September 2, 2013 (KHARTOUM) – The Sudanese government is poised to lift fuel subsidies for the second time since last year as the fiscal situation for the country continues to be leak, a senior official said.
- Mohamed Khair Al-Zubair Ahmed, governor of Sudan’s central bank (Reuters)
The governor of Sudan Central Bank Mohamed Khair al-Zubeir was quoted by pro-government Akhbar Al-Youm newspaper on Sunday as saying that they will target diesel first as it would affect fewer economic sectors as compared to gasoline.
Al-Zubeir noted that Sudan imports petroleum worth $1.4 billion which he said never happened in the history of the country.
He warned that the economic picture is unlikely to change before three years and will be contingent upon boosting oil production.
Sudan lost 75% of its oil reserves after the southern part of the country became an independent nation in July 2011 denying the north billions of dollars in revenues.
Prior to the country’s breakup, Sudan produced close to 500,000 barrels but now its output is limited to 140,000 barrels per day. Oil revenue constituted more than half of the Sudan’s revenue and 90% of its exports.
Per cooperation deals signed between Khartoum and Juba the latter pays a fee to the Sudanese government for the use of its pipelines and oil installations in exporting its crude.
The Central Bank governor stressed that the balance of payment reached a critical stage with imports at $8 billion which is twice export figures of $4.
He also disclosed that Sudan’s gold exports so far stood at $650 million compared to last year which reached $2 billion.
In separate statements, the finance and national economy minister Ali Mahmood Abdel-Rasool revealed that Sudan sells oil for $49 a barrel while buying it for at least $100 adding that part of the subsidy goes to undeserving people which requires restructuring of the subsidy system.
Following the independence of South Sudan in July 2011, Khartoum was forced to introduce a contractionary budget that saw the partial lifting of fuel and food subsidies which triggered rare but small demonstrations across the country.
The government defended the measures saying that the country can no longer afford to pay for these subsidies.
The World Economic Outlook (WEO) released by the International Monetary Fund (IMF) last April Sudan’s economy shrinking by -4.4% last year.
In 2013, Sudan is expected to achieve a 1.2% growth which is higher than the -0.6% projected by the IMF last year. Next year’s GDP is also forecasted to stand at 2.6% which is slightly better than the 2.1% predicted in the IMF last assessment of Sudan’s economy.