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Balance of Payments

A reasonably accurate presentation of Sudan's balance of payments--the summary in money terms of transactions with the rest of the world--was hampered by what foreign economists considered understatements in official statistics of imports and public sector loans. The lack of reliable statistical information was a problem, but the effects on the economy of mismanagement, famine, and war were obvious. In the current account (covering trade, services, and transfer transactions), the trade balance throughout the two decades from 1960 to 1980 usually showed a deficit; only in 1973 was a relatively substantial surplus registered. After 1973 the trade balance was unfavorably affected by higher petroleum import costs and the greater costs of other imports that resulted from the worldwide inflation engendered by oil price increases. The impact on the balance of payments was especially serious because of its coincidence with the implementation after 1973 of an intensive development program that required greatly increased imports. The current account situation was not improved by the services sector (insurance, travel, and others), which regularly experienced a net loss, as did investment income. Transfers usually had a positive balance, but one insufficient to offset the usual deficit in trade and services. Net inflows and disbursement of foreign loans and other capital failed to cover the shortage in the current account, and the overall balance of payments was regularly in deficit (see table 11, Appendix).

The government from its earliest days had been forced to resort to external financing to cover balance of payments shortfalls. Deficits and debt service obligations were relatively insignificant until the mid-1970s. Particularly from 1974 to 1977, large-scale borrowing and new commitments were estimated at more than the equivalent of US$2.4 billion. At the end of 1979, outstanding public and publicly guaranteed debts (disbursed) totaled more than US$2.5 billion, of which almost US$1.8 billion was owed to governments, US$535 million to commercial lenders, and US$235 million to suppliers. In 1981 Sudan's debt burden was estimated at US$4 billion. Little control over borrowing was exercised within the government. The Ministry of Finance and Economic Planning officially had responsibility for contracting foreign loans, but such loans frequently had been authorized directly by Nimeiri. Many were relatively short-term and at interest rates too high for Sudan, considering its economic situation. Until the coup d'état of Brigadier General Umar al Bashir on June 30, 1989, there was little fiscal control over currency and imports, and imports tended to include a large number of luxury goods. After 1989 there was no improvement in Sudan's foreign debt situation, despite a reduction in government subsidies for bread, a 50 percent reduction of wheat imports, and the end of sugar importation, which was expected to save an estimated US$400 million annually. Despite these measures, total foreign debt rose in 1990 to US$13 billion, with debt liabilities, including principal and interest, estimated at US$980 million in 1988-89.

In 1978 Sudan failed to meet its obligations fully--debt service payments owed that year amounted to 17.9 percent of export earnings. It was apparent that it would also not meet its obligations in 1979, and so it sought relief from creditors. In late 1979, acting through the so-called Paris Club, a group of industrialized creditor countries including the United States, Japan, and nine West European states, Sudan rescheduled an estimated US$400 million to US$500 million of the debts guaranteed by Western export credit agencies. The agreed payments were to be made over a seven-year period commencing after a three-year grace period. Rescheduling of another US$600 million in loans and interest with more than 100 commercial banks-- represented by the 5 main creditor banks--required a further two years; the agreement was signed at the end of 1981. Despite repeated reschedulings of Sudan's debt burden, both arrears and debt service payments continued to increase.

Since 1978 the government has undertaken various measures to improve the balance of payments situation. A 1979 devaluation of the overpriced Sudanese pound was carried out, reducing its value from the equivalent of US$2.87 to US$0.22. As of March 31, 1991, the official exchange rate was US$1=£Sd4.50. Since then Sudan's economy has steadily weakened, as have its relations with the IMF and the Paris Club. In 1989 Sudan had repaid the IMF only a token US$15 million and continued to resist IMF demands for further economic austerity measures. Despite declarations by the Sudanese government that it was determined to cooperate with international lending organizations, in mid-1991 Sudan had made itself ineligible for debt relief because it was unable to service its debt.

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Despite the problem of obtaining reliable and current information, a number of significant books and monographs have been published recently on various aspects of Sudan's economy. Among these is El Wathiq Kameir and Abrahim Kursany's Corruption as the 'Fifth' Factor of Production in the Sudan, which should be read in conjunction with the two books by Mansour Khalid, Nimeiri and the Revolution of Dis-May and The Government They Deserve. These books not only unravel corruption but also provide insightful analyses of Sudanese governments. Tim Niblock's Class and Power in Sudan covers the whole of the condominium and ends with the Nimeiri regime. Of more contemporary interest is the sound analysis of Sudan's economy in Dr. Medani M. Ahmed's The Political Economy of Development in the Sudan. A more recent work is a collection of essays, Sudan since Independence; several of these essays edited by Muddathir Abd al Rahim, Raphael Badal, Adlan Hardallo, and Peter Woodward pertain to the economy.

A very useful collection of essays is that edited by Ali Mohamed el Hassan, "Essays on the Economy and Society of the Sudan." More recent is a collection of essays on Sudan's economy edited by Paul van de Wel and Abdel Ghaffar Mohamed Ahmed, Perspectives on Development in the Sudan. Ali Abdel Gadir Ali's, Some Aspects of Production in Sudanese Traditional Agriculture has insightful comments on Sudan's economy. Siddiq Umbadda's Import Policy in the Sudan, 1966-1976 and Mekki El Shibly's Monetisation, Financial Intermediation, and Self-Financed Growth in the Sudan, analyze the economy during the Nimeiri years. An assessment of Sudan's agricultural development is provided in Tony Barnett's and Abbas Abdelkarim's book, Sudan: The Gezira Scheme and Agricultural Transition. An important journal specifically devoted to the Sudan's economy, particularly during the Nimeiri regime, is Sudan Journal of Economic and Social Studies.

Statistical information can be found in the Annual Reports of the Bank of Sudan (especially the 1989 edition), but their statistical information becomes increasingly unreliable after the fall of the Nimeiri regime, reflecting the political instability. Moreover, after the coup of June 30, 1989, the regime became increasingly secretive. The Economist Intelligence Unit's Sudan: Country Report, published quarterly, provides valuable data about Sudan's economy, as does the chapter on Sudan in the annual Europa volume Africa South of the Sahara, 1990.

Finally, Islamic banking as a relatively new phenomenon in Sudan cannot be ignored because of its impact on the economy and the powerful political influence these financial structures are enjoying in contemporary Sudan. J. Schacht's An Introduction to Islamic Law, Islamic Law and Finance, edited by Chibli Mallat, and the influential work by A. Mirakhour and Z. Iqbal, Islamic Banking, are useful works on the subject. (For further information and complete citations, see Bibliography.)

Data as of June 1991

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Sudan Table of Contents