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 AGREEMENT ON WEALTH SHARING DURING THE PRE-INTERIM AND INTERIM PERIOD
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AGREEMENT ON WEALTH SHARING DURING THE PRE-INTERIM AND INTERIM
PERIOD
1
Naivasha, Kenya: Wednesday, January 7th, 2004.
WHEREAS the Government of the Republic of the Sudan and the Sudan
People's Liberation Movement/Sudan People's Liberation Army (the
Parties)
have been conducting negotiations in Naivasha, Kenya, since 6th
December,
2003, under the auspices of the IGAD Peace mediated Process; and having
taken up the division of wealth in pursuit of a comprehensive
agreement,
that will ensure a just and durable peace in the Sudan;
NOW RECORD THAT they have reached agreement on Wealth Sharing,
covering
the division of oil and non-oil revenues, the management of the oil
sector,
the monetary authority and the reconstruction of the South and other
war-affected areas during the Pre-Interim and Interim Period;
THE PARTIES AGREE AND CONFIRM THAT they are determined to build on
this
important Agreement until a comprehensive peace Agreement is reached.
It is
within this context, that the Parties agree to continue negotiations on
the
remaining outstanding issues on the Conflict Areas and Power Sharing
and
subsequently negotiate a comprehensive ceasefire Agreement and
Implementation Modalities in order to achieve a final comprehensive
Peace
Agreement in the Sudan.
__________________________ __________________________
Hon. Idris Mohamed Abdelgadir Cdr. Nhial Deng Nhial
For: The Government of the Sudan For: The Sudan People's Liberation
Movement/Army
________________________________
WITNESSED BY: Lt. Gen. Lazaro K. Sumbeiywo (Rtd)
Special Envoy IGAD Sudan Peace Process and
On behalf of the IGAD Envoys.
__________________________________________
Framework Agreement on Wealth Sharing During the Pre-Interim and
Interim
Period Between The Government of the Sudan (GOS) And The Sudan
People's
Liberation Movement/Sudan People's Liberation Army
(SPLM/A)
Venue: Lake Naivasha Simba Lodge, Naivasha, Kenya. Date: 7th January,
2004.
WEALTH SHARING
1.0 GUIDING PRINCIPLES IN RESPECT OF AN EQUITABLE SHARING OF COMMON
WEALTH.
1.1 The Parties agree that the guiding principles and provisions below
shall
be the basis for the comprehensive text on Wealth Sharing.
1.2 The wealth of Sudan shall be shared equitably so as to enable each
level
of government to discharge its legal and constitutional
responsibilities and
duties.
1.3 The National Government shall also fulfil its obligation to provide
transfers to the Government of Southern Sudan.
1.4 The sharing and allocation of wealth emanating from the resources
of the
Sudan shall ensure that the quality of life, dignity and living
conditions
of all the citizens are promoted without discrimination on grounds of
gender, race, religion, political affiliation, ethnicity, language, or
region. The sharing and allocation of this wealth shall be based on the
premise that all parts of Sudan are entitled to development.
1.5 The Parties agree that Southern Sudan faces serious needs to: (i)
be
able to perform basic government functions, (ii) build up the civil
administration, and (iii) rehabilitate and reconstruct/construct the
social
and physical infrastructure in a post-conflict Sudan.
1.6 The Parties agree that Nuba Mountains, Southern Blue Nile, Abyei
and
other war affected areas face serious needs to: (i) be able to perform
basic
government functions, (ii) establish and build civil administration and
(iii) rehabilitate and reconstruct/construct the social and physical
infrastructure in a post-conflict Sudan.
1.7 That, without prejudice to the provisions of paragraph 1.3 herein,
Southern Sudan, and those areas in need of construction/reconstruction,
shall be brought up to the same average level of socio-economic and
public
services standard as the Northern states. To achieve these objectives
will
take time and effort to build up local institutional, human, and
economic
capacity. For this purpose, two special funds shall be established as
provided herein.
1.8 That revenue sharing should reflect a commitment to devolution of
power
and decentralisation of decision-making in regard to development,
service
delivery and governance.
1.9 The development of infrastructure, human resources, sustainable
economic
development and the capacity to meet human needs shall be conducted
within a
framework of transparent and accountable government.
1.10 That the best known practices in the sustainable utilization and
control of natural resources shall be followed.
