Sudan’s former central bank governor warns of post-secession shock
May 25, 2011 (KHARTOUM) – The former governor of the Central Bank of Sudan Sabir Mohamed al-Hassan sounded the warning bell on the impact of the upcoming country’s breakup on the economy.
A referendum was held last January in accordance with the CPA in which Southerners voted on whether they wanted to remain united with the North or establish their own state.
While most of Sudan’s proven daily output of 500,000 oil barrel is extracted from oilfields in the south, the pipelines infrastructure and refineries are based in the north. The South will therefore be required to pay a fee to transport its oil and ship it abroad from Port Sudan terminal.
Al-Hassan said at a workshop in Khartoum on the secession of the South that the separation will result in an “economic shock” that will surpass the effects of the global financial crisis which unfolded in 2008.
The former official projected a 20% drop in GDP and 50% decrease in revenue for the central government as well as a sudden decrease in hard currency supply available in the market.
He said that negotiations between the North and South on post-referendum arrangements must lead to the emergence of two economically viable states.
“If the two countries do not cooperate then they will both will be affected negatively and there is no loser or winner in the case of non-cooperation,” Al-Hassan stressed.
He also called for the restructuring of the Sudanese economy and emphasized the need for canceling Sudan’s external debt saying that Sudan is heavily indebted and as such the cost of servicing it keeps multiplying particularly after the failure of debt relief initiatives.
But today the Sudanese finance and national economy minister Ali Mahmood Hassanein appeared to contradict Al-Hassan’s asserions telling a visiting European delegation that the country, through its resources and economic potential, will be able to overcome the effects of separation.
The country’s state minister Al-Fatih Ali Sideeg was quoted by the official news agency (SUNA) today as saying that a plan has been drafted to reduce dependence on oil revenue in preparation for the split.
Last month the International Monetary Fund (IMF) said that North Sudan may lose 75% of oil revenues in a worst case scenario that would result in domestic and external imbalances.
“With oil revenue constituting more than half of government revenue and 90 percent of exports, the economy will need to adjust to a permanent shock, particularly at a time when the country has little access to external financing. The size and nature of the necessary adjustment could have significant implications for growth and macroeconomic stability,” said the report dated last January but released in April.
Under that scenario, it is also assumed that North Sudan will witness a 10% decline in non-oil GDP to reflect the share of the South in total non-oil economic activity as well as a decline in oil related services; an increase in service receipts to reflect the transportation fees charged for the transportation of South’s share of oil; a decline in both transportation payments and investment income payments to reflect lower oil production; a decline in imports of goods to reflect the shares of the oil sector and the South; an increase in imports of petroleum products to reflect the shortfall in domestic production.
To confront this scenario, the IMF stressed that North Sudan will need to reduce spending, lift fuel subsidies, reduce tax exemptions and enhance revenue administration.
(ST)
AAMA
Sudan’s former central bank governor warns of post-secession shock
I think Sudan needs this shock and its going to be a good thing. The government needs this shock to wake up and start governing properly and realize the fact that if it didn’t do so, then the shock will wake up the drowsy and opressed nation and this will lead to an inevitable change of regime in no time. And, as for the longer term, Sudan can make it easily without the south (maybe even have better chances of being a more stable country), it just needs to be governed at least 50% properly.
Peace.
Mapuor
Sudan’s former central bank governor warns of post-secession shock
Sabir,you are really aware of the possible scenario after secession of the South.Bashir is the most stupid leader on earth.Just think guys of his decision to impose trade blockade over the whole South,preventing Northern traders from selling their goods to the South,am sure he is digging his own grave,this action together with loss of oil revenues can lead to terrible economic recession & subsquent depresssion.
Adam
Sudan’s former central bank governor warns of post-secession shock
Both Sudan and South Sudan will suffer if they end up bitter enemies. However, they can help each other in economy if logic, good-will and cooperation prevail. No one should think that the separation is all blessings for the South or for the North.
It is our destiny to live in the same area bordering each other and sharing many resources. We can be politically rivals, but we MUST be economically partners. This is going to be true forever, unless an earth quack separates the two parts of Sudan leaving one in Africa and fusing the other to Latin America.
Stupids of NCP and SPLM should leave power, so the honest, educated and open-minded people can plant, harvest and cook the yam WE have and share them in peace.
Down with NCP
Down with SPLM
Long Live the PEOPLE OF SUDAN
Adam Milawaki,
Juba, South Sudan
okucu pa lotinokwan
Sudan’s former central bank governor warns of post-secession shock
The former Central Bank governor,is crying now what type of shock is he is saying the north are going to loose over of 550 barrels per day of oil.
For we the southerners if even the oil remains under the ground for many years our resources is still there, its time will come. GOSS should cut the oil following in the the north to port Sudan now,southerners are been kill in Abyei by the Omer government what type of relationship is that in trade with Khartuom?
OKUCU PA LOTINOKWAN
Wanibuluk Ciciliba
Sudan’s former central bank governor warns of post-secession shock
My dear brother,
At the face of a disaster and preparednes, what do you think the South should do in order not to face a seveer consequences of that trade embergo they are proposing?
