A WORLD BANK COUNTRY STUD' PU B-4528 -v SUDAN (- w) Pricing Policies and Structural Balances 0036 rW COPY l) A WORLD BANK COUNTRY STUDY SUDAN Pricing Policies and Structural Balances The World Bank Washington, D.C., U.S.A. Copyright (© 1985 The International Bank for Reconstruction and Development/THE WORLD BANK 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. All rights reserved Manufactured in the United States of America First printing October 1985 World Bank Country Studies are reports originally prepared for internal use as part of the continuing analysis by the Bank of the economic and related conditions of its developing member countries and of its dialogues with the governments. Some of the reports are published informally with the least possible delay for the use of govern- ments and the academic, business and financial, and development communities. Thus, the typescript has not been prepared in accordance with the procedures appropriate to formal printed texts, and the World Bank accepts no responsibility for errors. The publication is supplied at a token charge to defray part of the cost of manufacture and distribution. The designations employed, the presentation of material, and any maps used in this document are solely for the convenience of the reader and do not imply the expression of any opinion whatsoever on the part of the World Bank or is affiliates concerning the legal status of any country, territory, city, area, or of its authorities, or concerning the delimitation of its boundaries or national affiliation. The most recent World Bank publications are described in the annual spring and fall lists; the continuing research program is described in the annual Abstracts of Current Studies. The latest edition of each is available free of charge from the Publications Sales Unit, Department T, The World Bank, 1818 H Street, N.W, Washington, D.C. 20433, U.S.A., or from the European Office of the Bank, 66 avenue d'1ena, 75116 Paris, France. Library of Congress Cataloging-in-Publication Data Main entry under title: Sudan : pricing policies and structural balances. (World Bank country study) 1. Price regulation--Sudan. 2. Sudan--Economic conditions. 3. Sudan--Economic policy. I. Title. II. Series. HB236.S83S83 1985 338.5'2'09624 85-20366 ISBN 0-8213-0621-9 - i.ii - SUDAN PRICING POLICIES AND STRUCTURAL BALANCES This report is based on findings of a mission to the Sudan in January/February 1983 consisting of: John R. Hansen, Chief of Mission Ingrid Foik, Livestock and Southern Region Agriculture Isabel Guerrero, Joint Sector Resource Mobilization Thorvald G. Moe, Macro-Economics Robert B. Myers, Resource Mobilization Inderjit Singh, Agriculture The mission benefited from contributions by Nafsika C. Stavrou on external debt; Naimeh Hadjitarkhani and Louise M. Gariepy assisted with the statistical work. The World Bank received valuable comments and suggestions on an earlier draft of this report from His Excellency Hon. Mansour, Minister of Finance and Economic Planning and from a government review team under the chairmanship of Dr. Sayed Zaki. The views expressed in this report, however, are solely the responsibility of the World Bank. The reader should note that much of the data in this report is at least two years out of date. Although the mission took place about two years ago, the data collected at that time were in some respects even then not fully current. There have been important developments in Sudan's economic situation since then which are not covered in this report. Such developments will be covered in future economic reports. It should also be noted that the economic impact of the recent drive towards Islamization in Sudan, which started in late 1983, is not reflected in this report. - iv - ABSTRACT The economy of Sudan suffers from a number of basic structural imbalances. Among the most important is the imbalance between consumption and savings. This fundamental imbalance is closely tied to many others including, for example, those between imports and exports, between investment and domestic savings, between installed physical capacity and management capacity, between external debt service obligations and debt service capacity, and between public expenditure and public revenues. After a brief review of recent economic developments, this study examines the relationship between pricing and other resource allocation policies and the development and resolution of these structural imbalances. The study concludes with an analysis of Sudan's medium-term economic prospects. This analysis indicates that, even with pricing and complementary policies that would lead to strong export growth, elimination of non-essential imports, and restrained consumption -- developments all needed to restore basic economic balances -- the external debt burden is so extraordinarily large that about half the scheduled debt service each year will need to be rescheduled or forgiven if Sudan is to avoid an economic contraction. To carry out this program of economic recovery, major efforts will be required both by Sudan and by the donor community. CURRENCY EQUIVALENTS Currency Unit - Sudanese Pound (LS) LS 1.00 = 100 piasters (pt) = 1,000 milliems (mm) LS 1.00 = US$0.77 US$1.00 = LS 1.30 1/ WEIGHTS AND MEASURES 1 mile (mi) = 1.61 kilometers (km) 1 feddan (fd) = 0.42 hectare (ha) = 1.04 acres (ac) 1 metric ton (mt) = 1.1 short tons (t) = 2204.5 pounds 1 kantar of seed cotton (K) = 143 kilograms (kg) = 315 lb 1 kantar of cotton lint (k) = 50 kg = 110 lb 1 bale of cotton = 191 kg = 420 lb 1 rottle = 0.455 kg = 1.0 lb 1 UK gallon = 4.54 liters (1) = 1.2 US gallons All gallons are UK gallons (equal to 1.2 US gallons). All tons are metric tons. All dollars ($) are United States dollars (US$). Fiscal Year July 1 - June 30 The following conventions are used for years: Fiscal - 1979/80 Calendar - 1980 1/ For a history of recent exchange rate movements, see Annex 1, Table 6.8. - vi - Abbreviations ABS Agricultural Bank of Sudan BOS Bank of Sudan EEC European Economic Community EFF Extended Fund Facility IBS Industrial Bank of Sudan IDA International Development Association IMF International Monetary Fund MEC Military Economic Corporation MOAI Ministry of Agriculture and Irrigation MOFEP Ministry of Finance and Economic Planning NEC National Electricity Coroporation (formerly PEWC) PAPC Public Agricultural Production Corporation PIP Three Year Public Investment Program SDC Sudan Development Corporation SRC Sudan Railways Corporation SNWA Sudanese Nationals Working Abroad WNPC White Nile Petroleum Corporation - vii - PREFACE This economic study focuses on the adjustments that will be required during the coming decade if Sudan is to establish efficient production, a sustainable balance between savings and consumption, and a viable external payments position. The first part summarizes the current economic situation in the Sudan, the major key findings of the report, and the roles that pricing policies and practices have played in the past development of the current economic problems and can play in their future solution. The second part examines the key production problems and potentials of the major economic sectors. The final part focuses on internal and external resource mobilization, a vital issue for Sudan in its process of economic recovery. Since this report was prepared, balance of payments data for 1982/83 have become available which indicate that imports for 1983 fell to around $1,650 million, some $150 million less than had been previously forecast. The implications of this information for the future balance of payments scenario have not been discussed in this report. The fall in imports, and consequent improvement in the resource balance, could clearly, if sustained, have a beneficial impact on the future balance of payments situation of the Sudan. This should be borne in mind, particularly in reading Chapters 6 and 7. - TITA - - ix - SUDAN PRICING POLICIES AND STRUCTURAL BALANCES Table of Contents Page Part I - Macro Background 1. Recent Developments ........ ....... . 1 2. Incentive Patterns and Resource Allocation ......... ... 12 Part II - Structural Rigidities and Production Efficiency 3. Agricultural Sector ................................... 23 4. Industrial Sector ..................................... 43 5. Services Sector ...................................... 55 Part III - Financial Resources 6. Resource Mobilization ................................. 62 7. Balance of Payments Outlook ........................... 80 STATISTICAL ANNEX .................................................. 100 Maps Political Divisions Agriculture Industry and Power Energy Transportation x LIST OF TABLES Page 1.1 Summary of Macro Indicators ......................... 6 3.1 Foreign Exchange Dependence and International Value Added for Selected Crops ........................... 37 5.1 Volume of Transport by Mode ......................... 55 6.1 Sectoral Composition of National Savings and Investment ......... ............................... 63 6.2 Gross Savings and Investment ........................ 64 6.3 Central Government Operations ....................... 65 6.4 Tax Buoyancies ...................................... 66 6.5 Past and Projected Annual Foreign Debt Service Indices .................................. 67 6.6 Projected Changes in Expenditure Structure .... ....... 69 6.7 Projected Gross Savings and Investment .... ........... 71 7.1 Estimated Levels of Commitments ...................... 87 7.2 External MLT Debt ................................... 88 7.3 Balance of Payments .................................. 91 7.4 Key Debt Indicators ................................. 95 LIST OF FIGURES 1.1 External Trade and Gross Domestic Product ........... 7 2.1 Movement of Import-Weighted Exchange Rates .... ....... 13 3.1 Cotton Yields ........ ............................... 24 7.1 Exports of Major Agricultural Commodities .... ........ 81 PART I - MACRO BACKGROUND Chapter 1 RECENT DEVELOPMENTS Overview 1.01 During the past two years, the Government has taken a series of measures to increase export production and to reduce the budgetary deficit. It has also decided to build an export-oriented petroleum pipeline instead of a domestic refinery, and has made progress both in restructuring external debt obligations and in arranging new external assistance 1/. These measures will all contribute significantly to the nation's recovery effort. 1.02 Despite these positive developments, however, Sudan still faces very difficult economic challenges. The economy suffers from major structural imbalances in production, between consumption and savings, between public revenues and expenditure, and between imports and exports. These closely related problems reflect the pricing policies that prevailed during the past decade and the decisions that were made on the basis of these prices. 1.03 Undertaking the necessary structural adjustments would be difficult under the best of circumstances. To do so while servicing debt equal to nearly ten times current export earnings, with imports running three to four times the volume of exports, with a current account deficit well over 10 percent of GDP, with a population growth rate of over 3 percent p.a., and while supporting over half a million refugees from neighboring countries, will be a major challenge. It will require exceptional efforts by the Government, by the international community, and most importantly, by the Sudanese people. The normative macro scenario presented in Part III of this study indicates that an initial compression of real per capita consumption will probably be required during the period 1982/83-84/85 to bring about a better balance between total expenditures and domestic production. 1.04 The extent of the posited reduction in consumption is, however, not large. Assuming that Sudan on its part implements its recovery program with vigor and that Sudan's donors and creditors on their part continue to provide necessary external support for this program, the Bank's scenario holds forth an outlook characterized by resumed real growth in domestic consumption as well as in savings and investment. This growth should be facilitated from 1987/88 onwards by the additional resources which will be made available through petroleum exports. Given the extent of the imbalances to be corrected, however, it needs to be recognized that the modest levels of oil exports expected in the late 1980s will have only a limited impact on the public finances and balance of payments, with the 1/ For a detailed analysis of events prior to the past two years, see the previous IBRD economic report--Sudan: Investing for Economic Stablilization and Structural Change (Report No.3551a-SU), February 16, 1982 (not released for public distribution). -2 - consequence that continuing maximum efforts to raise savings (implying restraints on the growth of consumption) will be necessary throughout the coming decade. 105. The difficulties of reducing the absolute level of per capita real domestic consumption, even temporarily and by a modest amount, should not be underestimated, especially in a country where (a) the average per capita income (about $380) 2/ places it among the low income countries of the world,(b) institutional mechanisms including government taxing machinery and credit institutions are weak, and (c) real incomes can and do easily go "underground" and out of reach of the authorities. The implementation of appropriate resource mobilization policies will thus be a difficult task for the Government. A failure to implement such policies could lead to the reappearance of external payment arrears and disruptions in credit lines and other financing facilities, with immediate adverse consequences for consumption and production. Such an outcome could lead to an unplanned and disruptive compression of consumption, contrary to the situation under a carefully-controlled program of fiscal and monetary restraint. The donor community should, therefore, be mindful of the difficult and narrow path which Sudan is treading and be prepared to adjust its levels of concessionary aid and debt relief to Sudan in the light of changing circumstances and the adequacy of Sudanese efforts to effect the needed structural adjustments. 1.06 The scenario set forth in Chapters 6 and 7 illustrates how these adjustments might be phased over the medium-to-longer term in such a way that the domestic savings rate could reach around 10 percent of GDP by the early 1990s (as compared to nil today), and the resource gap (which recently stood at around 14-15 percent of GDP) could be reduced to 5 percent or less. Such major adjustments should serve to put the country on a much more self-sustaining and viable growth path for the years ahead. External Debt and Aid 1.07 At the time of the last Bank economic report on Sudan, the known stock of external public debt was about $3 billion 3/. By the time of the Consultative Group meeting in January 1983, this figure had risen to about $5 billion. Other obligations such as estimated military debt, obligations with the IMF and arrears on private debt raised the estimated total external debt to well over $7 billion. 1.08 Work since the last Consultative Group has confirmed this estimate. The $2 billion increase in external public debt between the time of the previous report and the present came from additional net medium-and long-term debt disbursements during the period, from additional interest in arrears that became part of the stock, and from better reporting of existing debt obligations. 2/ World Bank, World Development Report 1983, p. 148. 3/ The term "external public debt" in this report refers to public and publicly-guaranteed medium-and long-term debt outstanding and disbursed including arrears unless otherwise indicated. -3- 1.09 Much of the increase was related to relatively hard-term debt, and the estimated average annual debt service obligations through 1985/86 including repurchase with the IMF have risen from $900 million to $1,200 million, which is equivalent to about 85 percent of average annual exports of goods and nonfactor-services for that period. 