1.11 This Agreement sets out the respective types of income, revenue,
taxes
and other sources of wealth to which the various levels of government
are
entitled.
1.12 The Parties recognize that the National Government, during the
Interim
Period, will need to mobilize additional national resources.
1.13 There is a limit on how much additional national resources can be
mobilized and part of the national needs in a post-conflict Sudan will
have
to be met by external assistance.
1.14 The National Government shall not withhold an allocation due to a
state/region[1] or the Government of Southern Sudan. Any level of
Government
may initiate proceedings in the Constitutional Court should any other
organ
or level withhold monies due to it. The National Government shall make
transfers to the Government of Southern Sudan based on the principles
established.
1.15 In agreeing to these wealth sharing arrangements the Parties
signal to
the international community that it will have to play a strong and
constructive role in providing post-conflict construction/
reconstruction
assistance to Sudan, especially to Southern Sudan and other war
affected and
least developed areas.
1.16 The National Government shall assist the Government of Southern
Sudan,
during the pre-Interim Period, in cooperation with international
organizations, to develop and implement a program for capacity
enhancement
in the South. The highest priority should be public finance and
intergovernmental relations, including expenditure management to ensure
accountability.
2.0 OWNERSHIP OF LAND AND NATURAL RESOURCES
2.1 Without prejudice to the position of the Parties with respect to
ownership of land and subterranean natural resources, including in
Southern
Sudan, this Agreement is not intended to address the ownership of those
resources. The Parties agree to establish a process to resolve this
issue.
2.2. The Parties agree that the regulation, management, and the
process
for the sharing of wealth from subterranean natural resources are
addressed
below.
2.3. The Parties record that the regulation of land tenure, usage and
exercise of rights in land is to be a concurrent competency exercised
at the
appropriate levels of government.
2.4. Rights in land owned by the Government of Sudan shall be
exercised
through the appropriate or designated levels of Government.
2.5. The Parties agree that a process be instituted to progressively
develop and amend the relevant laws to incorporate customary laws and
practices, local heritage and international trends and practices.
2.6 Without prejudice to the jurisdiction of courts, there shall be
established a National Land Commission that shall have the following
functions:
2.6.1 Arbitrate between willing contending Parties on claims over
land,
and sort out such claims.
2.6.2 The party or group making claims in respect of land may make a
claim
against the relevant government and/or other Parties interested in the
land.
2.6.3 The National Land Commission may at its discretion entertain
such
claims.
2.6.4 The Parties to the arbitration shall be bound by the decision
of the
National Land Commission on mutual consent and upon registration of the
award in a court of law.
2.6.5 The National Land Commission shall apply the law applicable in
the
locality where the land is situated or such other law as the Parties to
the
arbitration agree, including principles of equity.
2.6.6 Accept references on request from the relevant government, or
in the
process of resolving claims, and make recommendations to the
appropriate
levels of government concerning:
2.6.6.1 Land reform policies;
2.6.6.2 Recognition of customary land rights and/or law.
2.6.7 Assess appropriate land compensation, which need not
be
limited to monetary compensation, for applicants in the course of
arbitration or in the course of a reference from a court.
2.6.8 Advise different levels of government on how to
co-ordinate
policies on national projects.
2.6.9 Study and record land use practices in areas where
natural
resource exploitation occurs.
2.6.10 The National Land Commission shall be representative
andind ependent. The composition of the membership and terms of
appointment
of the National Land Commission shall be set by the legislation
constituting
it. The Chairperson of the National Land Commission shall be appointed
by
the Presidency.
2.6.11 The National Land Commission may conduct hearings and
formulate its own rules of procedure.
2.6.12 The National Land Commission will have its budget
approved
by the Presidency and will be accountable to the Presidency for the due
performance of its functions.
2.7 In accordance with this Agreement and without prejudice to the
jurisdiction of courts, there shall be established a Southern Sudan
Land
Commission which shall have the following functions:
2.7.1 Arbitrate between willing contending Parties on claims
over
land, and sort out such claims.
2.7.2 The party or group making claims in respect of land may
make a
claim against the relevant government and/or other Parties interested
in the
land.
2.7.3 The Southern Sudan Land Commission may entertain such claims at
its
discretion.
2.7.4 The Parties to the arbitration shall be bound by the Southern
Sudan
Land Commission's decision on mutual consent and upon registration of
the
award in a court of law.
