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Sudan
Balance of Payments
A reasonably accurate presentation of Sudan's balance of payments--the
summary in money terms of transactions with the rest of the world--was
hampered by what foreign economists considered understatements
in official statistics of imports and public sector loans. The
lack of reliable statistical information was a problem, but the
effects on the economy of mismanagement, famine, and war were
obvious. In the current account (covering trade, services, and
transfer transactions), the trade balance throughout the two decades
from 1960 to 1980 usually showed a deficit; only in 1973 was a
relatively substantial surplus registered. After 1973 the trade
balance was unfavorably affected by higher petroleum import costs
and the greater costs of other imports that resulted from the
worldwide inflation engendered by oil price increases. The impact
on the balance of payments was especially serious because of its
coincidence with the implementation after 1973 of an intensive
development program that required greatly increased imports. The
current account situation was not improved by the services sector
(insurance, travel, and others), which regularly experienced a
net loss, as did investment income. Transfers usually had a positive
balance, but one insufficient to offset the usual deficit in trade
and services. Net inflows and disbursement of foreign loans and
other capital failed to cover the shortage in the current account,
and the overall balance of payments was regularly in deficit (see
table 11, Appendix).
The government from its earliest days had been forced to resort
to external financing to cover balance of payments shortfalls.
Deficits and debt service obligations were relatively insignificant
until the mid-1970s. Particularly from 1974 to 1977, large-scale
borrowing and new commitments were estimated at more than the
equivalent of US$2.4 billion. At the end of 1979, outstanding
public and publicly guaranteed debts (disbursed) totaled more
than US$2.5 billion, of which almost US$1.8 billion was owed to
governments, US$535 million to commercial lenders, and US$235
million to suppliers. In 1981 Sudan's debt burden was estimated
at US$4 billion. Little control over borrowing was exercised within
the government. The Ministry of Finance and Economic Planning
officially had responsibility for contracting foreign loans, but
such loans frequently had been authorized directly by Nimeiri.
Many were relatively short-term and at interest rates too high
for Sudan, considering its economic situation. Until the coup
d'état of Brigadier General Umar al Bashir on June 30, 1989, there
was little fiscal control over currency and imports, and imports
tended to include a large number of luxury goods. After 1989 there
was no improvement in Sudan's foreign debt situation, despite
a reduction in government subsidies for bread, a 50 percent reduction
of wheat imports, and the end of sugar importation, which was
expected to save an estimated US$400 million annually. Despite
these measures, total foreign debt rose in 1990 to US$13 billion,
with debt liabilities, including principal and interest, estimated
at US$980 million in 1988-89.
In 1978 Sudan failed to meet its obligations fully--debt service
payments owed that year amounted to 17.9 percent of export earnings.
It was apparent that it would also not meet its obligations in
1979, and so it sought relief from creditors. In late 1979, acting
through the so-called Paris Club, a group of industrialized creditor
countries including the United States, Japan, and nine West European
states, Sudan rescheduled an estimated US$400 million to US$500
million of the debts guaranteed by Western export credit agencies.
The agreed payments were to be made over a seven-year period commencing
after a three-year grace period. Rescheduling of another US$600
million in loans and interest with more than 100 commercial banks--
represented by the 5 main creditor banks--required a further two
years; the agreement was signed at the end of 1981. Despite repeated
reschedulings of Sudan's debt burden, both arrears and debt service
payments continued to increase.
Since 1978 the government has undertaken various measures to
improve the balance of payments situation. A 1979 devaluation
of the overpriced Sudanese pound was carried out, reducing its
value from the equivalent of US$2.87 to US$0.22. As of March 31,
1991, the official exchange rate was US$1=£Sd4.50. Since then
Sudan's economy has steadily weakened, as have its relations with
the IMF and the Paris Club. In 1989 Sudan had repaid the IMF only
a token US$15 million and continued to resist IMF demands for
further economic austerity measures. Despite declarations by the
Sudanese government that it was determined to cooperate with international
lending organizations, in mid-1991 Sudan had made itself ineligible
for debt relief because it was unable to service its debt.
* * *
Despite the problem of obtaining reliable and current information,
a number of significant books and monographs have been published
recently on various aspects of Sudan's economy. Among these is
El Wathiq Kameir and Abrahim Kursany's Corruption as the 'Fifth'
Factor of Production in the Sudan, which should be read in
conjunction with the two books by Mansour Khalid, Nimeiri
and the Revolution of Dis-May and The Government They
Deserve. These books not only unravel corruption but also
provide insightful analyses of Sudanese governments. Tim Niblock's
Class and Power in Sudan covers the whole of the condominium
and ends with the Nimeiri regime. Of more contemporary interest
is the sound analysis of Sudan's economy in Dr. Medani M. Ahmed's
The Political Economy of Development in the Sudan. A
more recent work is a collection of essays, Sudan since Independence;
several of these essays edited by Muddathir Abd al Rahim, Raphael
Badal, Adlan Hardallo, and Peter Woodward pertain to the economy.
A very useful collection of essays is that edited by Ali Mohamed
el Hassan, "Essays on the Economy and Society of the Sudan." More
recent is a collection of essays on Sudan's economy edited by
Paul van de Wel and Abdel Ghaffar Mohamed Ahmed, Perspectives
on Development in the Sudan. Ali Abdel Gadir Ali's, Some
Aspects of Production in Sudanese Traditional Agriculture
has insightful comments on Sudan's economy. Siddiq Umbadda's Import
Policy in the Sudan, 1966-1976 and Mekki El Shibly's Monetisation,
Financial Intermediation, and Self-Financed Growth in the Sudan,
analyze the economy during the Nimeiri years. An assessment of
Sudan's agricultural development is provided in Tony Barnett's
and Abbas Abdelkarim's book, Sudan: The Gezira Scheme and
Agricultural Transition. An important journal specifically
devoted to the Sudan's economy, particularly during the Nimeiri
regime, is Sudan Journal of Economic and Social Studies.
Statistical information can be found in the Annual Reports of
the Bank of Sudan (especially the 1989 edition), but their statistical
information becomes increasingly unreliable after the fall of
the Nimeiri regime, reflecting the political instability. Moreover,
after the coup of June 30, 1989, the regime became increasingly
secretive. The Economist Intelligence Unit's Sudan: Country
Report, published quarterly, provides valuable data about
Sudan's economy, as does the chapter on Sudan in the annual Europa
volume Africa South of the Sahara, 1990.
Finally, Islamic banking as a relatively new phenomenon in Sudan
cannot be ignored because of its impact on the economy and the
powerful political influence these financial structures are enjoying
in contemporary Sudan. J. Schacht's An Introduction to Islamic
Law, Islamic Law and Finance, edited by Chibli Mallat,
and the influential work by A. Mirakhour and Z. Iqbal, Islamic
Banking, are useful works on the subject. (For further information
and complete citations, see Bibliography.)
Data as of June 1991
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