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Sudan Economical Facts

 

Economical overview

The split of Sudan in July 2011 meant a huge blow to the new, smaller Sudanese economy, as three out of four oil sources ended up in the new state of South Sudan. Yet a decade later, Sudan is struggling with the effects of the loss of oil revenues and the country is undergoing tough savings programs. The dependence is large on loans and assistance from, among others, China and several Arab countries.

Even at the turn of the millennium, Sudan was one of Africa's poorest countries. However, the oil that began to be mined in the south in the late 1990s quickly provided large revenues to the Treasury. Sudan soon became one of Africa's richest states and many Sudanese experienced a significant rise in their standard of living.

  • Countryaah.com: Major imports by Sudan, covering a full list of top products imported by the country and trade value for each product category.

"Before the oil" the development of economic neglect was hampered. Almost all investments went to the area around the capital Khartoum. Economic policy was characterized by the cross-cutting between nationalizations and privatizations. The IMF threatened to exclude Sudan in 1990. The Government then met with the IMF with increased tax collection, deregulation and privatization.

Annual growth was good during the period 1997–2011, but the payment on the large external debt has been slow. Khartoum took over all of Sudan's foreign debt in exchange for the country receiving debt relief within two years. This did not happen (partly because of sanctions directed against Sudan by Western countries) and Sudan has instead borrowed money from China and a number of Arab countries.

Economical Facts of Sudan

Oil money for weapons

When the oil money started to flow, the war between northern and southern Sudan was still going on. The government used them to buy weapons, while the guerrillas in the south tried to hinder the extraction. The war cost huge sums and devastated the traditional economy of the south and the little that existed of infrastructure.

  • Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including SD which represents the country of Sudan.

Only when the government of Khartoum and the guerrillas in the south agreed to share the oil money did it become possible to end the war. And only then, around 2005, could the real oil boom begin. In the last years until the country's partition, Sudan produced about 500,000 barrels of oil a day, making it the third largest oil producer in Sub-Saharan Africa. Two-thirds of exports went to China. In 2010, the IMF estimated that Sudan's GDP had almost tripled since President al-Bashir took power in 1989, and that much of the growth has occurred over the past decade.

Immediately after South Sudan's independence, President al-Bashir announced that the government had adopted an economic crisis package to try to offset the large loss of income when oil production fell to about 120,000 barrels a day. The Minister of Finance estimated that central government revenue would decrease by 36 percent.

Rapidly rising food prices and the state's weak finances caused inflation to accelerate. One step in the efforts to overcome price increases was, according to the government, also the transition to a new currency, the Sudanese Pound, which began to be distributed a few weeks after the country's division. Government spending was also cut and work continued to improve tax collection. In 2015, inflation seemed to slow down somewhat, which was mainly due to low oil prices, but already a few years later it began to rise sharply again.

Negative growth

The conflict with South Sudan from 2012, for Sudan's part, led to reduced oil production and exports as well as dropped transit fees for South Sudanese oil. (South Sudan cannot export its oil without Sudanese involvement, as the lines go to the Sudanese Red Sea coast, where the only refineries are also located.) GDP growth shrank by around 2 percent per year in 2011–2012.

In 2013, the two neighboring states managed to agree on an oil agreement, with the result that South Sudan began to transport its oil through Sudan again. A few months later, Sudan accused the neighbor in the south of supporting a Khartoum hostile rebel movement and oil transport was halted again. After new negotiations, exports resumed, but in 2014–2015, internal conflicts in South Sudan put sticks in the wheel for oil production. GDP growth increased in 2013–2014 by 3 percent annually, but taking into account high inflation, growth was also negative in 2013.

The government has tried to compensate for the loss of oil revenues with increased gold exports, but a sharp fall in gold prices in 2013 led to a sharp decline in income as well. Since then, gold income has again grown.