2.7.5 The Southern Sudan Land Commission shall apply the law
applicable in
the locality where the land is situated or such other law as the
Parties to
the arbitration agree, including principles of equity.
2.7.6 Accept references on request from the relevant government, or
in the
process of resolving claims, and make recommendations to the
appropriate
levels of government concerning:
2.7.6.1 Land reform policies;
2.7.6.2 Recognition of customary land rights and/or law.
2.7.7 Assess appropriate land compensation, which need not be
limited
to monetary compensation, for applicants in the course of arbitration
or in
the course of a reference from a court.
2.7.8 Advise different levels of government on how to co-ordinate
policies on GOSS projects.
2.7.9 Study and record land use practices in areas where natural
resource exploitation occurs.
2.7.10 The Southern Sudan Land Commission shall be representative
and
independent. The composition of the membership and terms of appointment
of
the Southern Sudan Land Commission shall be set by the legislation
constituting it. The Chairperson of the Southern Sudan Land Commission
shall
be appointed by the President of the Government of Southern Sudan.
2.7.11 The Southern Sudan Land Commission may conduct hearings
and
formulate its own rules of procedure.
2.7.12 The Southern Sudan Land Commission shall have its budget
approved by the Government of Southern Sudan and shall be accountable
to the
President of the Government of Southern Sudan for the due performance
of its
functions.
2.8 The National Land Commission and the Southern Sudan Land
Commission
shall co-operate and co-ordinate their activities so as to use their
resources efficiently. Without limiting the matters of coordination,
the
National Land Commission and the Southern Sudan Land Commission may
agree:
a) to exchange information and decisions of each Commission;
b) that certain functions of the National Land Commission,
including
collection of data and research, may be carried out through the
Southern
Sudan Land Commission;
c) on the way in which any conflict between the findings or
recommendations of each Commission may be resolved.
2.9 In the case of conflict between the findings or recommendations of
the
National Land Commission and the Southern Sudan Land Commission, which
cannot be resolved by agreement, the two Commissions shall reconcile
their
positions. Failure to reconcile, the matter shall be referred to the
Constitutional Court.
3.0 OIL RESOURCES
A. Guiding Principles for the management and development of the
petroleum
sector
3.1 The Parties agree that the basis for an agreed and definitive
framework
for the management of the development of the petroleum sector during
the
Interim Period shall include the following:
3.1.1 Sustainable utilization of oil as a non-renewable natural
resource
consistent with:
a) the national interest and the public good;
b) the interest of the affected states/regions;
c) the interests of the local population in affected areas;
d) national environmental policies, biodiversity conservation
guidelines, and cultural heritage protection principles.
3.1.2 Empowerment of the appropriate levels of government to develop
and
manage, in consultation with the relevant communities, the various
stages of
oil production within the overall framework for the management of
petroleum
development during the Interim Period.
3.1.3 Give due attention to enabling policy environment for the flow
of
foreign direct investment by reducing risks associated with
uncertainties
regarding the outcome of the referendum on self-determination at the
end of
the Interim Period.
3.1.4 A stable macroeconomic environment that emphasizes stability
of the
petroleum sector.
3.1.5 Persons enjoying rights in land shall be consulted and their
views
shall duly be taken into account in respect of decisions to develop
subterranean natural resources from the area in which they have rights,
and
shall share in the benefits of that development.
3.1.6 Persons enjoying rights in land are entitled to compensation
on
just terms arising from acquisition or development of land for the
extraction of subterranean natural resources from the area in respect
of
which they have rights.
3.1.7 The communities in whose areas development of subterranean
natural
resources occurs have the right to participate, through their
respective
states/regions, in the negotiation of contracts for the development of
those
resources.
3.1.8 Regardless of the contention over the ownership of land and
associated natural resources, the Parties agree on a framework for the
regulation and management of petroleum development in Sudan during the
Interim Period.
B. National Petroleum Commission (NPC)
3.2 The Parties agree that an independent National Petroleum Commission
(NPC) shall be established during the Pre-Interim Period and its
decisions
shall be by consensus.
