The macroeconomic objectives of the 1999 Staff-Monitored Program (SMP) have been broadly achieved in Sudan. The macroeconomic situation at the end of 1999 was modestly more expansionary than programmed. Budget expenditure was maintained below the program level throughout the year and a surge in oil prices in late 1999 has increased oil revenue above budgeted amounts. Broad money growth at end-December was roughly in line with the 1999 program. Both oil and non-oil revenue were strong in the first two months, and expenditure was below trend, allowing the government to build up deposits at the central bank.

Abstract

The macroeconomic objectives of the 1999 Staff-Monitored Program (SMP) have been broadly achieved in Sudan. The macroeconomic situation at the end of 1999 was modestly more expansionary than programmed. Budget expenditure was maintained below the program level throughout the year and a surge in oil prices in late 1999 has increased oil revenue above budgeted amounts. Broad money growth at end-December was roughly in line with the 1999 program. Both oil and non-oil revenue were strong in the first two months, and expenditure was below trend, allowing the government to build up deposits at the central bank.

This statement provides information on recent economic developments in Sudan that has become available since the circulation of the staff report on the Article IV consultation and the fourth review of the first annual program under the medium-term staff-monitored program (EBS/00/83, 05/08/2000). This information is preliminary and will be discussed by the mission scheduled to visit Khartoum in early June to conduct the first review of the second annual program under the medium-term staff-monitored program. The updated information does not change the thrust of the staff appraisal.

I. Macroeconomic Developments

  • The inflation rate eased to 11.9 percent in April on a twelve-month basis, continuing the trend decline from the end-December 1999 peak of 17 percent.

  • Early budget data indicate that the quarterly fiscal benchmarks for end-March were met. Current and capital expenditures were within the agreed cap. Stronger than programmed oil revenue more than offset shortfalls in revenue from fees and charges. Tax revenue was broadly on target as the existing excise and trade tax structure has been kept in place pending the delayed introduction of the VAT on June 1. Preliminary calculations for the adjuster indicate that the ceiling on domestic financing of the fiscal deficit was also met.

  • In January, Bank of Sudan (BOS) gross usable reserves increased by US$7 million to US$60.5 million as of end-January 2000.

  • Net domestic assets of the BOS through end-February were considerably below end–March program levels as the net claims on the government were roughly unchanged from end-1999 and the net position with commercial banks declined.

  • The exchange rate of the Sudanese dinar against the U.S. dollar remained stable through end-April.

II. Structural Measures

  • On May 9, 2000, the BOS announced the unification of reserve requirements. The reserve requirement on deposits in domestic currency was decreased from 20 to 15 percent, while the reserve requirement on deposits in foreign currency was raised from 10 to 15 percent. Commercial banks will have until July 1 to comply. Additionally, the unified minimum rates on commercial banks’ services were abolished and, to encourage competition, the BOS will begin to publish the rates charged by each bank. Finally, the minimum profit margin under Murabaha contracts was decreased from 18 to 15 percent.

III. Relations with Creditors

  • In January–April, 2000, the authorities adhered fully to the schedule of monthly payments to the Fund.

Sudan: Staff Report for the 2000 Article IV Consultation and Fourth Review of the First Annual Program Under the Medium-Term Staff-Monitored Program
Author: International Monetary Fund