INTERVIEW-Sudan c. bank chief eyes peace dividend of loans, aid
By Isa Mubarak
MANAMA, Dec 8 (Reuters) – Sudan’s central bank governor said on Monday he expected the country to benefit from a peace dividend of new loans and grants once a deal to end 20 years of war in the south was reached.
Governor Sabir Mohammad al-Hassan told Reuters that the heavily indebted country was also expected to benefit from debt relief and said the government had cut runaway inflation in the 1990s to around seven percent a year now.
The United States, which currently lists Sudan as a “state sponsor of terrorism”, has pledged to increase aid to the country provided the government and rebels in the south reach a peace deal, which is now being negotiated in Kenya.
Hassan said war had prevented Sudan from benefiting from international debt reduction initiatives to cut its $21 billion debt burden.
“The problem of external debts for us is the most important problem which the Sudanese economy faces,” he said, adding that this situation would change with a peace treaty.
“The benefits that Sudan will derive from signing this treaty are many… (It) will generate more resources to Sudan that can be spent on development and infrastructure projects,” Hassan said on the sidelines of a conference in Bahrain.
“But reconstructing the affected areas needs huge financing that Sudan alone cannot afford. We expect the international community to play a big role in this as it did with other countries,” he said.
“Actually there are some promises to provide grants and long-term loans,” Hassan said without elaborating.
Hassan said a peace deal would improve ties with the United States, which helped push the government and rebels into talks.
On the economy, he said Sudan’s gross domestic product (GDP) was now about $15 billion, with annual growth of six percent, although he did not say if that was real growth. He said foreign currency reserves covered more than three months of imports.
“The average (annual) inflation stands now at seven percent, but we want to decrease it to five. This is certainly better than more than 150 percent in the mid-1990s,” he said.
“In the first six months of 2003, the Sudanese dinar saw an appreciation of two percent. The currency will show a big improvement because of the large foreign direct investment expected to follow the peace deal,” he said.
Oil production, which mainly comes from fields in the war-torn south, was also expected to rise, he said.
“Oil contributes eight percent to GDP. We expect our production of oil to increase to around 500,000 barrels per day by end-2004 from 300,000 bpd now,” Hassan said.