Sudan’s 2008 economic growth seen stable at 8 pct
April 3, 2008 (ADDIS ABABA) — Sudan’s economy is expected to grow 8 percent in 2008, the same rate as last year, underpinned by oil export revenues, agricultural production and the services sector, a senior government official said.
“In 2007, we achieved growth of 8 percent. As for our projections for 2008, we are also expecting the same momentum, 8 percent,” said Yousif Mohamed Ahmed Bashir, an economist with the Ministry of Finance and National Economy.
“Sudan is an agricultural country and our production is mainly driven by agriculture. But recently, oil has become a driver of the economy,” he told Reuters late on Wednesday.
Bashir said Sudan’s economy would suffer some inflationary pressure due to rising food prices, but that the government was subsiding wheat.
The country, which produces 500,000 barrels of crude per day, had maintained inflation within a 7-9 percent band in the last 10 years, he said.
“We expect the increase in food prices will cause some inflationary pressures on our very solid track on inflation control,” Bashir said, adding that inflation could rise to double digits within the year but drop back to below 10 percent.
“By the end of the year we are expecting the inflation pressure will be captured and we will be within one digit.”
The United States’ economic slowdown would not have an immediate impact on Sudan’s economy as the two nations do not have strong economic ties, Bashir added.
He expected a downturn in Asia economies trading with the U.S. would however have an impact on Sudan in the long run.
Sudan had set aside $5 billion of oil revenues to fund its budget in 2008, Bashir said. The rest of the proceeds, which he did not quantify, will go into Sudan’s Oil Stabilisation Account, which the government dips into whenever there is a drop in prices or quantity.
The amount in the fund varies each month between 1.5 and 6 months of import volumes, he said.
Sudan’s greatest challenges were to improve the country’s infrastructure and integrate the economy of southern Sudan into the national economy.
After two decades of war, Khartoum signed a peace deal in 2005 with rebels in the south which required the government to reconstruct the war-scarred south.
“People (in the south) are expecting peace dividends and this takes a very big chunk from our budget. We have to build schools, water points, (and provide) electricity.”
Bashir said when Sudan was sure there was no risk in terms of oil prices or a drop in production, it would use its Oil Stabilisation Account funds to build infrastructure and reconstruct areas affected by war.
Bashir said China’s and India’s forays into Africa were for the continent’s benefit, providing new capital, technology transfer, affordable goods and services and reciprocal trade of goods that are not as heavily subsidised as those from the West.
“Trading with Asia is providing the best opportunity compared with the Western partners,” Bashir said.
(Reuters)