Sudan’s finance minister paints grim picture of economy after the South separates

October 17, 2010 (KHARTOUM) – The Sudanese minister for finance and national economy Ali Mahmood Abdel-Rasool warned the people of the North that tough austerity measures would have to be undertaken should the South Sudanese vote for independence in the January 2011 referendum.

“We will lose seventy per cent of our share in oil reserves, and fifty per cent of the share in oil revenues. We hope and pray to God that Sudan is not divided, but this is what will happen if [Sudan] breaks up,” Abdel-Rasool said in an interview with the London-based Al-Sharq Al-Awsat newspaper.

In 2011 the people of South Sudan will vote in a self determination referendum in order to decide whether they want to remain as part of united Sudan or create their own state. It is widely expected that secession will be the overwhelming choice of Southerners.

About 75 percent of Sudan’s proven reserves of 6.3bn barrels are in the south but the pipeline that carries the oil to export terminals and refineries runs through the north. The south needs Khartoum’s co-operation to sell its oil; the north needs revenues from its neighbour’s resources.

The Sudanese official expressed hope that oil discoveries in the North will help compensate for some of the loss in oil revenue from the South adding that the country has been able to sustain itself before oil was discovered and should be able to do the same if it is gone.

However, he emphasised that other measures need to be taken to weather the impact of the likely secession of South Sudan.

“When Mr. President picked me to be the Minister of Finance, I conducted studies on exports and imports, and found that we import the equivalent of more than $9 billion each year; $1 billion for car [imports], and nearly $2 billion of wheat [imports], $100 million for [cooking] oil, and nearly $100 million for furniture, and the like for fruits, toys, and luxury items,” the Sudanese finance minister said.

“In accordance with my new policy, it is imperative that we reduce these amounts through rationalization of import, imposing tariffs and taxes on luxury items. And actually, I issued orders stopping the imports of used cars because, in the long run, it will be a burden on the owners and the Sudanese economy,” Abdel-Rasool added.

The recent move to curb imports were meant to preserve the FOREX reserves kept by Sudan’s central bank. The Sudanese pound have recently been sliding against the US dollars and authorities appeared unable to halt its decline through injecting its limited supply of foreign currency.

Abdel-Rasool also urged the Sudanese people in the North to help the government by cutting down spending on luxury items.

“I have spoken to the Sudanese people about the importance of returning to our local products; to corn, millet and to Kisra [Sudanese corn bread] and cooking it [at home]” he said.

The remarks by the Sudanese official marks a departure from those made by his peers which stressed that South Sudan’s secession will have limited impact on the economy of the North.

“It is true that a partition will have consequences but it is not impossible to face up to it,” said governor of the Central Bank of Sudan Sabir Mohamed Al-Hassan in a press conference in late September noting that non-petroleum exports have more than doubled over the last year.

“Sudan was able to overcome the global financial crisis and that gave it the ability to prevail over the crisis of the financial secession of the South,” Al-Hassan said.

(ST)