Sudan parliament inches closer to endorsing controversial budget

December 1, 2008 (KHARTOUM) — The Sudanese national assembly today overwhelmingly approved a third version of the 2009 federal budget amid national concern on the economic outlook facing the country.

A final vote is required before the budget becomes official.

The $10 billion budget forecasted a 44% drop in its oil exports revenue to $3.6 billion in 2009, down from $6.4 billion. This year’s budget introduces tax hikes to offset the shortfall in oil revenue.

The changes include a 20 % increase in telecoms Value Added Taxes (VAT), up from 15 per cent in 2008, and a new 5 per cent “development tax” on some imports, Reuters reported.

Oil exports represent 65% of revenue for Sudan and helped fuel its unprecedented economic growth despite US economic sanctions. However a severe global financial crisis sent oil prices down more than 60% from its all-time peak of $147.27 reached July 11.

Khartoum has previously sought to downplay the effects of the worldwide credit crunch saying that US economic sanctions provided immunity to its economy.

Adding to Sudan’s woes is a weakening Euro against the dollar. Last year Sudan central bank converted all its dollar reserves into Euro in order to circumvent both current and future sanctions imposed by the US.

State finance minister Tarek Shalabi told Reuters he was still hoping oil prices would bounce back in the coming months, but said government spending would remain restrained.

“The oil price has been nose-diving and that puts a lot of pressure on to our system,” he said.

“I think that prices will go up,” he added. “But there will be pressure on government departments to manage their resources very carefully”

Sudan official news agency quoted its finance minister Awad Al-Jaz as saying that gross revenue in the budget represents 13.2% of Gross Domestic Product (GDP).

Al-Jaz further said that the oil revenues are representing a top source the general revenues in Sudan and thus the budget was negatively impacted by the financial crisis. However he stressed that the budget sustained policies aimed at “promoting growth and development growth of resources”.

The top finance official in Sudan also said that the budget deficit for 2009 accounts for 6.2% of the GDP.

But some assembly members criticized the allocation of $3 billion to security and defense. This amount is more than six times what was set aside for education and healthcare.

The daily Al-Hayat newspaper published in London said that the southern ex-rebels held an eight hour meeting in Juba and decided to implement new measures that reduce government expenditures.

The Government of Southern Sudan (GoSS) cabinet meeting headed by Salva Kiir agreed to restructure government ministries, departure of all ministers residing in hotels, slashing compensation for government officials by 10% and aligning salary structure of the South with the North.

Luka Byong, GoSS minister for presidential affairs had criticized the lack of emphasis on national development projects in the South “that would help make unity attractive”.

In 2011, southerners will be asked to vote in a referendum on whether they want to be independent or remain part of Sudan.

(ST)