As to me, this is a rain season let’s till the land and we shall live from it and by it we shall grow…Agriculture…
Wau….
Abyei Soil
Sudan’s former central bank governor warns of post-secession shock
@ Adam
What are you insinuating in staggering statement as to upto yourselves like that brother?
Please tell brothers the killers and looters to leave Abyei peacefully then after you come and talk like that I really don’t know you but I said it.
Trade will be there between us but you first pay what you did to us wrongly preventing our children access to education by enforcing war on south please I don’t like to hear from you. Get away from Juba there!
Yanga
Sudan’s former central bank governor warns of post-secession shock
Stability is the best guarantor of commerce. Fervently (if not feaverishly) striving to lay the best possible foundations for a diversified and vibrant economy is undoubtably first amd foremost on the minds of those who have been elected to lead the future RoSS into statehood and beyond.
If RoSS is to get off to a good start, it needs stability so as to ensure the fledgling shoots of our domestic economy are not undermined by regional instability.
North Sudan is our closest neighbour – and here I do not mean just geographically. A 20% drop in GDP and 50% decrease in revenue for the GoS (as cited by the Al-Hassan) is simply near catastrophic. We in the future RoSS can’t afford a destablised North Sudan. The scale of the restructuring that will be required and the resulting tribulations of the northern peoples will surely spill over in some capacity over our borders and affect our prospects for development.
Much though the enduring conflict keeps fresh in our minds our differences and the memory of discrimination, it is in our best interests to start our new relationship, based as it will be on an equal status for both parties, on a good footing. Talk of ‘birds coming home to roost’ or gloating over the troubles of others are unhelpful no matter how heartfelt they may be.
Being seen to offer a helping hand in some way to North Sudanese would go a long way to endearing South Sudan to the northern ‘peoples’. It is the people who endure no matter the regime. There are ways to help the people without filling the NCP’s depleted treasury – through civil society and organisations etc.
I know this is a difficult concept to entertain, especially considering our present differences over Abyei and our own development needs, but one must think of the long term. And it is in our interests to have a stable and friendly North Sudan.
The NCP is not immortal. It is the people who must endure the results of the bad policies of their government. But the people endure long after a regime disappears. They will not easily forget our gesture of help and goodwill during what will be an immensely difficult time for them.
Paul Ongee
Sudan’s former central bank governor warns of post-secession shock
Adam, Mohamed Ali and the likes,
Don’t get mad. That is how criminal president of Sudan behaves because he thinks that we’re living in the old Sudan of 1989. No. The leadership of SPLM/SPLA has made it loud and clear that “Sudan will never be the same”.
Don’t you read, digest and get a sense of the statement? Scattering troops all over the Sudan, threatening Northern traders not to take goods to the South, making security arrangements with neighboring Chad and CAR, and selling a million acre of land to Egypt to remain in power won’t make any difference, maan.
Yesterday, Milosovic, Charles Taylor, and today Ratko Mladic and guess who tomorrow? Omer Hassan Al-Bashir. He has only few months and one choice to make, commit suicide at home or in battle field or face justice in The Hague to save the country from falling victim of financial crisis.
Anyway, we will help if North Sudan chooses to behave decently according to international standard not competitive interpretation of Quran to govern the country. CPA is good and appreciated by freedom lovers in the North including those who attempt to apply Sharia but sip whisky on the sly at home.
The good thing Sudan does not mobilize men to beat women found driving cars on streets like Saudi Arabia who was supposed to lead because it’s the center of attention. Don’t get mad Adam/Mohamed Ali. Just tell King Saud to let women have fun driving cars. OK?
Paul Ongee
Khartoum Watch
Paul Ongee
Sudan’s former central bank governor warns of post-secession shock
Adam, Mohamed Ali and the likes,
Don’t get mad. That is how criminal president of Sudan behaves because he thinks that we’re living in the old Sudan of 1989. No. The leadership of SPLM/SPLA has made it loud and clear that “Sudan will never be the same”.
Don’t you read, digest and get a sense of the statement? Scattering troops all over the Sudan, threatening Northern traders not to take goods to the South, making security arrangements with neighboring Chad and CAR, and selling a million acre of land to Egypt to remain in power won’t make any difference, maan.
Yesterday, Milosovic, Charles Taylor, and today Ratko Mladic and guess who tomorrow? Omer Hassan Al-Bashir. He has only few months and one choice to make, commit suicide at home or in battle field or face justice in The Hague to save the country from falling victim of financial crisis.
Anyway, we will help if North Sudan chooses to behave decently according to international standard not competitive interpretation of Quran to govern the country. CPA is good and appreciated by freedom lovers in the North including those who attempt to apply Sharia but sip whisky on the sly at home.
The good thing Sudan does not mobilize men to beat women found driving cars on streets like Saudi Arabia who was supposed to lead because it’s the center of attention. Don’t get mad Adam/Mohamed Ali. Just tell King Saud to let women have fun driving cars. OK?
Paul Ongee
Khartoum Watch