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Re: AGREEMENT ON WEALTH SHARING DURING THE PRE-INTERIM AND INTERIM PERIOD (Re: nada ali)
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3.3 Taking into account the provisions elsewhere in this Agreement, the
NPC
shall be constituted as follows:
a) The President of the Republic and President of the GOSS as
Co-chairs
and permanent members;
b) Four (4) permanent members representing the National Government;
c) Four (4) permanent members representing the GOSS; and
d) Not more than three (3) representatives of an oil producing
State/Region in which petroleum development is being considered,
non-permanent members.
3.4 The NPC shall have the following functions:
3.4.1 Formulate public policies and guidelines in relation to the
development and management of the petroleum sector consistent with
paragraph
3.1.1.
3.4.2 Monitor and assess the implementation of those policies to
ensure
that they work in the best interests of the people of Sudan.
3.4.3 Develop strategies and programs for the petroleum sector.
3.4.4 Negotiate and approve all oil contracts for the exploration and
development of oil in the Sudan, and ensure they are consistent with
the
NPC's principles, policies and guidelines.
3.4.5 Develop its internal regulations and procedures.
3.5 In performing the functions referred to in paragraph 3.4 above, the
NPC
shall take into account relevant considerations, including the
following:
3.5.1 The extent to which the contract provides benefits to local
communities affected by the development.
3.5.2 The extent to which the views of the state/region and the
affected
groups are incorporated in the proposed contracts.
3.5.3 If the NPC decides to approve the contract, persons holding
rights
in land who are aggrieved by the decision shall seek relief through
arbitration or in a court of law.
3.5.4 If the non-permanent members of the NPC representing the oil
producing State/Region collectively disagree with the decision of the
NPC to
approve the contract related to their State/Region, the National
Minister of
Petroleum shall not sign the contract and shall refer the matter to the
Council of States/Regions. If the Council of States/Regions rejects the
objection by two-thirds majority, the National Minister of Petroleum
shall
sign the contract. If the Council of States/Regions does not reject the
objection by two-thirds majority within 24 sitting days of receiving
it, the
Council of States/Regions shall remit the objection within that period
and
by two-thirds majority to a mechanism established by the Council to
arbitrate on the objection. The arbitration decision shall be made
within
six calendar months of referral to arbitration. The arbitration
decision
shall be binding.
3.5.5. If the NPC approves the contract the National Minister of
Petroleum
shall sign the contract on behalf of the Government of the Sudan.
3.5.6 In performing functions 3.4.1, 3.4.2, 3.4.3, and 3.4.5 of
paragraph
3.4, the NPC shall include only its permanent members.
3.5.7 In performing function 3.4.4 of paragraph 3.4, the NPC shall
include
its permanent members and representatives of oil producing State/Region
in
which contracts for the exploration and development of the petroleum
are
being negotiated and considered for approval.
4.0 EXISTING OIL CONTRACTS
4.1 The SPLM shall appoint a limited number of representatives to have
access to all existing oil contracts. The representatives shall have
the
right to engage technical experts. All those who have access to the
contracts will sign confidentiality agreements.
4.2 Contracts shall not be subject to re-negotiation.
4.3 If contracts are deemed to have fundamental social and
environmental
problems the Government of Sudan will implement necessary remedial
measures.
4.4 The Parties agree that "existing oil contracts" mean contracts
signed
before the date of signature of the comprehensive Peace Agreement.
4.5 Persons whose rights have been violated by oil contracts are
entitled to
compensation. On the establishment of these violations through due
legal
process the Parties to the oil contracts shall be liable to compensate
the
affected persons to the extent of the damage caused.
5.0 GUIDING PRINCIPLES FOR SHARING OIL REVENUE
5.1 The Parties agree that the basis for an agreed and definitive
framework
for the sharing of the wealth emanating from oil resources of Southern
Sudan
shall include the following:
5.1.1 The framework for sharing wealth from the extraction of
natural
resources should balance the needs for national development and
reconstruction of Southern Sudan.
5.2 The Parties agree that a formula for sharing the revenue from oil
resources shall be as set forth in this Agreement.
5.3 For the purposes of this Agreement 'Net revenue from oil' shall be
the
sum of the net revenue
(i) from exports of government oil and
(ii) from deliveries of government oil to the refineries. Exports shall
be
valued at the actual Free on Board (FOB) export prices less the charges
to
deliver the oil to any export destination including pipeline and
management
charges. Oil delivered to the refinery shall be valued at the average
FOB
export prices during the last calendar month in which there was an
export
sale less the charges that would have been incurred to deliver the oil
to
any export destination including pipeline and management charges.
