presentation made by lual a. deng at a high level seminar 1: the financial crisis
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Sudan: The Challenges of Managing the Impact of Global Financial Crisis on a Post-conflict Economy. Presentation made by Lual A. Deng at a High Level Seminar 1: The Financial Crisis and Fragile States The 2009 ADB Annual Seminars Dakar, Senegal, 12 May 2009. 1. 1. 1. - PowerPoint PPT PresentationTRANSCRIPT
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Presentation made by Lual A. Deng at a High Level Seminar 1: The Financial Crisis
and Fragile StatesThe 2009 ADB Annual Seminars
Dakar, Senegal, 12 May 2009
Sudan: The Challenges of Managing the Impact of Global Financial Crisis on a Post-conflict Economy
Sudan: The Challenges of Managing the Impact of Global Financial Crisis on a Post-conflict Economy
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Presentation Consists of Four Parts
SUDAN
1. The Context
2. The Impact on national economy
3. Impact on GOSS
4. Policy Response
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1. National Context
Sources of Fragility:
a) Political – just emerged out of protracted civilWar (1983 – 2005) in the south & continued
conflict in Darfurb) Economic – huge external debt of more than
US$30 billion, which has resulted in large arrears to Paris Club & multilateral institutions
c) Weak institutions of economic governance
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2. The Impact on the National Economy
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2.1 Sudan economy to grow at 4% in 2009, which is above SSA average & other developing countries, except East Asia
8.2
11.4
8.4
6.96.2 6.0 5.85.8
8
5.6
4.24.9
5.54.3
2.2
5.4
3.7
-2
2.43.3
-0.6
-3
0
3
6
9
12
All Dev EastAsia
SAR ECA SSA MENA LAC
2007 2008e 2009f
GDP growth, percent
Source: World Bank, DEC Prospects Group.
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2.2 Sharp Fall in Oil Prices of Sudan’s two Blends
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2.3 Weaker public finances likely to cause fiscal deficits to deteriorate sharply more than SSA & developing world, but
less than that of Europe & Central Asia
-1.5-2.1
-2.6 -2.6
-3.8
-5.6-6
-5
-4
-3
-2
-1
0
Middle-East& NorthAfrica
South Asia LatinAmerica &Caribbean
East Asia &Pacific
Sub-Saharan
Africa
Europe &Central Asia
Projected deterioration in fiscal balance, percent of GDP
Source: World Bank, DEC Prospects Group.
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Public Budgetary Impact:deteriorated GoNU’s Overall fiscal picture
2.4 Deteriorated GoNU’s Overall Fiscal Picture
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2.5a Worsening of Balance of Payments position due to lower foreign exchange inflows, partly explained by Lower Oil
Export Earnings
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2.5b Worsening of Balance of Payments position due to lower foreign exchange inflows, partly explained by declining
FDI and slowing in Remittances
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2.6 a sharp decline (i.e. by 50%) in the foreign exchange reserves from its peak of US$2.0 billion in August 2008 to about U2S$1.0
billion at end-December 2008
March 2009 - reserves are less than 1 month import coverage.
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Southern Sudan and Global Crisis
1.Fiscal impact especially strong in Southern Sudan
2.Implications for oil revenue transfers to GOSS
3. GOSS
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3.1 Fiscal impact especially strong in Southern Sudan, which relies on oil revenues for more than
95%
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141414Source: Ministry of Finance & National Economy
Implications for Oil Revenue Transfers from GoNU to GOSS
3.2
* Monthly transfers figures don’t include arrears and withdrawals from ORSA
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• Short-term Measures
– Increased VAT on telecom, tobacco & alcoholic beverages.– Strengthened customs & tax collection in Southern Sudan by
appointing SPLA officers into national customs and tax administration operating in the south.
– Reduced public expenditure (e.g. expenditure on purchase of goods & services was reduced by 51% during the 1st quarter of 2009).
– Allowed prices to adjust rather than impose quantitative restrictions in goods, money and factor markets (including foreign exchange within a “float-managed” regime).
– Strengthened microfinance policy framework as by way of enhancing local financial intermediation needs of the vulnerable group and rural communities.
– Established a ministerial policy group to monitor the global financial and economic crisis.
Sudan’s Policy Response to the crisis
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Medium-Term Measures– Increased capital expenditure (i.e. development) on infrastructure in that
priority is given to upgrading roads, river transport and railway along the major north-south corridor and roads to key agricultural zones.
– Enhancing economic governance at all levels of government in Sudan.– Creating a clear policy framework for transparent and competitive
environment of transport services. – Focusing on agriculture as the engine of growth of Sudan economy and
a vehicle for diversification.– Encouraging broader private sector participation in all sectors of the
economy, e.g. infrastructure construction.
– Working toward strengthening inter-governmental fiscal and regulatory policy coordination between GoSS and GONU as well as with the 25 States of Sudan.
– Simplify state-level taxation system and improve accountability in revenue collection.
– In the process of creating a transparent, predictable, and less binding fiscal and regulatory policies toward the private sector.
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THANK YOU