1.10 Faced with this sharp upward revision of external debt estimates, the Government realized that scheduled debt service payments could not be met without a degree of import compression that would strangle both export production and hopes for economic recovery. It therefore gave high priority during the past year to rescheduling its debt service obligations. A complete rescheduling was arranged of debt to the Paris Club and to the commercial banks. Other arrangements have been made with Arab creditors and Eastern Bloc countries (ref. Chapter 7). 1.11 As a result, Sudan now has a debt service ratio for 1983 equal to about 30 percent of exports, compared to the 90 percent that would have been owed, even if only nominal payments had been made on the outstanding arrears 4/. 1.12 In addition to the debt relief for service payments falling due in 1983, Sudan arranged through the last Consultative Group for new assistance from official sources which, along with commitments already in the pipeline, was expected to result in disbursements totaling about $750 million in 1983. Of this, about 60 percent would be for balance of payments support. Including debt relief, the total financing commitments arranged for 1983 amounted to about $1.7 billion. 1.13 The major progress made towards regularizing external payments for 1983 will be very important to the economic recovery program that the Government presented at the 1983 Consultative Group meeting. Without this financing, the minimum level of imports required to prevent a deterioration of per capita national income could not have been assured, and the export production effort would have been crippled. But in addition to external financing, basic changes in economic policy and structure continue to be required to restore a sustainable balance between imports and exports, thus reducing the level of external financing required to more manageable levels in the longer term. Policy Reform and Economic Recovery 1.14 During the past few years, the Government has made substantial progress in implementing policies that are leading to higher export production and which will gradually result, with additional effort, in improvements in the balance of payments. 4/ All debt service ratios in this report are with respect to exports of goods and non-factor services. This results in lower ratios than the frequently used ratio to goods only; on the other hand, it overstates the burden to the extent that a major share of Sudan's foreign exchange earnings comes from Sudanese working abroad. - 4 - 1.15 Policy Reform: The Government has long recognized the need to stimulate production, particularly of export products, and to constrain consumption. Following an initital stabilization program in 1978, the Government undertook a series of arrangements with the IMF including an Extended Fund Facility for the period 1979/80-1981/82. The current IMF agreement involves a Standby Arrangement for SDR 170 million for 1983. Each of the IMF arrangements has involved measures such as exchange rate adjustments and changes in domestic prices designed to constrain consumption. For example, the price of sugar was raised by over 60 percent in January 1982, and the price of gasoline has more than doubled since 1981. 1.16 These demand-oriented policies have been complemented by supply-side actions, including a progressive refinement of the public investment program through a series of three year rolling plans designed to direct public resources to production-oriented investments with the best potential for foreign exchange earnings in the short term. 1.17 The economic recovery program presented to the last Consultative Group meeting included the most comprehensive statement of economic policy by the Government in recent years 5/. In addition to the standard list of projects, the document included a Tetailed analysis of Sudan's long-term prospects, of the resources likely to be available for the public investment program, and of the policy reforms needed to assure efficient production and improved domestic savings. It should be noted, however, that continuing policy efforts will be required by the Government to attain the desired results. 1.18 In addition to the policy changes noted above, the Government has taken a variety of other measures as part of its effort to carry out the policy action program presented to the last Consultative Group. In the following areas it has: - Monetary and Credit Policies * Introduced a reserve requirement of 10 percent for commercial banks and the Bank of Sudan; * Established an Export/Import Bank to help mobilize and coordinate funding for critical imports and to stimulate exports; * Set strict quantitative controls on credits over LS 150,000; * Prohibited lending except to productive sectors; * Devalued the official exchange rate from LS 0.90/$ to LS 1.30/$. 5/ SUDAN: Prospects, Programmes and Policies for Economic Development, 1982/83-1984/85. Khartoum, Ministry of Finance and Economic Planning, October 1982. -5- - Government Revenues and Expenditures * Undertaken a major study of tax system; * Strengthened controls to reduce tax evasion; * Transferred responsibility for collection of many local taxes to regional authorities; * Closed numerous Sudanese embassies abroad; * Shifted all import taxes from a specific to an ad valorem basis; * Raised the "additional" tax from 10% to 13% on imports. - Foreign Trade Policies * Dropped export taxes on all items except sorghum; * Reduced spraying charges on sorghum in mechanized areas; * Banned the importation of about 40 major commodities including cars and canned foods; * Imposed a requirement of advance deposit with Bank of Sudan of up to 100% for imports; * Launched a study to find ways of improving the flow of worker remittances. These policy changes represent a major effort by Government and should help to assure the success of the economic recovery program. Further policy reforms are suggested in later sections of this report. 1.19 Production: Sudan achieved a major turn-around in cotton production during 1981/82 and 1982/83. Production of seed cotton increased by 51 percent and again by 25 percent in these two years, respectively. This was highly encouraging and confirms the Government's strategy for restoring cotton production, which had fallen by nearly 60 percent during the 1970s. 1.20 As a result of this and other positive developments in the economy since 1980/81, the decline in GDP which the economy had suffered in 1978/79 and again in 1979/80 was reversed. GDP growth of 3-4 percent per year was attained in 1980/81 and 1981/82- - 6 - Table 1.1 SUDAN: Summary of Macro Indicators Item 1970/71 1972/73 1977/78 1980/81 1981/82 1982/83 - (LS millions) - GDP (current market prices) 761 897 2,883 5,432 7,246 9,222 - (US$ millions) - Current Account Balance -46 -11 -494 -917 -1,269 -916 External Public Debt (MLT- Disbursed only) 300 370 1,800 3,100 5,000 5,100 Debt Service Ratio (X) 14 12 14 27 41 41 Cotton Exports (ths bales) 1,500 1,200 749 466 260 630 - (percent of current price GDP) - Imports 17.7 16.6 16.4 21.4 26.6 27.2 Exports 16.2 16.9 8.4 8.1 8.6 11.2 Current Account Bal. -2.1 -0.4 -6.0 -10.6 -15.6 -12.2 Central Government Current Revenues 21.6 19.6 16.6 13.5 12.3 13.4 Current Expenditures 18.5 18.1 15.4 15.5 13.5 12.9 Current Savings 3.1 1.5 1.2 2.1 -1.2 0.6 Development Expenditures 2.3 2.7 6.7 5.3 4.2 4.8 - (Growth rates) - 70/71-81/82 70/71-72/73 72/73-77/78 77/78-82/83 GDP (constant prices) .. -5.2 7.9 0.2 Money Supply 28.1 22.3 28.6 31.6 a/ a/ Covers only the period through 1981/82 because of a change in monetary series (see Annex 1, Table 6.1.). Although cotton production increased in 1982/83, adverse weather conditions, transport problems, and shortages of imported fuel seriously affected production in the rainfed areas, leading to declines of 30 percent in the output of groundnut, 39 percent in sorghum, 40 percent in sesame, 42 percent in gum arabic and 60 percent in millet. With these shortfalls, and with declines in production in other critical sectors (such as industry) that were affected by a severe scarcity of foreign exchange, GDP declines which had been arrested in 1980/81 and 1981/82, reappeared in 1982/83. -7- Figure 1.1 SUDAN: EXTERNAL TRADE AND GROSS DOMESTIC PRODUCT CONSTANT 1980/81 PRI'CES 6S 68 70 72 74 76 78 80 62 -30.0 ' I I I I I I '30.0 6 27.5 27. S a 25.2 IMIPORTS 25.0 LL 22.5 22.5 K 20.0 20.0 Z17.5 I I*.0 j 15 66 677 8 cr ~ ~ ~~~/EXPORTS .-- 00 Wj 5.0 RSUC A . Ot 2.5 REORE0?2.5 66 68 70 72 74 76 78 so082 : FISCAL YEARS Source: Annex 1, Table 2.3 1.21 Balance of Payments: Despite the substantial increase in cotton production in 1981/82, cotton exports suffered an overall decline between 1979/80 and 1981/82 from 969,000 bales to 260,000 bales. The recession in the world market, high levels of cotton stocks in cotton-importing countries, and quality problems with Sudanese cotton were the main factors. The decline in world prices for key export goods--cotton and groundnuts--together with rising import prices, led to a decline in Sudan's net barter terms of trade between 1980 and 1982 of over 30 percent. This compounded the decline of nearly 10 percent in the period 1978-80 that was caused primarily by rising petroleum prices. The overall decline of nearly 40 percent has been a major factor underlying the severity of Sudan's current balance of payments crisis. The income loss due to the terms of trade deterioration was equivalent to around 2 percent of GDP in both 1981/82 and 1982/83. This effectively reduced the real income available for savings. 1.22 The decline in cotton and other exports, the continued rise in imports, and the sharp increase in known debt service obligations contributed to a record current account deficit in 1981/82, estimated at $1.3 billion (15 percent of GDP). On the capital account, disbursements of funds on medium- and long-term commitments from commercial sources -8- virtually disappeared, and with the relative stagnation of disbursements of official aid, the overall disbursements of medium and long term financing were only $410 million in 1981/82, compared to amortization obligations of nearly $500 million (excluding arrears). Unable to meet its full debt service obligations, Sudan had accumulated arrears of about $2.5 billion by January 1983. Except for about $500 million of short term commercial arrears, these arrears were largely cleared up by the major reschedulings that took place in the first quarter of the year. During 1982/83, the increased output in cotton production, together with Government's strenuous efforts to constrain imports, led to a sharp decline in the current account deficit which fell to $915 million or 12 percent of GDP in current prices. Government Budget 1.23 Internal Demand and Savings: High levels of borrowing from the Bank of Sudan to cover Government's deficit spending created major inflationary pressures in Sudan during the past decade. This excess demand, which could not be satisfied from domestic production, led to the sharp increase in imports and to the current account deficit noted above (Table 1.1), and thus to the pressures on the exchange rate in past years. Recognizing the adverse effects of these developments, the Government has sought to reduce public sector borrowing, an effort which has met with substantial success during 1982/83, at least as far as the Central Government is concerned. 1.24 The demand management and resource mobilization measures taken during recent years appear to have slowed and perhaps reversed the decline in Central Government revenues, which fell from 20 percent of GDP in the early 1970s to 14 percent by 1979/80. At the same time, the changes have introduced more elasticity in the structure of revenues. The Government has increased tax revenues through a variety of measures. Import taxes are now calculated on the basis of the LS 1.30 per dollar rate instead of the LS 0.50 rate that was used throughout the period of devaluation from 50 to 80 to 90 piasters per dollar. Income tax collections have been increased by over 200 percent since 1979/80, compared to an overall increase in tax revenues of 60 percent. The increased role of direct taxes represents a critical structural change in the tax system which should improve the basic elasticity of tax revenues (ref. Chapter 6). 1.25 Total government expenditures (including those for development) have been between 20 and 24 percent of GDP for a number of years, a pattern consistent with average levels in Sub-Saharan Africa. Sudan has taken measures in recent years to control expenditures, including the virtual elimination of direct fiscal subsidies and revisions of the public investment program. 1.26 The Government raised sharply the prices to consumers of all major consumption goods including wheat, bread, sugar and petroleum during 1981/82 and 1982/83, thereby reducing and in most cases eliminating budgetary subsidies. (Economic subsidies deriving from importing at an official exchange rate which does not reflect the true scarcity value of foreign exchange still existed by the end of 1982/83, however.) The public investment program has been scaled down substantially from previous plans to conform with projected resource availabilities. -9- 1.27 Sudan's efforts to control expenditures and raise revenues have tended to improve the Government's overall budgetary position in certain years. The central government gross financing requirement, which had jumped from 4 percent of GDP to in 1975/76 to about 9 percent in 1978/79 with the full impact of the major revision of public sector salaries that year, rose further to nearly 10 percent in 1980/81. Serious efforts by Government to implement the fiscal recovery programs which it has agreed to with the IMF are gradually beginning to take effect. As a result, the overall financing requirement fell to about 6 percent of GDP in 1982/83. This decline, together with increased borrowing from abroad, reduced the requirements for central bank borrowing and thus the rate of monetary expansion, which fell from 42 percent in 1980/81 to about 25 percent in 1981/82. Substantially increased direct taxes, which are borne primarily by the more affluent, together with moves to reduce the price controls that lead to black market profits for the trading class, should also help to improve the nation's balance of payments position by dampening import demand. 1.28 A Military Economic Board (MEB) was established in April 1982. To date the assets consist primarily of existing military and parastatal plants whose ownership has been transferred to the MEB. At the time of writing the MEB had established a well-defined managerial structure, had substantially improved the operations of several entities and seemed to be taking a serious, responsible approach to its work. However, unless managed in careful accordance with clear policy guidelines regarding pricing, borrowing, and budgetary support, however, the MEB could potentially lead to a reversal of overall progress in fiscal and economic management, diverting government resources from the public investment program and driving private sector enterprise out of business (where both are competing) through underpricing of goods and services (ref. paras. 2.28-2.35). Such guidelines do not appear to exist at present. The MEB could exacerbate the generally poor performance of the parastatal sector as a whole, whose growth of borrowing from the banking system rose from 17% p.a. in 1979 to almost 50% p.a. in 1981/82. Petroleum 1.29 The Government announced in September 1982 that it would build an export-oriented pipeline instead of the 25,000 bpd Kosti refinery that had been under discussion. The pipeline, which is expected to begin operations by end-1987, will make a substantial contribution to Sudan's balance of payments position. Net annual earnings are estimated to average at least $180 million in current prices, equivalent to nearly half of Sudan's 1981/82 merchandise export earnings. Refugees 1.30 Of the eight countries sharing a common border with Sudan, half have suffered major domestic upheavals in recent years. As a result, Sudan is now offering refuge to about 570 thousand displaced persons from Ethiopia (420 thousand), Uganda (130 thousand), Chad (16 thousand) and Zaire (5 thousand). Over half of the refugees are in the Eastern Region, with another 20 percent in the South. The Government of Sudan, with some help from external donors (particularly the UN High Commission for - 10 - and basic agricultural inputs available to them. In addition, there have been special programs of education, assistance to handicapped refugees and legal counseling. 