5.4 An Oil Revenue Stabilization Account shall be established from
government oil net revenue derived from actual export sales above an
agreed
benchmark price. The benchmark price will be established annually as
part of
the national budget reflecting changing economic circumstances.
5.5 The Parties agree that at least two percent (2%) of oil revenue
shall be
allocated to the oil producing states/regions in proportion to output
produced in such states/regions.
5.6 After the payment to the Oil Revenue Stabilization Account and to
the
oil producing states/regions, fifty percent (50%) of net oil revenue
derived
from oil producing wells in Southern Sudan shall be allocated to the
Government of Southern Sudan (GOSS) as of the beginning of the
Pre-Interim
Period and the remaining fifty percent (50%) to the National Government
and
States in Northern Sudan.
5.7 A Future Generation Fund shall be established once national oil
production reaches two (2) million barrels per day. This production
criterion may, as part of the National Government's normal budget
process,
be reduced down to one (1) million barrels per day.
5.8 The Parties agree that all funds/special accounts referred to in
this
Agreement and future accounts shall be on-budget operations.
6 SHARING OF NON-OIL REVENUE
6.1 The National Government shall be entitled to legislate, raise and
collect the below-listed taxes and to collect revenue from these
sources:
6.1.1 National Personal Income Tax;
6.1.2 Corporate or Business Profit Tax;
6.1.3 Customs Duties and import taxes; and
6.1.4 Sea-ports and Airports Revenue;
6.1.5 Service charges;
6.1.6 Oil revenues as set out herein;
6.1.7 National Government Enterprises and projects;
6.1.8 VAT or GST or other retail taxes on goods and services;
6.1.9 Excise Tax;
6.1.10 Any other tax as agreed upon in these negotiations;
6.1.11 Loans, including borrowing from the Central Bank and the
public.
6.2 The Government of Southern Sudan shall be entitled to revenue from
the
following sources and to raise and collect the below-listed taxes:
6.2.1 The National revenue allocation to the Government of Southern
Sudan
and States/Regions from the National Revenue Fund as set forth in
section
7.0 of this Agreement;
6.2.2 Revenue from any of the sources listed as state/region revenue
sources referred to in paragraph 6.3 herein;
6.2.3 The Southern Sudan Reconstruction and Development Fund (SSRDF);
6.2.4 Oil revenues as is set out in this Agreement;
6.2.5 Southern Sudan Government Taxes, which do not encroach on the
exclusive National Government taxing powers or which are contemplated
in the
Power Sharing Protocol;
6.2.6 Service charges of the Government of Southern Sudan;
6.2.7 Government of Southern Sudan enterprises and projects;
6.2.8 Grants in Aid and Foreign Aid;
6.2.9 Taxes and levies on small and medium business;
6.2.10 Excise taxes on goods within the region deemed to be luxury
consumables;
6.2.11 Southern Sudan Personal Income Tax;
6.2.12 Any other taxes as may be agreed to from time to time;
6.2.13 Loans and Borrowing in accordance with the Monetary Policy,
Banking, Currency and Borrowing sections of this Agreement.
6.3 The states/regions shall be entitled to raise and collect the
below-listed taxes and revenue from the below listed sources:
6.3.1 State/Regional Land and property tax and royalties;
6.3.2 Service charges for state/regional services;
6.3.3 Licences;
6.3.4 State/Regional Personal Income Tax;
6.3.5 Levies on Tourism;
6.3.6 State/Regional share of oil Revenues as is set out in
paragraphs 5.5
and 5.6 of this Agreement;
6.3.7 State/Regional Government projects and state/regional nature
parks;
6.3.8 Stamp duties;
6.3.9 Agricultural Taxes;
6.3.10 Grants in Aid and Foreign Aid through the National Government
and
the GOSS;
6.3.11 Excise taxes;
6.3.12 Border Trade charges or levies in accordance with National
Legislation;
6.3.13 Other state/region taxes which do not encroach on national or
Southern Sudan Government taxes;
6.3.14 Any other tax as may be agreed to from time to time; and
6.3.15 Loans and borrowing in accordance with the Monetary Policy,
Banking, Currency and Borrowing sections of this Agreement.
