MondaySudan: Shortfall in revenues blamed on oil

Sudan: Shortfall in revenues blamed on oil

May 18, 2007 (KHARTOUM) — The cabinet approved yesterday [17 May] under the chairmanship of Vice-President Ali Osman Taha the report presented by the minister of finance and national economy on the financial performance during the first quarter of the current year’s budget.

The report said that the country’s economic performance was moving toward attaining the target growth rate of 10 per cent. The Finance Minister said that the state collected 70 per cent of the projected revenues during the first quarter of the year.

He attributed the shortfall in revenues to the decline in petroleum production from the Adar Yeil oilfield in Upper Nile State, in Southern Sudan.

The Minister said his ministry will seek to redress the shortfall in revenues during the second quarter of the year by increasing the Value Added Tax by two percent. He said the five-percent increase in salaries will be implemented in the second quarter of the fiscal year and that priorities will be rearranged during that period, in addition to regulating governmental spending, implementing development projects in the provinces, paying dues required for implementing the peace agreements in Darfur and the East, and paying the southern provinces their entitlements in full, plus providing the finances required for the agricultural season.

The report said the economic growth rate in the first quarter was 10 per cent and that the inflation rate amounted to 9.8 per cent, a slight increase above the projected rate. The national currency’s exchange rate was stable and the balance of trade improved in comparison with the corresponding period last year. As for revenues and expenditures, the budget’s performance was as follows:

[Begin recording by Finance Minister Al-Zubayr Ahmad al-Hasan, speaking at the cabinet session] The revenues were about 70 per cent of projections, and this was due primarily to the decline in oil revenues. It was clear that the new petroleum in the Adar Yeil field is still in the range of 160,000 barrels daily, but the main reason is that although the production is there work on the port has not been completed to allow the full amount to be exported. [End recording]

[Reporter] The budget was implemented within a range of 74 per cent of projections [allocations]. It was financed to a percentage of 75 per cent from indigenous resources, 11per cent foreign loans, and 13.5 per cent sukuk [bonds] and borrowing from the Central Bank [reception interrupted]. The 70 per cent level attained in revenues represented an obstacle to implementing the budget’s expenditures in full. This led to rearranging priorities in the First Chapter [salaries], development projects, and the South’s share.

[Begin Finance Minister recording] To deal with the shortfall, we had a number of options including raising the prices of fuel and removing subsidies, reconsidering investments, and raising VAT from 10 per cent to 12 per cent. After extensive debate, we excluded the first two options and settled on the third which is to raise VAT on commodities and services from 10 per cent to 12 per cent.

Sudan Radio