6/ Key Findings and Prospects for the Future 1.31 Sudan today suffers from structural problems in the areas of pricing, production efficiency, resource mobilization, and balance of payments. Resolution of these difficulties through appropriate policy initiatives will be vital for the nation's economic recovery. The Government is taking action in these areas, as indicated in the policy action agenda which it included in the economic recovery program that was presented to the Consultative Group meeting in January 1983. 7/ 1.32 Pricing: Many of Sudan's economic problems are tied directly to the pricing policies that were followed during the past decade. Those pricing policies resulted in major problems in both production and expenditure, problems that will require years to resolve. Of particular importance have been the prices for foreign exchange, capital, agricultural and industrial products, and public services. The Government has made considerable progress towards establishing a set of price relationships consistent with economic recovery, but much remains to be done (ref. Chapter 2). 1.33 Production Efficiency: Agricultural yields, particularly in the irrigated sector, fell sharply in the latter half of the 70's. Industrial plant is currently being used at 25 percent of capacity or less. The low levels of production efficiency in Sudan reflect investment and production decisions that were made in the past on the basis of then-prevailing prices, as well as current shortages of labor and foreign exchange, and management problems. Structural adjustment is required in all of the economic sectors to increase production efficiency; appropriate pricing policies will be an essential ingredient in this adjustment process (ref. Part II). 1.34 Resource Mobilization: The savings rate in the Sudan fell from about 7 percent of GDP in 1978/79 to zero in 1981/82, compared to an average of about 20 percent for sub-Saharan Africa as a whole. 8/ The highly inflationary borrowing from the Bank of Sudan and the massive current account deficits seen in recent years are a direct result of the exceptionally low savings effort by both the public and private sectors. A variety of measures could be taken that would substantially increase domestic resource mobilization. Among these, appropriate pricing policies, 6/ See "Report on Activities in 1981", UNHCR, Khartoum, 1981. 7/ See "Policy Action Programme" in SUDAN: Prospects ... 1982/83-1984/85; op.cit, pp. 137-157. 8/ Unless otherwise indicated, savings refer to gross domestic savings in current prices. - L1 - including positive real rates of interest, will be vital in restoring a more adequate savings rate (ref. Chapter 6). 1.35 Balance of Payments: Sudan's most visible problem for the rest of this decade and part of the next will be its balance of payments position. Shortages of foreign exchange will seriously constrain growth prospects unless massive debt relief on highly concessional terms is made available over an extended period. In the absence of further debt relief, the debt service ratio would average about 85 percent of exports (GNFS) through 1985, a clearly unsustainable level. Although a debt service ratio of around 30 percent would be high compared to what Sudan has been able to pay in the past, such a rate would allow Sudan to dedicate sufficient export earnings to import the inputs required to support production sufficient to avoid a decline in per capita income. To attain this ratio would require debt relief averaging at $700-800 million per year. Total disbursements of nearly $2 billion per year including debt relief will be required over the next 10 to 15 years. However, with rising export levels, the debt outstanding will fall from about nine times exports at present to three times in 1995, indicating progress towards a more sustainable balance of payments position. 1.36 These projections assume exceptional export performance, resulting in a real export growth averaging about 8 percent p.a. from the relatively depressed 1978-80 base to 1990. Excluding the exceptional impact of petroleum exports, which are expected to begin in 1986, the average annual growth is 6-7 percent. These export growth rates imply a recovery of cotton production to 1970/71 levels by 1988/89. Exports as a percentage of GDP would rise to 1971/72 levels by 1986 with the coming on stream of oil production, and they would increase only marginally relative to GDP thereafter. The projections also assume that, with major import substitution taking place in sugar and other food products, import growth will be constrained to an overall average elasticity of about 0.8 through 1990. Excluding the exceptional effect of major investments in sugar production on sugar import and of increased domestic grain production, the overall import elasticity approaches unity. These assumptions represent the contours of the minimum scenario required to support a modest growth in per capita consumption, assuming that there are no extraordinary developments such as a massive increase over projected levels in domestic oil production or in concessional assistance flows. With these relatively optimistic normative assumptions,9/ the current account deficit would drop from 12 percent of GDP in 1982/83 to the more supportable range of around 6 percent of GDP until the end of decade (ref. Chapter 7). 9/ Whereas the projections of merchandise exports are acknowledged to be on the optimistic side, they are still deemed feasible of achievement provided that the Government's recovery program is implemented with vigor. Moreover, the seemingly very high growth rates noted above must be interpreted in light of the depression of recent years' export volumes and the scope for relatively rapid recovery for some commodities. A detailed discussion of the assumptions upon which the projections are founded is presented in Chapter 7 (see also appendix to that chapter). - 12 - Chapter 2 INCENTIVE PATTERNS AND RESOURCE ALLOCATION 2.01 The major structural problems noted above in the Sudanese economy--the imbalance between savings and consumption, the inefficiencies in production, the large deficit on external account, and the imbalance between public revenues and expenditures--are closely tied to pricing policies and to related non-price resource allocation decisions. Income distribution in Sudan has also been significantly influenced by these policies. Pricing Policies 2.02 The pricing policies that have most influenced the structure of the economy over the past decade are those related to foreign exchange, domestic agricultural and industrial products, government services, and capital. 2.03 Exchange Rate: The exchange rate for the Sudanese pound was kept constant at LS 0.35 per dollar from before independence in 1955 until June 1978. During most of this period, that rate appeared to be appropriate; major, chronic current account deficits did not arise. Between 1974 and 1978, however, domestic prices increased by 15 percent p.a., while world prices rose by only 7 percent p.a. 1/. Although the rapid rise in international prices of petroleum and other products had a direct impact on domestic prices in the Sudan during the mid-1970s, they accounted for less than half of domestic inflation. The exchange rate for the Sudanese pound stayed constant during this period, so the purchasing power parity of the pound declined substantially, resulting in a nominal overvaluation of the pound by 1978 of about 30 percent. 2.04 The devaluations of 1978 and 1979 restored a fairly realistic exchange rate; the black market rate, for example, stayed close to the officially-set parallel rate of LS 0.80 per dollar for several months after the September 1979 devaluation. Expansionary domestic policies including large-scale borrowing by the Government from the Bank of Sudan have contributed since then, however, to a roughly estimated rate of domestic inflation averaging about 25-30 percent per year. In contrast, the global recession held world price increases to an average of only 3.6 percent per year from 1979 to 1982. Even though Sudan devalued in total by about 33 percent during this period, the resulting official exchange rate, at LS 1.30 per dollar, was notably lower than the market rate of around LS 2.00 per dollar (Fig. 2.1). However, it should be noted that the demand for foreign exchange in the free market reflects not only transaction demand for merchandise import financing, but also demand for speculative purposes. 1/ Based on the US dollar denominated Import Unit Value price index. (IMF, International Financial Statistics, 1982). - 13 - Figure 2.1 SUDAN: Movemaent of Import-Weighted Exchange Rates (January 1979 -100) 260.0 240.0 o* I n. 23.0 200.0 360.0 j. 36~~~~~~~~~~~~~~~~~~~10.0 4.0. 340.0 320.0 o1 ,. . 120. {~ ~~~~ ~~~ _ricl "le 100 60.0 60.0.N. ;' MI i d P. 3 ii M j 0 *nnlJ 3373 1360 lot3 316 330 2.05 The deviation between the official exchange rate and the economic value of foreign exchange has adversely affected economic decisions. Most importantly, it has discouraged exports and encouraged imports 2/. For example, the real prices received by public irrigated schemes and farmers for their cotton have deteriorated substantially, a major factor contributing to the decline in cotton production by nearly 60 percent between 1970/71 and 1980/81. During the same period crops for domestic consumption such as sorghum became more attractive because of their inflated prices in the domestic market. 2.06 On the import side, the falling real cost of imports led both the public and private sectors to make import-intensive production and consumption decisions (e.g. the metal fabrication and chemicals industries and the widespread use of diesel-powered irrigation pumps). 2.07 Consumption patterns showed a similar bias during the 1970s. For example, the import of passenger cars rose from 300 units in 1971/72 to 9,000 units in 1981/82. Likewise, wheat imports rose by about 11 percent 2/ This problem is by no means unique to the Sudan; the IBRD report Accelerated Development in Sub-Saharan Africa - an Agenda for Action concluded that "Trade and exchange rate policy is at the heart of the failure to provide adequate incentives for agricultural production and for exports in much of Africa." (page 24). - 14 - p.a. between 1973/74 and 1980/81, compared to population growth of only 3 percent p.a. during the same period 3/. 2.08 The Government made substantial progress towards correcting the overvaluation of the Sudanese pound by devaluing from LS 0.90 per dollar to LS 1.30 per dollar 4/ in November 1982. This understates the real adjustment, however. Between 1979 and early 1982 the Government also allowed a legal free market to operate with very little regulation (the rate in this market was around LS 1.80 per dollar in early 1983). The Government has gradually moved an increasing share of total transactions onto the free market; about 60 percent of imports and 25 percent of export proceeds were now traded at this rate by mid 1983. If smuggled goods were included, both figures would be significantly higher. 2.09 In March 1983 the Government decided to close the foreign exchange shops, while allowing selected commercial banks to begin trading in the free market. Government intervention in the operation of the nationalized commercial banks, which included removal of the licenses of the five commercial banks that attempted to align their rates with the black market, limited the responsiveness of the free-market rate to market forces. Rates in the black market in excess of LS 2.00 per dollar were reported soon thereafter. Recognizing these difficulties, the Government in June-July 1983 relicensed the commercial banks which had lost their licenses, and the Government intends in the near future to relicense the foreign exchange dealers. Initial steps were taken in September 1983 with an announcement which legalized participation of individuals, partnerships and companies in the foreign exchange market. A continued active exchange rate policy will be needed to maintain appropriate price incentives. 2.10 Agricultural Products: The decline in real returns because of exchange rate overvaluation that has hurt cotton growers has also affected other export crops such as gum arabic and groundnuts. Production sharing arrangements (the "joint account- 5/) and price controls on output at virtually all levels eroded the real returns to agriculture during the 1970s, aggravating the effect of price distortions deriving from exchange rate policies. 2.11 The Government, recognizing the adverse effects of its pricing policies for agricultural products, took a number of politically 3/ Based on grain equivalent of wheat and flour imports for 3 year centered average end years. 4/ For a history of the exchange rate adjustments during this period, see Annex 1, Table 6.8. 5/ A system under which total costs of a wide variety of agricultural inputs provided by scheme management was deducted from total revenues derived from sale of crops without reference to the volume of inputs used by various operators. By averaging costs, the system gave little incentive to efficient production and subsidized the inefficient producers. - 15 - difficult steps between 1980 and 1983 to establish more realistic prices. By early 1983, there were no fiscal subsidies on sugar, and the Government pledged to eliminate subsidies on wheat flour and bread by the end of 1983. This was done in July 1983. The economic subsidies on both sugar and wheat are still substantial, however, for these goods are imported by the Government at the official exchange rate, which is currently about 40 percent below the free market rate. (Agriculture pricing policies are discussed in more detail in Chapter 3). 2.12 Industrial Products: All domestically produced industrial products are subject to price controls at the factory, wholesale and retail levels. These pervasive controls, designed to reduce overall domestic inflation rates, have fallen far short of their goal. Although world prices stagnated during 1981/82 and 1982/83, domestic inflation continued. Artificial price controls could not offset the effects of expansionary monetary policies. 2.13 Controlled prices have tended to raise costs to consumers in some cases. When adequate rates of return to domestic producers are not possible, neither the necessary inventories of working materials nor the capital stock of the factories can be maintained. As a result, plants work inefficiently, raising unit costs. Because the prices are artificially low, many products go into the black market where they are sold at prices considerably higher than the official prices (e.g. sugar and petroleum, which in the past have sold in the black market in rural areas at several times the official price). The desired benefit of lower costs to the consumers is lost. And it is the illegal blackmarketeer, not the legitimate industrialist, who profits from these distorted prices. 2.14 Domestic production shortages because of inadequate price incentives to domestic producers also lead to higher imports, which the country can ill afford. In textiles, for example, the country has sufficient installed capacity to meet all domestic requirements with a surplus for export. However, all but one of the nine textile mills was shut down by mid-1983, and that one was operating at only 5-10% of capacity. In 1980 Sudan spent about $150 million on imported cloth despite more than adequate domestic capacity (ref. Chapter 4). 