7 EQUALIZATION AND ALLOCATION TO THE NATIONAL, SOUTHERN SUDAN AND
STATE/REGIONAL LEVELS OF GOVERNMENT IN RESPECT OF REVENUE COLLECTED
NATIONALLY.
7.1. All revenues collected nationally for or by the National
Government
shall be pooled in a National Revenue Fund (NRF) administered by the
National Treasury. Such Fund shall embrace all accounts and sub-funds
into
which monies due to the Government are collected, reported or
deposited.
7.2 All the revenues and expenditures of the Government will be
on-budget
operations and made public.
7.3 Notwithstanding the provisions of paragraphs 5.6, 7.1 and 13.1, the
National Government shall allocate fifty percent (50%) of the national
non-oil revenue collected in Southern Sudan, as provided for herein
under
paragraph 6.1 above, to the GOSS to partially meet the development cost
and
other activities during the Interim Period. The Parties agree to review
this
arrangement, at mid-term of the Interim Period, with the view of the
National Government allocating additional resources to the Government
of
Southern Sudan.
7.4 As a result of the allocation arrangements in paragraph 7.3 above,
the
Parties agree to appeal to the international and donor community to
help the
Government of Southern Sudan by providing post-conflict reconstruction
assistance especially at the beginning of the transition.
7.5 The states/regions and the Government of Southern Sudan shall
retain and
dispose of such other income raised and collected under their own
taxing
powers.
8. FISCAL AND FINANCIAL ALLOCATION AND MONITORING COMMISSION (FFAMC)
8.1 To ensure transparency and fairness both in regard to the
allocation of
nationally collected funds to the states/regions and the Government of
Southern Sudan, a Fiscal and Financial Allocation and Monitoring
Commission
shall be established. This body shall be comprised of experts nominated
by
the various states/regions, the Government of Southern Sudan and the
National Government. Decision making arrangements of the FFAMC shall be
as
agreed to by the Parties.
8.2 The FFAMC shall undertake the following duties and
responsibilities:
8.2.1 Monitor and ensure that equalization grants from the National
Revenue Fund are promptly transferred to respective levels of
government;
8.2.2 Ensure appropriate utilization and sharing of financial
resources;
8.2.3 Ensure that resources allocated to war affected areas are
transferred in accordance with agreed upon formulae; and
8.2.4 Ensure transparency and fairness in the allocation of funds to
the
GOSS and states/regions according to established ratios or percentages
stipulated in this Agreement.
8.3. The FFAMC shall be composed of representatives from the National
Government and the Government of Southern Sudan and States/Regions as
follows:
a) Three Representatives of the National Government;
b) Three Representatives of the Government of Southern Sudan (GOSS);
c) All Finance Ministers in all States/Regions of Sudan
8.4 The Chairperson of the FFAMC shall be appointed by the
Presidency.
8.5 The FFAMC shall work out its own rules and procedures, which
shall be
approved by the Presidency.
9.0 INTERSTATE COMMERCE
9.1 There shall be no legal impediment to interstate commerce or the
flow
of goods and services, capital, or labour between the states/regions.
10.0 GOVERNMENT LIABILITIES
10.1 Any debts/liabilities incurred by any level of government shall be
the
responsibility of that level of government.
11.0 DIVISION OF GOVERNMENT ASSETS
11.1 There shall be a fair and equitable division of government assets.
An
asset shall in the first instance be allocated to the level of
government
responsible for the function in respect of which the asset is related
(e.g.
school buildings to the level of government responsible for education).
In
the event of a dispute, the Parties agree that such dispute shall be
referred to a committee comprising a representative of each of the
Parties
involved in the dispute and a mutually agreed expert.
12.0 ACCOUNTING STANDARDS AND PROCEDURES AND FISCAL ACCOUNTABILITY
12.1 All levels of government shall comply with generally accepted
accounting standards and procedures. There shall be institutions at the
state/region, Government of Southern Sudan and National levels to
ensure
that funds are distributed according to the agreed government budget,
and
properly expended having regard to value for money.
12.2 To ensure the effective operation of such institutions, there
shall be
independent National and Southern Sudan Audit Chambers, which shall
have
responsibility for the functions referred to above. The National Audit
Chamber shall set auditing standards. Appointments to the National
Audit
Chamber shall be made by the Presidency and confirmed by the National
Assembly.
