Sudan attributes shortfall in revenues to decline in oil production
May 18, 2007 (KHARTOUM) — Sudan federal finance minister has attributed shortfall in revenues to the decline in petroleum production from the Adar Yeil oilfield in Upper Nile State, in Southern Sudan.
The federal minister of finance and national economy, Zubair Ahmed Al-Hassan, told the Sudanese cabinet in a session held on May 17, that the revenues were about 70 per cent of projections, and this was due primarily to the decline in oil revenues. He further said 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.
The Minister further said his ministry will seek to redress the shortfall in revenues during the second quarter of the year by increasing the Value Added Tax (VAT) by two percent.
“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.” He said.
In his report to the cabinet on the financial performance during the first quarter of the current year’s budget, al-Hassan said that the country’s economic performance was moving toward attaining the target growth rate of 10 per cent.
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.
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 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 bonds and borrowing from the Central Bank. 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 salaries, development projects, and the South’s share.
(ST)