2.15 In a country like Sudan where there is a limited number of producers, policies are needed to prevent monopolistic pricing. Current realities show, however, that price controls on domestically produced goods do not work--profits are simply redistributed from the legitimate businessmen to the black marketeers. A far more effective approach to assuring fair domestic pricing policies is a combination of a realistic exchange rate and reasonable protective tariffs--ones that will not promote smuggling, but which will encourage imports through legal channels if domestic manufacturers undertake monopolistic pricing. 2.16 Government Services: The Government's large budgetary deficit in recent years is evidence of the distortions in the pricing of government services. National welfare can often be increased by borrowing for productive investments, so a budgetary deficit of reasonable size may be desirable if the resources are well-used. In the Sudan, however, the overall budgetary deficit has been beyond supportable levels. During the - 16 - period between 1974/75 and 1982/83 it averaged 6.5 percent of GDP, with a peak of nearly 9 percent in 1978/79, compared to an average of 4 percent during a similar period for all Sub-Saharan African countries (ref. Chapter 6). 2.17 Because of the "public good" nature of many government services, the Government cannot charge for all of its services as industrialists and traders would. However, these services still have costs that must be recovered either directly through specific user charges or indirectly through taxes. Both user charges and taxes have fallen short of appropriate cost recovery levels in Sudan. For services such as power and rail transport, direct user charges and full cost recovery are appropriate, but neither the power nor the rail corporations, for example, have been allowed to earn adequate rates of return on their services 6/. The fact that the Government introduced a 100 percent increase in power tariffs in April 1983 and plans a second increase of a similar magnitude in the near future to help attain a minimum acceptable rate of return is an indication of the degree to which prices have become out of line with costs. 2.18 In addition to services, the Sudan Government also provides goods such as petroleum, sugar and wheat for sale to the public, either directly or through designated agents. Aside from sugar, which earned monopoly profits for the Government for a number of years up to 1979/80, the sale of these products resulted in revenue losses for the Government until the recent price increases. (The impact of inappropriate prices for public goods and services on resource mobilization is examined in Chapter 6). The Government periodically adjusts prices of consumer products (e.g., bread prices were increased by over 40 percent in July 1983), but the adjustments are quickly made insufficient by further inflation; adjustments need to be made more frequently and more automatically. In many if not most areas, the price controls should be lifted entirely. 2.19 The Government as the largest employer, sets the level of wages. Wages for public employees do not appear to be optimal, particularly at the higher civil service levels. People can work in the private sector in Sudan in similar positions for salaries at least two to three times what they can earn in government service. As a result, the Government has difficulty attracting and retaining the caliber of staff it needs. At the same time, the low wages have facilitated overstaffing at the lower levels --overstaffing that would not have been possible within current budgetary limits if wages had been higher. Because of the low salaries, employees 6/ In 1981/82 Sudan Rail had a net loss of LS 4.0 million. Included in revenues, however, was LS 12 mls of subsidy from the Central Government to cover the cost to the railways of hauling selected goods at tariffs which the Government purposely set below cost. Another LS 3.7 mls of revenues came as a rebate of the tax element in petroleum price paid by the railways for operating fuel. LS 10 mls was covered by deferring payment on customs duties for imported inputs to the rail system. Without these items, and a deferral of payments of customs duties on imported capital equipment, Sudan Rail's cash position would have fallen short by an additional LS 26 million. - 17 - commonly hold other jobs at the same time. This further degrades the quality of work done for the Government. With existing pay levels, however, it appears difficult to impose the necessary discipline. Capital 2.20 The prices charged for capital (interest rate) in the Sudan by both commercial banks and the Government seriously undervalue this scarce commodity. 2.21 With domestic inflation exceeding 25 percent p.a. during past three years, and with lending and deposit rates averaging 15 and 9 percent respectively, negative real rates of interest have prevailed. 2.22 The Bank of Sudan lends to the Central Government at rates as low as 0.5 percent. Most intergovernmental domestic currency lending, including that to parastatals, carries only a 5 percent rate. 2.23 The Central Government also onlends foreign exchange funds borrowed from abroad. In some cases a nominal interest rate is charged. Otherwise, the funds are treated as an equity investment upon which profits are supposed to be paid to the Central Government. Gross profits from parastatal enterprises during the period 1979/80-1981/82 averaged LS 29 million, of which over 80 percent came from the public banking sector. Gross losses of the non-bank parastatal corporations (as measured by increased net borrowing from the Bank of Sudan) were several times gross profits. Thus the effective charge for capital by the Government is highly negative. These negative capital charges are passed on to consumers in the form of under-priced goods and services, exacerbating the bias towards consumption and against savings. 2.24 The Government recognizes the problems that have been created by past capital pricing policies and is moving to remedy the situation. Commercial bank deposit and lending rates, which were only 8 and 13 percent per year in 1978, have gradually been raised to around 15 and 18 percent (ref. Annex 1, Table 6.5). Onlending rates to parastatals for project loans are being increased, at least for projects financed by the World Bank. More needs to be done, however, to establish prices for capital that are positive in real terms and reflect the true opportunity cost to the nation. Such changes can be successful, however, only if parastatals are allowed to charge prices for their output that are sufficient to recover the full cost of operations, including the cost of capital, from the consumers. Non-Price Capital Allocation 2.25 Resource allocation has been adversely affected by various non-price mechanisms. Of particular concern are the Public Investment Program and the Military Economic Corporation. 2.26 Public Investment Program: Public investment, which is roughly equal to the value of investment undertaken by the private sector annually, was allocated in the past with insufficient reference to the opportunity cost of capital. Decisions were influenced heavily by a variety of social - 18 - and other considerations 7/. As the result partly of non-optimal decisions, and partly of Implementational difficulties, the projects did not yield sufficient returns in time to repay the loans that financed them. 2.27 The criteria for allocating public investment resources have been changed during recent years to focus more heavily on earning adequate rates of return and generating foreign exchange as quickly and efficiently as possible. This change in policy can be seen, for example, by comparing the Six Year Plan for the period 1977/78-1982/83 with the economic recovery program laid out to the last Consultative Group in the document Prospects, Programmes and Policies for Economic Development, 1982/83-1984/85. Among other things, the Government decided to eliminate (a) costly infrastructure projects with low rates of return and long gestation periods, and (b) public expenditure on new industrial enterprises, focusing instead on project completion and improved capacity utilization in existing projects. Investment in new industrial enterprises was to be left to the private sector. 2.28 Military Economic Board: Although performance during the first several months after its establishment in April 1982 seemed to be generally quite good, the Military Economic Board (MEB), could easily result in investment decisions that are not consistent with the opportunity cost of capital in the Sudan. 2.29 When the MEB was established in Sudan, the announced intent was to put idle men and equipment of the armed forces to work producing food and transport services for the military. The MEB has already gone well beyond either production only for military needs or basic civic action and civil works programs, an area where similar types of organizations have sometimes been successful in other countries. It was set up as a conglomerate of seven holding corporations, with up to eight subsidiary companies under each (ref. Annex 1, Tables 5.11). The holding companies cover the entire spectrum of economic activity -- agriculture, industry, transport, housing and construction, trade and commerce, banking and insurance, and other services. Total assets exceeded LS 50 million by the end of 1983. 2.30 Some of the assets that came under MEB control were existing military activities such as the Military Printing Press, the Ammunitions Factory, a small vehicle assembly plant, and the Military Cooperative Society. Others such as the Khartoum and Kordofan Trading Companies were existing parastatal corporations. 7/ A good example of non-economic criteria in the choice of projects is the six weaving sheds. Several of these were located, because of social and regional development objectives, hundreds of miles both from raw material sources and from markets. - 19 - 2.31 But MEB actions during late 1983 and early 1984 indicated that it will go beyond use of existing assets. For example, a $12 million loan from Spain had been arranged for the purchase of 150 buses for use in the Khartoum area; these were taken over by the MEB to operate a competitive transport facility which is presently controlled by another public sector corporation8/. A loan of about $3 million from the U.S. was obtained by the Military Corporation for Housing and Construction to purchase road construction equipment, beginning with upgrading the road passing the main army baracks at the Shejera leading from Khartoum to an industrial area five miles outside town. 2.32 The Military Investment Company has been established by the Military Corporation for Banking and Insurance in association with the Sudan Development Corporation with an initial capital of $5.6 million, of which half is in hard currency. In addition to equal shares from the MEC and the SDC, another LS 1 million is coming from the state-owned El Nilein Bank. 2.33 The Military Corporation for Agriculture bought the privately owned Kafuri (Belgravia) dairy in Khartoum North for LS 1 million. The Military Land Transport Corp. has received a loan of about LS 2 million from the Wad Nimeiri Cooperative Society to purchase heavy trucks. 2.34 Other activities are under discussion or are ready for implementation. For example, the Commercial Drilling Corporation has been established in cooperation with the Booker Drilling Co. (U.S.) to provide drilling services to Chevron and other companies. 2.35 In the economic recovery program presented to the 1983 Consultative Group, the Government stated clearly its intention to reduce the participation of the public sector in industrial activity by limiting further investment to completion and rehabilitation of existing projects, and by returning certain units to the private sector. As MEB activities use public resources (in combination with funds from the private sector), it is important that the allocation of these funds be consistent with the Government's overall public investment strategy as stated in the rolling three years public investment program. Social Impacts of Pricing Policies 2.36 In addition to the adverse consumption and production impacts noted above, the price patterns that prevailed during the 1970s had significant income distribution effects. The real earnings of farmers producing cotton and food grains, for example, declined sharply because of the steady appreciation of the exchange rate at which they sold their export crops. Controlled prices for basic consumer goods have benefitted primarily the urban dwellers. Within this group, the trading class seems to have benefitted most, for they can easily take advantage of the price distortions to enhance their wealth (ref. Chapter 5). 8/ The loan was arranged before the MEB was established, but the assets from the loan are now controlled by the MEB. - 20 - 2.37 The inequities are compounded by the fact that the urban dwellers also benefit from much higher quality public services like schools, hospitals, power and water, which are generally provided below cost. Price distortions are a key factor explaining the high level of migration to urban areas, which creates urban congestion and contributes to the scarcity of labor in rural areas. Although consumer goods are nominally made available at controlled prices in the rural areas, Sudan is so large, and the resources available to distribute the goods and police the prices so limited, that people in the rural areas must commonly buy their requirements at black market prices far above the official prices. 2.38 In summary, price distortion in the areas of foreign exchange, agricultural and industrial goods produced locally, government services and capital, together with public investment decisions that were not always consistent with economic criteria, have had a major impact of the current structure of production and consumption in Sudan. 2.39 The structural problems affecting production are examined in the next section of the report on a sectoral basis. The savings/consumption/ resource mobilization issues arising from past pricing policies are then examined in the final section. - 21 - Part II - STRUCTURAL RIGIDITIES AND PRODUCTIVE EFFICIENCY Introduction i. The current structure of production and consumption in Sudan developed on the basis of the relative prices that prevailed during the past decade. Structural adjustment will require changes both in prices and in the physical structure of production. ii. Changes in physical assets take time and resources. Price changes could theoretically be made overnight, but in practice, even these will have to be made more gradually. The costs of sudden radical changes in prices, particularly for basic consumption goods, are well known and can exceed the costs of continued inefficiencies during a period of more gradual change. The appropriate rate of change requires political judgement. This study does not recommend a rate of change. It only seeks to identify areas where changes are needed and, in some cases, to provide an estimate of the type of change needed for economic efficiency. iii. Increases in producer prices can probably be managed somewhat more easily than consumer price changes, at least at the outset, and especially for exported goods. Problems can arise, however, when price increases to producers need to be passed on as higher domestic consumer prices. iv. The Government has made significant progress towards improving producer prices for agricultural products since 1979. This progress has been possible without budgetary subsidies because of the gradual devaluation of the Sudanese pound. Devaluations of course raise the cost of inputs to farmers, but as long as there is positive domestic value added at world prices (the cost of imported inputs is less than the world value of the output), producers will gain with devaluations 1/. Even assuming no other changes in production methods, profits to the farmer will increase more than proportionally because the cost of domestically produced inputs 1/ The positive impact of devaluation for efficient producers, even those depending heavily on imported inputs, is shown in the following hypothetical table based on cost structures not atypical of Sudanese agriculture: Before (LS 0.50/$) After (LS 1.00/$) $ LS $ LS Output 100 50 100 100 Imported Inputs 40 20 40 40 Domestic Margin . 