Sudan Parliament Approves 2011 Budget, Says Can Be Changed After Ballot
Sudan’s parliament today approved the country’s budget for next year, which foresees a deficit of 3.2 percent of economic output, Finance Minister Ali Mahmoud Abdel Rasoul said.
The budget targets economic growth of 5 percent, similar to this year’s figure, and an inflation rate of 12 percent, Abdel Rasoul told reporters today at the national assembly in Omdurman, a suburb of the capital, Khartoum. Oil output is predicted at between 480,000 and 500,000 barrels per day, little changed from this year, and the price of the Nile and Dar blends is forecast at about $60 a barrel, he said.
The country plans to finance the budget gap by selling Islamic bonds, known as Sukuk, among other domestic borrowing, and by external loans of 4.4 billion Sudanese Pounds ($1.85 billion) from China, Arab nations, India and other countries, Abdel Rasoul said.
Sudan relies on oil exports for most of its foreign currency earnings. Output of 490,000 barrels a day makes it sub- Saharan Africa’s third-largest producer, according to the BP Statistical Review of World Energy. Most of the oil is pumped in Southern Sudan, which is due to hold a referendum in January on whether to declare independence.
The country is working on attracting foreign investors into non-oil sectors such as gold mining and agriculture, in a bid to diversify the economy, Abdel Rasoul said.
Sudan will soon pass legislation easing conditions for foreign investors, President Umar Al-Bashir told parliament Oct. 12. The country expects more than $3 billion of foreign investment in non-oil industries next year, up from $2 billion in 2010, Abdel Rasoul said.
“We expect after the referendum that foreign direct investment will resume,” Central Bank Governor Sabir Hassan said in an interview today. Currently, it’s “almost halted because of political uncertainties,” he said.
Hassan last week announced plans to raise $600 million from the sale of three-year local-currency Islamic bonds by the end of this year, backed by the government’s share in the Khartoum Refinery. The first tranche of $200 million is “fully subscribed,” he said.
Sudan will sell more of the securities next year “if needed,” Abdel Rasoul said. “We have the ability to issue more Sukuk backed by other assets,” he said.
While the budget was drafted for a united Sudan, it could be amended if the oil-rich southern region votes to secede in January, Abdel Rasoul said.
The independence referendum is a key component of a 2005 peace agreement which ended a two-decade civil war between Sudan’s Muslim north and the south, where Christianity and animist beliefs dominate. It would allow a six-month period between a vote for independence and its declaration.
“In those six months we can prepare another budget,” Abdel Rasoul said.
A study by the Washington-based National Democratic Institute published Oct. 20 showed a majority of Southern Sudanese favoring independence, while the Sudan government is campaigning for voters in the region to choose unity.
Northern Sudan will not lose all its current revenue from oil if the south secedes, as a new agreement must be reached on revenue sharing, Hassan told reporters today. Under the peace agreement, the two regions currently split revenue from oil pumped in the south. The north produces 25 to 30 percent of the country’s total output, Hassan said.
Sudan’s only oil refineries are also in the north, with the largest, Khartoum Refinery, a joint venture of the government and China National Petroleum Corp., processing as much as 100,000 barrels of oil a day. All crude exports, including those from the landlocked south, pass through a pipeline running north from the oilfields to Port Sudan on the Red Sea.