The Sudanese central bank has appealed to financial institutions in the Arab countries of the Persian Gulf to deposit money into Sudanese banks to reduce the country's major shortage of hard currency. The lack of hard currency in 2013 forced the central bank into two sharp devaluations of the country's currency.

Attempts to Islamize the economy during the 1990s created confusion in the banking system. In 2003, the government decided that the Islamic system would exist in parallel with a Western-based banking system.

Support from China and the Arab world

The al-Bashir regime's representatives had strong private interests in business through companies without transparency. Some were run by the National Security Service and others by individual members of the now disbanded NCP, while a third category was Islamic "charities." The companies without transparency dominated the oil and construction industry and communications, but were found in all parts of the economy.

With the exception of the period with high oil revenues, Sudan has had a deficit in the trade balance abroad. China, the United Arab Emirates and Saudi Arabia are Sudan's most important trading partners and aid providers. Sudan has been dependent on aid since independence in 1956.

During the Cold War, the United States was the largest donor. Other major bilateral donors were Egypt, Libya and the United Kingdom. The main multilateral donors were the World Bank, the IMF and the EC (now the EU). Al-Bashir's takeover of power in 1989 led to international isolation and sanctions from parts of the world, not least the United States. Sudan also experienced problems in relations with the IMF and the World Bank. As a result, Khartoum formed closer ties with countries such as China, Saudi Arabia and the United Arab Emirates to obtain financial support from them. Other significant donors are India and the Islamic Cooperation Organization (OIC).

Regime change and economic reconstruction

In the second half of the 2010s, the government continued its austerity policy. Removed subsidies on food and fuel led to violent mass protests in several cities. In April 2019, repeated mass protests finally led to the overthrow of President al-Bashir by the military. Four months later, a civil-military transition regime took office.

The new Prime Minister Hamdok immediately began negotiations with the World Bank and the IMF on debt restructuring of the Treasury. He estimated that Sudan needed $ 8 billion in financial aid over the next two years to rebuild the country's economy. In November of the same year, the transitional government agreed with the IMF, the World Bank and the African Development Bank on a so-called economic rehabilitation plan starting in 2020. The plan included, among other things, a debt relief program. To cope with the serious shortage of foreign currency, Sudan received a loan pledge of more than $ 300 million from the Arab Monetary Fund in November.

A bright spot came in March 2020 when the United States lifted the sanctions against 157 Sudanese companies. This meant that companies could start doing international transactions. Shortly thereafter, however, a severe setback came when the corona pandemic reached Sudan in the spring. To curb the spread of infection, the country's borders were closed and Khartoum was quarantined. Only necessary community service was kept open. In addition, some problems remained regarding the distribution and transport of oil.

Sudan's economy shrank by just over 2 percent in both 2018 and 2019. The deep economic crisis has forced nearly two-thirds of the population to live below the official poverty line. There are many poor people in the east and Darfur in the west. Most Sudanese rely on agriculture and livestock care in self-catering. The oil industry has not created many jobs and the income from the oil sector is not evenly distributed.

At an international donor conference in June 2020, Sudan pledged a total of $ 1.8 billion in support of the country's political reforms and economic recovery.

FACTS - FINANCE

GDP per person

US $ 977 (2018)

Total GDP

US $ 40,852 million (2018)

GDP growth

-2.3 percent (2018)

Agriculture's share of GDP

31.5 percent (2018)

Manufacturing industry's share of GDP

6.1 percent (2011)

The service sector's share of GDP

49.5 percent (2018)

Inflation

50.4 percent (2019)

Government debt's share of GDP

212.1 percent (2018)

External debt

US $ 21,754 million (2017)

Currency

New Sudanese Pound

Merchandise exports

US $ 3 485 million (2018)

Imports

US $ 7,065 million (2018)

Current account

- US $ 4,679 million (2018)

Commodity trade's share of GDP

28 percent (2018)

Main export goods

Oil and petroleum products, gold, sesame seeds (2019)

Largest trading partner

China, United Arab Emirates, Saudi Arabia, India (2018)


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