30 . 60 Domestic Inputs . 10 . 10 Profit to Farmer . 20 . 50 - 22 - would generally not rise by the amount of the devaluation. The gains from devaluation to producers with positive world value added will increase even more over time because changes in production methods will conserve relatively expensive imported inputs and favor relatively cheaper domestic inputs. v. Industries which have negative world value added will, on the other hand, be adversely affected by devaluation. Some plants in the textile industry, for example, consume inputs worth more than the finished product at world prices because of excessively high construction costs, underutilized capacity and generally inefficient operations. For such firms, devaluation can have disastrous effects, especially if the firms also have debt service obligations denominated in dollars. Some such firms, if appropriately assisted by the Government through moderate tariff protection or even quantitative import restriction for a limited time period, reasonable domestic prices, working capital and access to adequate infrastructure facilities, can gradually become efficient and profitable at the new prices. Others, especially those that are poorly located and in gross disrepair, will probably have to be closed. In such cases, Government actions to open up productive employment opportunities in more competitive areas such as agriculture will help to ease the process of structural adjustment. vi. The structural adjustment problems of the agricultural, industrial and services sectors, which are discussed in the three chapters of this section, should be seen against these basic principles of prices and structural adjustment. - 23 - Chapter 3 AGRICULTURAL SECTOR Introduction 3.01 As agriculture is the most important sector in the Sudanese economy, its productivity and efficiency are central to any program for economic recovery. Agriculture accounts for about 40% of the total GDP, 75% of the GDP in the production sectors, 1/ and 90% of the labor force. 2/ Most productive capacity that lies outside agriculture is dependent on agriculture--as a source of raw materials, as a consumer of goods and services, or as the major source of earned foreign exchange for the economy. 3.02 The role of agriculture in generating exports is particularly crucial. In 1981/82, nearly 95% of the total value of all commodity exports came from agriculture. These include the export of cotton (17% of total value of commodity exports in 1982), 3/ groundnuts (12%), gum arabic (11%), livestock (14%), sorghum (16%) and oTlseeds (10%). No strategy for meeting Sudan's foreign debt obligations can succeed without a substantial increase in agricultural exports. While almost all export earnings come from agriculture, and although parts of it are highly capital intensive, the sector probably accounts for less than one fourth of the total import bill even if all indirect imported inputs are included. 4/. 3.03 An additional 20% of the import bill goes for food and beverage imports. Many of these imports could be readily and efficiently produced in Sudan, saving scarce foreign exchange. 3.04 Thus both the recovery from the short term debt crisis as well as longer term growth prospects for the economy depend heavily on continued increases in agricultural production and exports. 1/ GDP in 1981/82 at factor cost. 2/ Only 13% of the labor force was estimated to be in urban areas in 1975. See I.L.O. Growth, Employment and Equity: A comprehensive Strategy for Sudan, Geneva: I.L.O., 1976, p.316. 3/ This low figure is due to the fact that cotton exports have been declining rapidly in value compared to other exports in 1981 and 1982. In 1980 cotton accounted for over 55% of total export value (ref. Annex 1, Table 3.2). 4/ See footnote 15/ on page 39 for details of this estimate. - 24 - Current Situation Crop Production 3.05 Significant increases in production and yields have occurred in the past year in certain areas (ref. Fig. 3.1). In particular, there has been a sharp increase in yields and production in the irrigated sector. In the Gezira, for example, average yields of 3.8 and 4.4 kantars/feddan (K/fd) for long and medium staple cotton were attained in 1981/82 compared to a low of 2.1 and 3.9 K/fd in 1980/81. In the 1982/83 season, yields were higher--4 K/fd for long and 5.8 K/fd for medium staple cotton. Other public irrigation schemes such as Rahad have also shown increased yields. These increases have raised total production of cotton (both long and medium staples combined) to 382,000 mt in 1981/82 and 567,000 mt in 1982/83 compared to an average production of 340,000 mt p.a. during the 1978-80 period. Although groundnut production declined in 1982/83 due to reduction in cropped areas, both groundnuts and sorghum yields in the irrigated sector have increased, reversing the declining yield trends in the 1974-81 period. Figure 3.1 SUURN: COTTON YIELDS- 1954-83 1954 1958 1962 1966 1970 1974 1978 1982 i450 1 4 .50 Z 4.25 4.25 C 4.00 4.00 C: 3.75 3.75 LUJ Lu_ 3.50 3.50 o:3.25 3.25 LU 3.00 3.00 2.75 2.75 Y 2.50 2 .50 2.25 42 .25 ~-2.00 2.00 z Cr 1 .75 1111 ~1 .75 I .60 I II 150 1954 1958 1962 1966 1970 1974 1978 1982 Source: Annex 2. - 25 - 3.06 A closer examination of crop yields in the irrigated and publicly managed sector for different crops over longer periods show consistent upward trends in the 1965-73 period followed by declining trends in the 1974-81 period. Only during 1982-83 did yields again improve to their earlier historical levels. 3.07 These changes in yields are related to the availability of essential inputs and better management at the scheme levels. The period from 1974-81--which saw declining incentives to producers from export earnings, increasing imports and severe foreign exchange constraints--also saw rapidly declining yields in the public sector. 3.08 The reversal in production and yield trend declines for cotton during 1982-83 was most welcome. Most of the production is available for export, and cotton exports accounted for 45% of all export earnings in the five year period before 1980. This turn-around in cotton production has been due to a number of factors, including measures taken in the context of the Government's Export Action Program. 5/ Such measures include better incentives to tenants for growing cotton (made feasible partly by a devaluation which abolished the excessive implicit tax on the crop, and partly by the abolition of the joint accounts and their substitution by an individual account system in the schemes), and more favorable weather conditions. Another important factor has been the better availability of essential inputs--water, fertilizers, seeds, pesticides and machinery services--made possible through improved efforts to provide foreign exchange to purchase essential inputs and special measures to get them to the irrigation schemes on time. Better management of services and water delivery systems have also helped. These improvements are due in part to a series of agricultural rehabilitation projects which are helping to assure the flow of essential inputs and services. 3.09 In the rainfed sectors--both mechanized and traditional--yield trends are related to weather and rainfall. In the rainfed mechanized areas, which are also heavily dependent on imported inputs--machinery and fuel--the severe foreign exchange constraints also played an important role in declining sorghum yields in the 1974-81 period. (Average yields in the traditional rainfed sector, on the other hand, rose in this period). It appears that in 1982183 rainfed production will decline sharply, with groundnuts production down 25%, sorghum down 40% and millets down 60% from the previous year's levels. These figures overstate the problem, however, because production in the rainfed areas during 1981/82 was exceptional, reflecting the very high world market prices in the previous year and exceptionally good weather conditions. It is unlikely that production levels of 1981/82 can be regained, unless equally exceptional conditions prevail. 5/ Ministry of National Planning, Export Action Programme, 1980-1990, Khartoum, September 1980. - 26 - 3.10 The net effect of increased output in the irrigated sectors and a decline in output in the rainfed sectors has been a slight decline in the share of GDP generated in agriculture. In 1982/83 agricultural output is expected to decline by 7% at constant 1976/77 prices. However, because of the increased production of tradeables in the irrigated sector,the volume of agricultural exports is expected to increase in 1982/83. Livestock 3.11 Sudan has an estimated livestock population of 16.1 million cattle, 35.5 million sheep and goats and 2.6 million camels. 6/ In 1981/82 livestock accounted for over 14 percent of the country's total export earnings. Following the lifting of a temporary export ban, sheep exports more than trebled between 1977 and 1982. These exports currently amount to about 600,000 head and account for 80 percent of the value of total livestock exports. Cattle, camels, hides and skins, and goats account for the remainder. The major export market is Saudi Arabia--and to a lesser extent the Gulf States--where there is a substantial demand for large, good quality live sheep. 3.12 Sudan's livestock population is concentrated in the less accessible Eastern, Southern and Western parts of the country where livestock is raised by both transhumant pastoralists and sedentary farmers following traditional husbandry practices. Pressure on open rainfed grazing lands, the low quality of animals, inadequate veterinary services and improved production techniques and environmental hazards like drought and diseases mean that productivity and offtakes are low. Marketable surpluses for exports are, however, produced in the White Nile province and in Darfur and Kordofan regions. Some livestock are also exported from the South to Khartoum to meet local demand. Commercial offtake rates are around 10 percent for cattle and 18 percent for sheep. Given the rigidities in the production systems these rates are not expected to increase dramatically. Low productivity and offtakes and lack of transportation are also constraints on expanding livestock exports in the short-run. 3.13 The export market is in theory regulated by the Ministry of Commerce, which sets minimum export prices and tries to assure "orderly market conditions" by issuing licences to traders. Producer prices, however, are set by demand and supply conditions, and smuggling accounts for a major part of the export trade in livestock. Real producer prices have increased sharply in recent years under the influence of higher export prices--between 1978 and 1981, producer prices for sheep increased by 150 percent and for cattle by over 200 percent. Although the Government attempts to regulate consumer prices by setting maximum retail price levels, actual market prices are much higher and reflect current export prices. Future domestic prices are expected to continue to increase in real terms, providing strong incentives for production. World market prices for beef and mutton are also expected to increase, though only moderately. Prospects for exports will, however, continue to be strong, especially for mutton, because of the strong demand from the Gulf area. 6/ See Annex 1, Table 7.2 for details. - 27 - 3.14 At present levels of production it is estimated that some 5% of the commercial offtake of beef and over 40% of the mutton are available for exports. With projected increases in the national herd of around 1% p.a. for cattle and 2.5% p.a. for sheep, and with per capita consumption remaining constant, the exportable surplus of cattle is expected to decline to zero in the latter half of the 1980's. With marginal improvements in offtake rates, the exportable surplus for sheep will increase in the near future, implying a net increase in foreign exchange earnings from this sector. 3.15 The livestock sector offers considerable scope for increased production and exports. Output expansion however is contingent on a rehabilitation of the veterinary services as well as improved pasture and range conservation methods. Both measures could well be financed by contributions from cattle owners through the reintroduction of collections of the cattle tax. To secure existing export markets and explore new market outlets, the Livestock and Meat Marketing Corporation (LMMC) should be more actively involved in the monitoring of export markets. Also, appropriate export pricing policies are needed that would reduce the considerable volume of unofficial trade--estimated at about 50% of the official trade--and divert it into official channels. In order to increase production and exports from this sector, it is essential to (a) increase transportation capacity to allow exportable surpluses to reach Port Sudan in good condition, (b) provide extension and veterinary services, (c) increase animal productivity by changing husbandry practices to include integration with crop and forage production, and (d) let producers receive the benefit of price incentives provided by the export market. 3.16 A significant portion of Sudan's livestock industry is in the southern part of the country. With 25 percent of the country's area and 22 percent of its population, this area has a diverse agricultural sector. Available data do not allow a precise estimate of the contribution of the southern part of Sudan to total agricultural production in Sudan. The region exports both foodstuffs and livestock, with an estimated 100-150,000 mt of sorghum and 30,000 head of cattle reaching the North annually. 7/ 3.17 Agriculture is the most important part of the regional economy, accounting for about half of regional GDP. A majority of the population in the region is engaged in rainfed subsistence crop production (35% of sectoral GDP) and traditional livestock herding (30%), with forestry (25%) and fishing, hunting and other activities (10%) as subsidiary occupations. Total cultivated area is estimated at 2.4 million feddans, although reliable estimates of the potentially cultivable land are unavailable. Land is not a constraint, although its productivity is low. Sorghum, with 7/ Despite this outflow, there are substantial imports as well to the south from the north by deficit areas having better transport links to the north via the Nile than with surplus areas elsewhere in the south. - 28 - annual production of 350-400 thousand mt (about 45% of regional food production) is the main crop. Cassava, millet, groundnuts and small quantities of rice are also grown. An estimated 7 million head of cattle (30% of national total) and 6 million sheep and goats (15% of national total) also come from the region. Over 90% of Sudan's timber resources are found in the South, as is most of its fishing (with an estimated 150,000 mt of potential production). No data are available regarding production trends in the region, but given that production is mainly for subsistence, it is assumed that production has at best kept pace with population growth. 