I would like to update Directors on recent information and data that have become available to staff since the staff report was circulated to the Executive Board on September 6. The new information does not change the thrust of the staff appraisal.
1. Political Situation: Discussion between Sudan and South Sudan in early September averted a complete shutdown of oil production that was expected to take place as of September 6. The last minute agreement paved the way for a steady implementation of the Cooperation Agreement that was signed between the two countries, including continuing oil production.
2. Oil Agreement. By mid-September, the Sudanese authorities received oil payments from South Sudan amounting to about US$ 65 million as a result of shipments of crude oil from Port Sudan.
3. Payments to the Fund. The authorities made last week a fourth payment to the Fund this year for an amount equivalent to SDR 550 thousand. This brings the total amount of payments this year to SDR 2.9 million, compared to obligations falling due of SDR 2.3 million.
4. Exchange restrictions: The authorities have informed staff this week that they have removed an exchange restriction on tax certification requirement in respect to transfers abroad of profits generated by enterprises other than joint stock companies. Also, the authorities informed staff that they issued a circular to clarify that there are no limitations on sale of foreign exchange by banks.
5. Inflation. The consumer price inflation continued its downward trend, dropping to 22.9 percent at end-August, against a peak of 47.9 percent in April 2013. This significant deceleration of inflation mainly reflects continued lower food prices and transportation costs, as well as modest growth in monetary aggregates.
6. Revised WEO Oil Prices. The WEO oil price projections were recently revised upward. The revisions for Sudan will translate into higher prices per barrel (US$4.4 per barrel for 2013 and an average of $3.7 per barrel for 2014-16). Due to the limited role of the oil sector in post-secession Sudan, these changes, however, will lead to modest improvements in the fiscal and external current account balances, within an estimated range of 0.2-0.4 percentage point of GDP.
7. Next steps:
- a) Annual Meetings. A Sudanese delegation is expected to visit Washington to attend the Annual Meetings. Staff will take the opportunity to inquire about the status of the reform package, and discuss prospects for a successor Staff Monitored Program.
- b) Technical Working Group. Fund and World Bank staffs plan to organize the lx Technical Working Group at the margins of the Annual Meetings. At that meeting, representatives from the African Union, as well as Sudan and South Sudan will be invited to brief on progress made on the joint debt relief outreach activities. In this context, the Presidents of Sudan and South Sudan as well as the Chairman of the African High Level Implementation Panel (AUfflP) President Thabo Mbeki have recently signed a letter to the international community to request support for debt relief for Sudan and the lifting of unilateral sanctions.
- c) Next mission. Staff is planning to visit Khartoum in late October to discuss the 2014 budget. If by then, the corrective policies discussed in the staff report are in place, staff may then also initiate discussions for a successor Staff Monitored Program.
- d) Resident representative: A new resident representative is expected to take up his assignment in early October.