12.3 All levels of government shall hold all income and revenue
received by
it in public accounts and subject to public scrutiny and
accountability.
13 FINANCING THE TRANSITION
13.1 The National Government shall assist, during the Pre-Interim
Period to
the extent that it is able, the SPLM/A in the establishment of the new
transitional governments at the State/Regional level and the Government
of
Southern Sudan. The Government of Southern Sudan shall meet the direct
costs
of establishing these levels of government, with the assistance from
the
international community.
13.2. Upon signature of a comprehensive Peace Agreement, the Parties
shall
establish a Joint National Transition Team to undertake the following:
13.2.1 Prepare budget estimates for the establishment of
Governments at
the National, Southern Sudan, and state/regional levels as provided for
by
the Peace Agreement;
13.2.2 Organize and prepare relevant documents for the donor
conference,
including the agenda of the conference, letters of invitations and be a
secretariat to the donors' conference;
13.2.3 Develop fund raising strategies, and assist in the
identification
of potential sources of funds necessary for a smooth and timely
commencement
of the Interim Period.
14.0 MONETARY POLICY, BANKING, CURRENCY AND BORROWING
A. MONETARY POLICY, BANKING AND CURRENCY
14.1. The Parties agree, consistent with the Machakos Protocol of
20th
July 2002, to have a dual banking system in Sudan during the Interim
Period.
An Islamic banking system shall operate in Northern Sudan and
conventional
banking system shall operate in Southern Sudan.
14.2. The Parties agree that conventional banking facilities are
urgently
needed in Southern Sudan. The Parties therefore agree to establish,
during
the Pre-Interim period, the Bank of Southern Sudan (BOSS) as a branch
of
Central Bank of Sudan (CBOS) consistent with paragraph 14.1 above.
14.3. The Parties agree to restructure, during the Pre-Interim
Period, the
CBOS so as to reflect the duality of the banking system in Sudan. The
CBOS
shall therefore use and develop two sets of banking instruments, one
Islamic
and the other Conventional, to regulate and supervise the
implementation of
a single monetary policy through: (i) an Islamic financing window in
Northern Sudan under a deputy governor of CBOS using Islamic financing
instruments to implement the national monetary policy in Northern
Sudan; and
(ii) the Bank of Southern Sudan (BOSS), headed by a deputy governor of
CBOS,
to manage the conventional window using conventional financing
instruments
in implementing the same national monetary policy in Southern Sudan.
14.4. The CBOS shall be responsible for the conduct of monetary
policy.
All banking institutions shall be subject to the rules and regulations
set
by the CBOS.
14.5. The primary responsibility and mandate of the CBOS shall be
ensuring
price stability, maintaining stable exchange rate, sound banking system
and
issuance of currency. The monetary policy shall be carried out
accordingly
relying primarily on market-based instruments instead of administrative
allocation of credit.
14.6. The CBOS shall be fully independent in its pursuit of monetary
policy.
14.7. The Governor of CBOS and his/her two deputies shall be
appointed by
the Presidency. The Governor of CBOS shall appoint in consultation with
his/her two deputies other senior officers within the Central Bank.
14.8. The Parties agree to establish, during the Pre-Interim Period,
an
independent Board of Directors (BOD). Decisions of BOD on matters that
may
affect adversely the interest of either Party to this Agreement shall
be by
consensus. The BOD shall be responsible to the Presidency on the
accountability of the CBOS and shall consist of nine (9) members as
follows:
a) Governor of CBOS ( Chairperson) and his/her two deputies and;
b) Six highly qualified Sudanese to be appointed by the Presidency
taking into account the agreed formula in the Power Sharing Protocol
for the
institutions of the National Government.
14.9 The CBOS shall adopt a program to issue a new currency as soon
as is
practical during the Interim Period. The design of the new currency
shall
reflect the cultural diversity of Sudan. Until a new currency has been
issued with the approval of the Parties on the recommendations of the
CBOS,
the circulating currencies in Southern Sudan shall be recognised.
14.10 The BOSS shall be responsible for chartering and supervising
financial institutions in Southern Sudan.
14.11 All financial institutions shall be subject to internationally
recognized regulatory and prudential standards for Islamic and
conventional
finance, as set by the CBOS.
14.12 All financial institutions shall be bound to implement monetary
policies set by the CBOS.