3.18 There are three major ecological zones (going from North to South) in the Southern Sudan: (a) central rainlands, located in the North, where production is geared to quick maturing grains and some oilseeds, and livestock that is largely in the hands of nomadic pastoralists. Some sorghum production is done in large mechanized commercial farms. This is the only area in the region that produces a sizeable marketed surplus; (b) the flood plains, located on the central part of the South, that cover about half the region and are subject to perenial flooding and waterlogging. Here some crops are grown, and cattle are grazed in the dry season. The relative absence of the tse-tse fly makes this the most important livestock producing area; (c) the equatorial zone, bordering Uganda, with subsistence farming in a variety of crops including maize, groundnuts, cassava, sesame, cotton, coffee, tea and vegetables. Livestock production in this zone is restricted by the tse-tse fly. 3.19 The South has only a small marketed surplus available for export, and lack of transportation and communication links with the North limit marketing and trade in that direction (ref. para. 3.16). Some coffee, cattle and sheep do move to the North, and private traders bring in sorghum and millet to deficit areas in season. Lack of data on trade and prices make it difficult to estimate price differentials, but retail sorghum prices in Juba are about 80% higher than in Khartoum and prices for cattle 50% lower, indicating the barriers imposed by transport and marketing costs to inter-regional trade. 3.20 A few schemes have been initiated by the regional government--mechanized farming, forestry, rice and tea are examples--but their impact has been limited to date. Agro-industries include a tobacco and a tea factory, sawmills, a textile factory, oil mills, and charcoal producing units. 3.21 The Southern Region has great agricultural potential, but in the short run this has been limited by poor access to markets. In the medium term several measures could release this potential. These include (a) improved road and rail transportation, (b) the introduction of adequate river transportation with the development of the Jonglei canal and (c) increased budgetary allocations to the agricultural sector to provide marketing and other agricultural services. At present agriculture receives only 17 percent of the regional development budget. Increased outlays could be financed in part by the Southern Region's share of the anticipated revenues from petroleum in the South. Measures need to be taken to assure that some proportion of the revenues from this sector are allocated for agricultural and infrastructural development in the South, for this is the - 29 - only way both to integrate the Southern economy with the rest of the country and to release its agricultural potential. This task will be particularly challenging in the face of the redivision of the Southern Region and the administrative restructuring that this is likely to entail. 3.22 Future prospects for economic growth and exports for the Sudanese economy as a whole can be assured by (a) increasing agricultural output through effective utilization of existing productive capacity, (b) improving price incentives to assure the required production response, (c) increasing productive efficiency by establishing policies that will reinforce regional comparative advantages and the potential for net export earnings, and (d) reducing the rigidities in the sector imposed by technology, resource, transportation and institutional constraints. Increasing Agricultural Output 3.23 The need to maximize agriculture's contribution to net export earnings places a heavy reliance on both the irrigated and the mechanized rainfed subsectors because they account for a major share of the country's exports (cotton, groundnuts, shorghum), use most of the imported inputs needed by the agricultural sector, and have the greatest potential for reducing food imports via import substitution (in wheat and sugar). 3.24 Analysis of the sources of growth in agricultural output in Sudan over the past decade shows that for the rainfed crops--groundnuts, sorghum, and sesame--the main source of growth has been expansion in area. By contrast, the main source of growth for the major irrigated crops--cotton groundnuts, sorghum--has been yield increases. 3.25 In the irrigated sector, increased yields offer the best scope for increasing the production of tradeables (cotton, sorghum and wheat). Yields were at all-time historical lows in the 1974-1980 period, even in comparison to normally low yield levels in Sudan, and yields can be raised to at least earlier historical levels. Further yield increases beyond the historical levels are also definitely possible through better crop management practices and improvements in present technologies. 3.26 Yields improved dramatically in 1981/82 and 1982/83. Cotton yields in Gezira averaged 4 K/fd for long staple and near 6 K/fd for medium staple cottons in 1982/83. In Rahad, the medium staple cottons yielded 7.2 K/fd that season, compared to an average yield of 2.9 K/fd in 1980/81 on 75% of the area. This means an aggregate increase in production of over 80 percent in exportable cotton alone, compared to 1980/81, which will substantially increase foreign exchange earnings. 8/ Groundnuts, sorghum, wheat and short staple cotton yields have all increased. Better than average wheat yields could also reduce wheat imports for the coming years. 8/ Firm figures on cotton exports in 1982/83 were unavailable at time of writing, and there may be some lag because of stock movements before the increased production raises exports. - 30 - 3.27 Further yield increases can be attained by paying better attention to cropping practices--planting densities, irrigation, balanced (perhaps reduced) spraying and weed control. Continued attention to incentives at the farm level is also needed. Further increases will depend on the increased and efficient use of critical inputs--fertilizers, pesticides and better management of scarce water resources. 9/ 3.28 Even though yield increases are the most critical factor, full utilization of the available areas in the irrigated sector, subject to the availability of water and better crop management practices, is also important. Full area utilization has yet to be achieved and maintained in some of the irrigation schemes. Further area expansion for cotton and wheat could be encouraged, especially in the pump schemes, as both domestic and international comparative advantage make this desirable, especially if input and output price structures are properly aligned and if arrangements are made to assure adequate supplies of inputs for such expanded areas. Substantial additions to the irrigated areas are also possible later in this decade. The opening of the Jonglei canal is expected to provide approximately two cubic kilometers of water per year into the White Nile. This could support expanding irrigated areas for cultivation by almost half a million feddans. Such an expansion of irrigated area would avoid the high costs of new dams as pump irrigation would suffice. There would be adequate water to allow new schemes along the White Nile to be developed, preferably under private leasing arrangements. The rising costs of pump irrigation could reduce the profitability of new schemes, but expanding irrigated areas might prove to be less costly than intensification on areas already under irrigated cultivation. These issues, however, will need to be examined further in the context of the proposed Irrigated Development Priorities Study to be undertaken in late 1983. 3.29 The mechanized rainfed sector dominates the production of sorghum, and most of the exports of sorghum come from this subsector. Apart from the weather-related yield variability, it is the scarcity of inputs, the low level of agronomic practices and inadequate price incentives which remain as the key problems in this subsector. It is unlikely that the low level of agronomic practices will be raised until the 9/ A comparison of recent yield performance in Sudan and other countries shows that the scope for further increasing average yields in Sudan is considerable. Between 1979 and 1982 cotton yields in Sudan averaged around 2.7 K/fd. Even if they are restored to an average of 4 K/fd, they would compare poorly with average yields between 1978/79 and 1981/82 of 9.5 K/acre in Israel, 8.3 K/acre in the USA and 6.8 K/acre in Egypt during the same period. In 1982/83 long staple cotton yields in Sudan were around 3.8 K/fd compared to an average of 8.35 K/fd in Egypt between 1978/79 to 1981/82. Similarly during the same period sorghum yields of 550 Kg/ha in Sudan compare unfavourably with 3310 Kg/ha in the USA, 2407 Kg/ha in China and even 700 Kg/ha in India; groundnut yields of 804 Kg/ha compare poorly with 2583 Kg/ha in the USA, 1075 Kg/ha in China but are better than 775 Kg/ha in India; wheat yields were only 930 Kg/ha compared with 3222 Kg/ha in Egypt, 1500 Kg/ha in Pakistan and 1534 Kg/ha in India (Annex 2.1). - 31 - current land tenure system (leaseholds of 5-6 years) is replaced by a system of considerably longer leases or outright sale, a system that would encourage longer-term investment in the land and its maintenance. Area expansion is limited by poor price incentives and by the availability of fuel, labor, machinery spare parts and transport. If these constraints were reduced, output could continue to expand in this sector. This sector has the added advantage of being located in large part where relatively low cost transport is available (e.g. the sorghum belt along the Wad-Medani Port Sudan road, and areas to the west along the El-Obeid railway line). Thus, increased production could be exported. Area and production expansion in sorghum could, however, reach its natural limits soon due to the inelasticity of the export market for sorghum. Until recently a large premium over international prices was being offered by Saudi Arabia for sorghum exports, and this constituted the main outlet. These premiums were reduced considerably in 1983. As the attractiveness of this market is reduced, more will tend to be sold in the domestic market, reducing domestic sorghum prices, which have increased over thirteen fold in the past 12 years--a rate considerably faster than the domestic CPI in urban areas. (There has been no substantial change in prices in the last two years). 3.30 The traditional rainfed sector also offers scope for increasing the output of tradeables--in particular groundnuts, gum arabic and sorghum. It is already the major source for gum arabic and livestock exports. Its output and export potential are, however, limited by a number of factors: (a) the variable and low yields dictated by the vagaries of the weather, (b) the difficulty of transporting inputs into and marketed outputs out of the geographically remote and extensive area covered by this sector, (c) the rising costs of transportation, (d) the increasing desertification in many areas as population and livestock growth continues to exert pressure on the land, (e) the lack of any effective technology packages that can dramatically change yields or reduce their variability, and (f) the lack of any significant adaptive research that can bring new technologies to bear in the near future. In addition, price incentives 10/, marketing, transportation, credit and adaptive research have been neglected. National investment plans (as well as Bank policies that have concentrated on irrigated cotton) have systematically favored the irrigated sector. More needs to be done now to complete a careful comparison of the comparative advantage or economic rates of return in the two subsectors. 3.31 This review of the performance and potential of the three key agricultural sectors in Sudan tends to confirm the basic premises on which the strategy for short term agricultural recovery are based: (a) In the irrigated sector (mainly on government-managed schemes), output changes will have to rely largely on changes in the yield components as the potential for area expansion is limited in the short 10/ It was reported that the prices of gum arabic have actually been declining, and in some areas, acacia trees are being cut down for fuel. - 32 - run. This will require efficient management of the resources and incentives that will be needed to reverse the generally declining yield trends of past years. (b) In the mechanized rainfed sector, output expansion could be achieved by expanding the areas planted; land in general is not a constraining factor, but its efficient and responsible use through sound cultivation practices is vital if deterioration of the soil and desertification of certain areas are to be avoided. The other resources -- inputs, labor, management transportation and above all viable technologies -- are, however, major constraints. Strategies for increasing output in this sector in the short run may have to rely mainly on area expansion in regions where essential inputs and transportation can be assured, and on providing long-term security of land tenure. (c) In the traditional rainfed areas, the best that can be expected in the short term is that they recover their historical trend levels in yields, production and exports. 3.32 In the medium term, however, there will probably be a need to increase the share of resources going to the rainfed sectors, which will require developing a strategy for integrating them into the overall program of economic recovery. Careful attention should be paid to the comparative advantage of different crops in the rainfed and irrigated areas to determine future allocation of investible resources. Price Incentives 3.33 Price incentives remain a critical element if producers are to be motivated to achieve higher yields and output levels. 3.34 The issue of incentives is broader, however, than just that of increasing the nominal price of a given crop. The prices of other crops, of important inputs and their relation to border prices as well as the real returns to domestic producers have to be considered. For example, thousands of Sudanese have chosen to work abroad and earn foreign exchange that can be converted at the very attractive free market rate rather than to remain in the agricultural sector. 3.35 The evidence from 1971-80 shows that, although both nominal domestic and f.o.b. prices rose dramatically: (a) domestic producer prices were not aligned with their border price equivalents, suggesting protection for some crops (wheat and sorghum) and disincentives for other crops (cotton, groundnuts, sesame); (b) real producer prices declined sharply for most crops; (c) the share that producers retained of the prices for cotton paid to the schemes was low and declined in real terms during the period; and - 33 - (d) real returns to cotton, wheat and sesame production declined, especially in the irrigated sector, while real returns for groundnut and sorghum increased (ref. Figure 3.2). 3.36 The shifts in the cropping patterns and production have reflected these changes in relative real returns. A decline in cotton production from around 450,000 mt in 1970/71 to a low of 180,000 mt in 1980/81 (a decline of over 60%), and a dramatic increase in sorghum production from 1.5 mls mt in 1970/71 to 3.3 mls mt in 1981/82 are a direct consequence of these changes. 3.37 Considerable attention has been given recently to the issue of incentives, particularly for cotton production. During 1981/82 and 1982/83, the nominal prices for cotton were increased considerably, and the joint account system in the Gezira Scheme was replaced by the individual account system (a policy to be extended to other schemes). Both changes have had the salutary effect of increasing the returns to cotton relative to other crops. This has been reflected in the recent dramatic upturn in yields in the subsequent years; seed cotton production increased from 304,000 mt in 1981, to 460,000 mt in 1982, and to 570,000 mt in 1983. The evidence clearly suggests the key role of price incentives in encouraging higher yields and output. 3.38 As producers begin responding to the higher real returns offered for their individual efforts, there is a need to monitor the new system of production relations in the irrigated schemes to assure that, on a net basis, producers continue to be better off both absolutely and relative to the potential returns from alternative activities. Further consideration also needs to be given to measures that would formally allow tenants a greater role in decisions on cropping patterns, input use, output marketing, livestock maintenance, and choice of technology. This would help to assure efficiency of resource use, reduce the friction between scheme level and tenant level objectives, and encourage tenants to take some risks with expectation of having more control over results. Finally, consideration needs to be given to measures that would reduce the volatility of domestic groundnut prices. 