World Bank sees southern Sudan growing by 25 per cent next y

World Bank sees southern Sudan growing by 25 per cent next year
(Reuters)

27 November 2005

NAIROBI — The World Bank expects southern Sudan’s economy to expand by 25 per cent in 2006 and maintain double-digit growth for the next few years after a peace deal unlocked billions of dollars in oil revenues.
“At the very least 25 percent in 2006 and double digits for the next 4-5 years if things go well,” Ishac Diwan, the World Bank’s country director for Ethiopia and Sudan, told Reuters yesterday.
“You’re starting from a very low base and you’ve got many resources. The south will receive at least $1.3 billion in oil revenues in 2006,” he added.
Sudan currently produces more than 300,000 barrels of oil a day and plans to produce 500,000 bpd by the end of 2005.
Under a January deal between the government and southern rebels that ended more than two decades of civil war in which two million people were killed, roughly half the oil wealth goes to the south.
Diwan said the World Bank, on behalf of a trust fund managing foreign donations, had signed a $27 million grant with the newly-established government of southern Sudan on Thursday.
The money — $20 million from donors and the rest provided by the new southern administration — is earmarked to buy drugs for clinics, supply schools with textbooks and equipment for government offices. Another grant worth $150 million for roads is expected to be signed next month, he said.
Diwan said most of the south’s projected $1.5 billion budget for 2006 would be spent on developing a vast region of mud villages and thorny bush lacking electricity, roads, piped water, banks, schools and hospitals.
“In my view the budget is too ambitious,” Diwan said. “The ministers are new, they have to put projects together. My recommendation to them would be to take their time, accumulate some reserves for a rainy day.”
With foreign companies from Africa and beyond poised to exploit a surge in post-war demand in sectors ranging from construction and banking to farming, Diwan said the challenge was to encourage growth in the local private sector.
“Most of the $1.5 billion budget will go to contractors -- all this creates demand for the private sector. With support from a good tax regime — 0 per cent for the next two years — the private sector will respond,” Diwan said.“With a bit of attention you will get a middle class very quickly,” he said. “It’s important to create training centres, microfinance and get southerners involved.”
Although the World Bank is in charge of managing the trust fund, Diwan did not expect relations between Sudan and the bank to normalise until the country’s $25 billion debt was restructured and reduced. He said the main obstacle was the conflict raging in Sudan’s western region of Darfur, which is not covered by the north-south peace agreement.
The World Bank quit Sudan more than a decade ago, after the country failed to honour debt repayments.
Source: Khaleej Times news paper 27.11.2005