B. BORROWING:
14.13. The Government of Southern Sudan and the states/regions may
borrow
money based on their respective credit worthiness. Neither the National
Government nor the CBOS shall be required or expected to guarantee
borrowing
by sub-national governments.
14.14 The GOSS and all sub-national governments shall report
financial and
fiscal data to the relevant National Government bodies for statistical
purposes.
14.15 The Government of Southern Sudan and the states/regions may
borrow
money from foreign sources based on their respective credit worthiness.
14.16 Foreign borrowing by all sub-national governments shall be done
in a
manner that does not undermine national macroeconomic policies and
shall be
consistent with the objective of maintaining external financial
viability.
All sub-national governments' foreign borrowing transactions shall
conform
to the CBOS specifications.
15 RECONSTRUCTION AND DEVELOPMENT FUNDS
A. Southern Sudan Reconstruction and Development Fund (SSRDF)
15.1. There shall be established a Southern Sudan Reconstruction and
Development Fund (SSRDF) to solicit, raise and collect funds from
domestic
and international donors and disburse such funds for the reconstruction
and
rehabilitation of the infrastructure of the South, for the resettlement
and
reintegration of internally and externally displaced persons, and to
address
past imbalances in regional development and infrastructure.
15.2. A monitoring and evaluation system shall be established to ensure
accountability, transparency, efficiency, equity and fairness in the
utilization of resources.
15.3. The Government of Southern Sudan shall be responsible for
expenditure
from the fund and shall be entitled to raise additional funds by way of
donation from foreign States, multilateral organizations, or other
bodies
for the purposes of the reconstruction and development of the southern
states/regions. The Fund shall be transparently administered and
professionally managed subject to an oversight committee appointed by
the
Government of Southern Sudan but having on it a representative of the
National Ministry of Finance and of the National Audit Chamber.
B. National Reconstruction and Development Fund (NRDF)
15.4. There shall be established by the Treasury, a National
Reconstruction
and Development Fund (NRDF) having the mission of developing the war
affected areas and least developed areas outside Southern Sudan and a
steering committee with appropriate representation from such areas. A
member
of the Southern Sudan Ministry of Finance shall be a member of the
Steering
Committee. A report on the income, expenditure and the projects
supported by
the fund shall be placed before the National Assembly and the Council
of
States/Regions, which shall exercise oversight over the Fund.
C. Multi-Donor Trust Funds
15.5. The Parties recognize the need to establish, during the
Pre-Interim
Period, two Multi-Donor Trust Funds (MDTFs), one for the National
Government
and one for the Government of Southern Sudan to support urgent
recurrent and
investment budget costs under clearly stated criteria of eligible
financing
components. The Trust Funds shall be operational for the Pre-Interim
Period,
and shall thereafter be transformed into (i) one MDTF dedicated to the
Southern Sudan Reconstruction and Development Fund (the "SRRDF"); and
(ii)
one MDTF dedicated to the National Reconstruction and Development Fund
(the
"NRDF").
15.6. The MDTFs shall commence immediately to support, among other
things,
priority areas of capacity building and institutional strengthening and
quick start/impact programs identified by the Parties.
15.7. Both funds shall support urgent recurrent and investment budget
costs
under clearly stated criteria of eligible financing components, and
both
shall have the right to solicit, raise and collect funds from foreign
donors.
15.8. All trust funds shall report the flow of funds to the CBOS.
15.9. To ensure proper accountability for funds disbursed through the
MDTFs
the Parties shall cause audits to be performed on funds used within six
(6)
months of the close of the recipient's financial year.
15.10. During the Pre-Interim as well as the Interim Period, funds may
be
channeled directly to finance activities beneficial to the National
Government or the GOSS as the case may be.
15.11. During the Pre-Interim Period, the flow of foreign funds shall
be
through special accounts established in the Bank of Sudan for areas
outside
Southern Sudan and for Southern Sudan in a commercial bank in Southern
Sudan
until the Bank of Southern Sudan is established and operational. For
the
Interim Period: (i) the flow of foreign funds for the National Fund
will go
through the CBOS; and (ii) for the Southern Fund, the foreign funds
will be
disbursed through a special account at the Bank of Southern Sudan
designated
for the Government of Southern Sudan; or through arrangements as
specified
in the MDTF.
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