3.39 To summarize, incentives remain a key to further increases in the production, especially of tradeable outputs in the sector. To assure such increases, it will be necessary to: (a) allow producer prices to keep pace with adequate exchange rate adjustments on a continual basis in order to bring higher prices to producers and better incomes to the schemes; (b) adjust output and input prices towards border price equivalents (properly adjusted for anticipated increases in processing, marketing and transportation costs at the shadow exchange rate) so as to assure continuing efficiency and to reduce both protection for foodcrops (wheat and sorghum) and eliminate disincentives for export crops (cotton and gum - 34 - arabic); (c) pay attention to the prices of outputs in relation to price of critical inputs and consumer goods in rural areas so as to assure that the real net returns to crop production remain positive and are gradually returned to earlier levels; (d) allow a higher share of the fob prices to filter down to producers in the schemes by increasing scheme efficiency; (e) allow a greater share of the decisions to pass from scheme authorities directly to producers; and (f) continually monitor and liberalize production relation to give tenants the maximum choice to allocate their resources. Comparative Advantage 3.40 To increase the possibilities of production for exports, it is not enough to provide incentives to producers. It is also important that productive efficiency be maintained and that a strategy of viable export recovery be based on products offering the highest potential for earning foreign exchange. This requires that, in the medium term, the optimal crops be grown in those regions (or farming systems) where they have the best comparative advantage. This is particularly true during a period when both relative domestic prices and the prices of traded inputs and outputs are changing because of continuing domestic inflation and external devaluations. 3.41 Fortunately this issue has received considerable attention recently from both the GOS and donor agencies, and a spate of recent studies is available. The evidence suggests that Sudan has a clear potential comparative advantage in the production for export of nearly all crops currently grown (except wheat and rice) and in the production of wheat as an import substitute. Yield increases sufficient to restore yields to pre-1974 levels are, however, a precondition for realizing this comparative advantage. Continuing devaluations in line with domestic inflation rates would further enhance the comparative advantage of crops by making traded outputs more competitive and by inducing the use of domestic substitutes for imported inputs. These studies also indicate that the traditional rainfed sector has a higher comparative advantage in the production of livestock and of many crops such as sorghum, sesame, groundnuts and millet than the irrigated sector, even after the high costs of transportation are taken into account. 3.42 The evidence confirms the present strategy of the Government whereby export-led growth in the agricultural sector forms the basis for a strong program of recovery. 3.43 Careful consideration now needs to be given to incorporating the rainfed and traditional sectors into a comprehensive longer-term strategy of export-led growth by providing higher incentives to producers via removal of government intervention in market prices, by improving the marketing and transport networks (including GOS directives on the choice of - 35 - transport) to reduce marketing costs, by improving the system of adaptive research, by encouraging increased investment outlays, and by improving the security of land tenure, especially in mechanized farming. Rigidities in the Agricultural Sector 3.44 The ability of farmers in the short term to respond to price and other incentives and to exploit areas of comparative advantage is constrained by rigidities in established production facilities, resource availability, technology, transportation, and institutions. Five constraints in particular can be addressed in the short and medium term via specific policy measures. These include (a) the capital intensity of the sector and the heavy dependence on imported inputs--especially in the irrigated and rainfed mechanized sectors; (b) the alleged shortages of labor, especially during seasonal peak periods, which are said to limit expansion of output in the irrigated sector and to dictate the choice of capital-intensive technology; (c) the high cost of transportation over long distances and its implications for export competitiveness; (d) the lack of institutional support for credit, and (e) the scarcity of adaptive research and extension, especially in the traditional sector. 3.45 Capital Intensity in Agriculture: The irrigated and mechanized rainfed subsectors, which account for most agricultural production and export, are both highly capital intensive and heavily dependent on imported inputs. This heavy dependence raises three issues: (a) the capital intensity of these subsectors in an economy where capital is, and will continue to be, very scarce, (b) the heavy dependence on imported inputs at a time when foreign exchange is in extremely short supply and when the supply is subject to increasing uncertainty and disruptions and, (c) the extent to which these sectors are net contributors to foreign exchange. 3.46 Data on capital use and intensity in the agricultural sector as a whole are sparse, but information on the operations of the Sudan Gezira Board over the last decade show that crop expenses on imported inputs and overhead expenses on supervisory, administrative and managerial labor have been increasing in real terms, whether measured relative to cotton area sown or cotton produced. These data also indicate that expenses on labor intensive tasks have been decreasing in real terms, whether measured relative to total area sown, cotton area sown or cotton produced. 11/ Since most of the imported inputs are used on cotton, and since the SGB administration's focus is in large measure on cotton, the increasing expenses per cotton area sown for these items is clear evidence of increasing capital intensity and overheads. Furthermore, an increasing number of farm and processing operations have been progressively mechanized over the years in these subsectors. Thus, capital intensity has been increasing at the same time as capital has become relatively more costly--a seeming perverse response to changing relative prices that can be explained only by the deviation between economic and financial prices. 11/ If data were available on machinery costs including depreciation and replacement costs, capital outlays would be higher. - 36 - 3.47 Two arguments are offered in defence of increased mechanization and capital use: First, mechanization is necessary because of "labor shortages", especially in the irrigated schemes (ref. para 3.51 ff.). Second, mechanization leads to higher intensities and yields. Increased mechanization, especially in the irrigated schemes that are now being rehabilitated on an even higher capital intensive basis, cannot be easily justified on either grounds. 3.48 What are the implications of the increasing dependence of these subsectors on imported inputs given the current balance of payments crisis? In addressing this issue it is essential to bear in mind that the agricultural sector as a whole and the irrigated and rainfed mechanized subsectors in particular are net earners of foreign exchange. In 1981/82, when cotton export earnings were at their lowest, the agricultural sector earned nearly LS 325 million via exports, while its input needs did not exceed LS 239 million 12/ The sector more than pays for itself in terms of foreign exchange. The "shortages of foreign exchange" which prevent essential inputs from reaching this sector are therefore due to inadequate foreign exchange being allocated to this sector. While agriculture is a major and efficient export earner, a major share of its export earnings are consumed by imports that go to the government, household and service sectors--sectors which do not pay their way in terms of foreign exchange. This does not argue, however, for more government intervention in the allocation of foreign exchange. If the sector were to receive payment in local currency for its exports at an exchange rate that reflected the full economic value of these export earnings to the economy, the sector could easily afford to buy back the foreign exchange it needed, even at free market rates. 3.49 The available evidence thus shows that the dependence of the irrigated and rainfed mechanized sectors on foreign exchange is very high relative to crops grown in traditional rainfed areas, but that their net foreign exchange earning capacity is even higher. 12/ That includes the imports of fertilizers, insecticides, jute and sacks, and tractors, and assumes that a third of the import cost of trucks, tires and tubes, a third of the costs of machinery, spare parts, and a fifth of the costs of imported petroleum were for the agricultural sector. A recent study of energy use in the Sudan showed that agriculture directly consumed only 18% of the gasoil imported into the country in 1980. If we add to this a third of the gasoil used in transportation (surely an overstimate), the direct and indirect use of petroleum products in agriculture was less than 20% of the total. Government of Sudan: Sudan: National Energy Assessment, National Energy Administration, Ministry of Energy and Mining, Khartoum, September 30, 1982, p.12. - 37 - Table 3.1 SUDAN: Foreign Exchange Dependence and International Value Added for Selected Crops Crops/Sector FED (a) IVA (b) ($/fd) Traditional Rainfed Sesame 0.18 31.0 Groundnuts 0.33 30.0 Millets 0.34 10.0 Sorghum 0.36 8.0 Mechanized-Rainfed Sesame 0.20 38.0 Sorghum 0.51 11.0 Irrigated (Gezira) Cotton-MS 0.35 196.0 Cotton-LS 0.36 212.0 Groundnuts 0.36 117.0 Source: Bank staff estimates. (a) Foreign Exchange Dependence: Ratio of value of imported inputs to value of output at border price (based on official exchange rate of LS 1.3/$). (b) International Value Added: Value of output minus value of imported inputs at border prices and at official exchange rate of LS 1.3/$. 3.50 Consideration should nevertheless be given to measures for reducing the use of imported inputs. These should include (a) raising the price of gasoline, (b) raising the price of tractors and farm machinery,13/ (c) pricing imported inputs at their border price equivalents with constant adjustments as exchange rates change, (d) improving technology and its transfer to farmers, (e) carefully evaluating practices such as spraying and fertilizing to assure that, at the margin, additional use of these inputs yields a net economic benefit, (f) considerations for only partial mechanization of some operations, and (g) increased interest rates on credits for farm machinery so as remove the implicit subsidy on capital input, and (h) charging full costs for services provided in the irrigated schemes. 13/ The real price of gasoline and tractors declined by 20% and 60% respectively vis-a-vis the CPI between 1971-80. - 38- 3.51 Labor Shortages: A second and more cogent reason given for mechanization is the existence of severe "labor shortages" in agriculture. The available evidence suggests that there is an abundant supply of unskilled labor in the country as a whole, and that the "labor shortage" problem is actually a more specific problem of shortages of labor--mainly migrant labor--for cotton picking and sugar cutting. Although seasonal shortfalls of labor in terms of the gap between "availability" and "requirements" do exist--especially in the irrigated schemes--these "gaps" are exaggerated and depend on questionable assumptions regarding the availability of cotton harvesting days and cotton picking rates. The demand for labor may exceed supply at existing wage rates prevailing in the schemes. 14/ But this is due to the declining real wage rates for cotton picking and other physically hard manual tasks in agriculture relative to those in alternative occupations--a decline due in large part to the decline in real returns to cotton growers until the last two years. As a result of the relatively low wages paid, tenant family labor, locally hired labor and migrant labor have not been eager to work in the irrigated schemes. The "labor shortages" have in fact been induced by inadequate wage and non-wage incentives; they do not reflect an absolute imbalance between "requirements" and "availability". The shortages can only be overcome when the wage and non-wage incentives are improved. 3.52 Much more labor would be supplied to the irrigated schemes if appropriate measures were taken. Wage rates that are competitive in relation to those other sectors and occupations could be offered in the schemes. 15/ A premium wage for hard physical labor involved in many agricultural operations such as cotton picking and cane cutting is clearly needed. The rising costs of transportation to and from the schemes could be fully allowed for in estimating the wages to be paid to seasonal migrant workers, and transportation could be provided during the harvesting season to take workers from one scheme to the next. Larger advances could be made, especially to smaller tenants--or greater working capital could be made available to them via formal credit institutions--to help them finance their contractual requirement for labor. Greater attention needs to be given to non-wage incentives in the schemes by changing settlement policies to include the provision of basic services for tenants and migrant laborers--including housing, health, education--so as to attract greater 14/ Manpower "availability" and "requirements" are misleading measures because they involve only physical numbers, and not quantity-wage relationships. Demand and supply relationships are by contrast defined in terms of the quantity demanded or supplied at a given wage rate. 15/ The experience last year in Gezira indicates that, when wage rates for cotton pricing picking are raised, the necessary labor does in fact become available. The returns to labor effort are particularly relevant for cotton picking labor where real wages per unit of effort tend to fall when yields are low and tend to rise when yields are high even for the same piece work rate. - 39 - supplies from other sectors and regions. And greater attention is needed to providing off-season employment opportunities for migrant labor. The question of the appropriate size of tenancies and tenurial reforms also needs to be investigated. But none of these measures will be effective unless cotton cultivation continues to be made more productive and profitable so that producers have both the incentive and ability to pay more for labor. 3.53 Measures should also be considered that would reduce the peak demand for labor by staggering harvesting dates in the schemes to the extent possible and by developing varieties that allow longer harvesting periods. The potential costs of slightly reduced yields need to be measured against the savings that would arise from not having to mechanize additional operations. 3.54 Further mechanization should only be undertaken after careful studies to determine whether capital intensive methods of producing crops will yield higher economic (as distinct from financial) returns than labor intensive methods at competitive wage rates. Given the importance of the "labor issue," efforts should be taken to collect data on rural wages and employment on a regular basis. 3.55 Transportation Costs: With huge distances between the major producing areas and the primary export outlet of Port Sudan, high transportation costs play a major role in determining the comparative advantage of different crops in different regions and in determining the export potential from different areas. Transportation costs by road and rail are high and carrying capacities limited. The lack of transportation is cited as an important factor in explaining the low export potential of the traditional sector. 3.56 The evidence, however, shows that even when higher transportation costs (evaluated at their border prices) are taken into account, many crops from the traditional sector continue to enjoy a comparative advantage over similar crops in the irrigated sector. The constraints to the export potential are really imposed by the limited carrying capacities of the road and rail network serving the traditional areas in the West. Only if this carrying capacity is increased can increased marketed surpluses be tapped for exports. Whether additional exportable surpluses and inter-regional trade justify additional investments in transportation remains an open issue needing further study. 3.57 Credit: Although considerable attention has been given to various institutions serving agriculture--research, extension, marketing, parastatals--credit and credit institutions have been relatively neglected. 16/ The institutional and financial ability of the agricultural credit institutions to meet the needs of the farmers remain 16/ See IBRD: Sudan Agricultural Sector Survey, Report No. 1836-SU, World Bank, May 18, 1979, specially Volume III, Annexes 5-9 for example (not released for public use). - 40 - severely limited and the formal banking system generally neglects the short term capital needs of the agricultural sector. Although the agricultural sector dominates the economy, the total loan portfolio of the Agricultural Bank of Sudan (ABS), the prime institution providing agricultural credit, was a mere LS 20 million in 1981 compared to over LS 300 million advanced by the commercial banks to all sectors in 1977. 17/ Most of the ABS loans go to the cotton sector or the rainfed mechanized sector, and most of these are for purchases of machinery. Little or no credit is available for poorer farmers in the traditional sector or for working capital to finance annual crop production. In the irrigated sector, advances are made by the schemes, but only for cotton cultivation. Credit remains a major constraint throughout the sector to expanding production. 3.58 By default, those in need of credit--a majority of the producers--have to rely on the "sheil"18/ system and the private money lenders who dominate it. Although part of the cost to borrowers under the sheil system reflects the cost of providing valuable services in remote areas where ordinary lenders find it difficult to function, the real interest charges are still very high (and often exploitative)--varying any where between 100-300% per annum. These rates are a disincentive to the use of credit in crop production, leaving borrowers with very low returns to their efforts and trapping smaller producers in a situation of chronic indebtedness from which they find it difficult to extricate themselves. 3.59 To relieve this situation of chronic shortage of short term credit in the sector, measures should be taken to increase the financial and human resources available to ABS, increase its number of branches in rural areas, and increase the share of its portfolio going to short term working capital--as distinct from medium term loans for mechanization. For such credit expansion, additional resources will have to be budgeted. Incentives should also be offered to private commercial banks (in terms of discounting facilities) in order to encourage them to set up rural branches and extend a larger share of their portfolio to the agricultural sector. 3.60 Adaptive Research: Agricultural research remains underdeveloped in the Sudan. With its five regional stations and twelve substations, most of the agricultural research in the Sudan is under the Agricultural Research Corporation (ARC), a semi-autonomous body. 3.61 Past research efforts have concentrated on improving the technology and productivity in the "modern sector", with a specific focus on cotton and the irrigated areas. Rainfed areas, especially the 17/ In 1977 of the total short term loans of LS 259 mls advanced by the commercial banking sector less than 1 percent (only LS 0.4 mls) were advanced for crop cultivation. Data from Bank of Sudan cited in Ahmed Homeida Ahmed: "Lender Behavior and the Recent Performance of Rural Financial Markets in the Sudan," Ph.D. Dissertation, Ohio State University, 1980, p. 50. 18/ Informal loan system in the rural areas. - 41 - on the comparative advantage of the rainfed sectors in producing many crops and in light of its export potential, the research orientation of the ARC needs to be directed increasingly in the longer term towards the rainfed sectors--both mechanized and traditional. Even though funding new higher yield technologies for the complex crop-livestock farming systems of Western Sudan is unlikely to yield results in the short run, it is particularly important that the traditional rainfed sector not be bypassed. A foundation should be laid now if research results are to pay off in 10-15 years. 3.62 The need for this reorientation is being recognized by Government and donor agencies, and further measures are being taken. These include (a) establishing research stations in all the main agro-climatic zones, specially in the rainfed areas of the country, (b) increasing their financial and staff resources, (c) setting up agronomic field trials in zones where potential new technologies exist to test their viability under field conditions and (d) propagation of improved varieties. These recommendations are already under consideration in connection with a research project being proposed for Bank financing. 19/ 3.63 It is essential during a period of budgetary crisis that the importance of long term adaptive research not be neglected. Budgetary cuts in research will not be felt for a long time but could have serious consequences for the future potential of the agricultural sector. Future Outlook 3.64 If supported by appropriate policies, the physical potential should exist for an overall growth in agricultural value added of around 5 percent p.a. for the rest of the 80s. Crop production is expected to increase considerably, particularly in the cotton producing irrigated subsector, as a result of recent investment and improved management structures. This would imply a reversal of the downward trend experienced during the 70s. Crop specific details are shown below: Annual Growth Rates 1970/71-80/81 1980/81-90/91 Cotton -7.7 7.7 Long Staple -13.2 3.3 Medium Staple 7.9 11.2 Short Staple 0.4 15.4 Groundnuts 8.7 5.8 Sorghum 3.7 3.7 Sesame -3.9 5.7 Millet 1.7 4.4 Wheat 2.2 8.0 19/ See "Agricultural Research, Extension and Training in the Irrigated Sector," World Bank (Eastern Africa Regional Office), April 1983 (not released for public use). USAID has also taken a keen interest in funding research in the Western Savanah belt. - 42 - Total cotton production, both irrigated and rainfed, is expected to grow by an average rate of nearly 8 percent p.a. This would result in a total seed cotton production (including short-staple cotton) of around 784,000 tons by 1990/91, over 80 percent of the Government's original Export Action Program target. Both sorghum and groundnut production are expected to grow at rates similar to those experienced during the 70s. 3.65 For the projected growth in millet and sesame to materialize, more attention will be needed to the development of the rainfed sector. Finally, wheat, which is only grown in the irrigated schemes, is expected to show considerable growth because of recent investments. 3.66 Because of the relatively high level of domestic consumption of most of Sudan's export crops, a given growth rate in total agricultural output can, with proper measures to restrain growth of domestic consumption, result in a far higher rate of export growth. For example, about 80% of groundnut production is consumed domestically, leaving 20% for export. If domestic consumption were held stable, allowing for population growth and keeping percapita consumption of groundnut stable, a 6% growth of production would still support an export growth of around 25% p.a. Thus attention paid to raising agricultural growth rates could yield even higher growth rates for exports (ref. Chapter 7). - 43 - Chapter 4 INDUSTRIAL SECTOR Current Status 4.01 The importance of the industrial sector in the Sudan lies not so much in its current contribution to the economy (only 6 percent of GDP), but in its potential contribution based on presently underutilized capacity. With at least one third of manufacturing value added coming from traditional small-scale industry, the sector is also a valuable source of employment and income for many Sudanese. Capacity utilization in manufacturing plants today is estimated at only 20-30 percent, with rates in private companies averaging about twice those of the public sector enterprises 1/. 4.02 The economic costs of underutilized capacity are twofold. First, the loans that financed the development of this sector during the 19708 must be repaid (of the project loans taken out by the public sector during the mid-1970s, about 25 percent or around LS 420 million were for the industrial sector). Without full capacity production in industry, resources will have to be taken from other sectors to repay these loans. 4.03 Second, underutilized capacity means foregone production. This cost is more difficult to measure than the the cost of debt service because, for some poorly designed and located plants, the additional variable costs of production may exceed the value of the output--even ignoring the cost of capital. For a broad spectrum of plants including many of those in the sugar, cotton, textile, cement, leather and food products industries, however, it appears that the economy would benefit by completing ongoing projects and by restoring existing projects so that they could operate closer to their full economic capacity. 4.04 The major problems which prevent the manufacturing sector in the Sudan today from reaching acceptable levels of capacity utilization, efficiency and profitablity are (a) inadequate infrastructure--particularly power and transport, (b) shortages of material inputs--both foreign and domestic, (c) the limited size of the domestic market, (d) past choices of product, production technique and location, (e) management and labor shortages, (f) competition from imports, and (g) price controls. Some of these constraints, such as the past choice of product and technique, are so severe for various activities that Government will need to give serious thought to closing permanently certain plants and reallocating any salvageable assets. Such plants could probably be sustained only at a continuing loss, which would be inconsistent with the nation's economic recovery effort. 1/ For an analysis of the economic efficiency of selected manufacturing plants in Sudan, see T.G. Moe, SUDAN: Export Development Study, IBRD, 1983 (not for public distribution). - 44 - Infrastructure 4.05 Recent surveys of manufacturers in the Sudan indicate that shortages of power and transport are among the most critical barriers to higher levels of capacity utilization. 4.06 Power: During the mid-1970s, power generation grew by an average of only 8 percent p.a., while industrial capacity was growing by perhaps 20 percent p.a. 2/ The shortage of power for industry was compounded by the rapid growth of consumer demand for power, particularly in the relatively urbanized Blue Nile Grid area that includes Khartoum. Between 1977/78 and 1981/82, domestic power consumption grew by 12% p.a. while overall power consumption rose by only 6% p.a, reflecting the urban bias of price and incomes policies during this period. Despite the relatively rapid rise of power consumption in the urban areas, the rate of power consumption per person is only 60 kwh/year, among the lowest in the world. 4.07 In an effort to overcome the shortages of power, which is vital to the modern, capital intensive industries generally favored by public policy during the 1970s, many private sector factories installed their own generating plants. Some public sector plants did so as well, but in general this was forbidden by government policy. This accounts in part for the substantially lower capacity utilization rates in public sector plants. Captive generation plant (excluding that in sugar factories) is now equivalent to about 50 percent of NEC's generation capacity. 4.08 Captive generation is not necessarily desirable. Both the capital cost of generator equipment per unit of output and the operating costs are high compared to those of large-scale plants. As petroleum is very scarce in the Sudan, generators often sit idle for lack of fuel. For many marginal factories, the doubling of petroleum prices in 1973/74 and again in 1979/80 made the cost of self-generation prohibitive. 4.09 The Government is now seeking to eliminate the power bottleneck to industrial production through major investments in the power sector. In addition, consideration is being given to liberalizing the rules on importing generator sets. The ultimate solution, however, must lie with increased the generation capacity of the National Electricity Corporation, which was reorganized om 1983 to help increase its efficiency. 4.10 Transport: Several years ago, transport was listed by industrialists as one of their most critical constraints. Lengthy delays were encountered in rail shipments from Port Sudan, and road shipments were 2/ There is no official estimate of the value of installed industrial capital in the Sudan, so direct calculation of the growth of fixed capacity is not possible. Industrial investment, and thus capital stock, has been estimated here using the average incremental capital output ratio for African countries and Sudan's industrial output in the mid 70s. - 45 - costly and unreliable. The congestion has diminished over time because of the sharp decline in the volume of exports in recent years, the compression after 1978 in the volume of imports, and the diversion of freight from the rail system to the road transport industry that has grown up around the new paved road between Khartoum and Port Sudan. These developments have substantially reduced the delays in rail transport. 4.11 As far as transport is concerned, manufacturers today are primarily concerned about access to markets outside of the Khartoum area, particularly in the South and West. The Government has done very little to develop the river transport system, which is potentially the cheapest means of transport to the Southern Region, and the only effective means other than air transport for much of the year. To the West, the road system is still very rudimentary, depending almost entirely on unpaved roads and desert tracks. Better transport to these areas, through improved roads and river transport, would in the longer term help expand the markets for producers of basic consumption goods and would also facilitate production and export of agricultural goods from these areas. Material Inputs 4.12 Shortages of material inputs are another key constraint for many factories. Both imported and domestic supplies are costly and scarce. 4.13 Imported Inputs: The shortage of foreign exchange is the key constraint to obtaining adequate imported inputs. Some manufacturers report delays of up to a year in obtaining foreign exchange through commercial banks at official rates. Others have entirely given up trying to get foreign exchange through official channels and now deal exclusively on the free market. 4.14 In late 1983, free-market foreign exchange cost about 40 percent more than foreign exchange purchased through the commercial banks (at about LS l.90-LS 2.00 per dollar). This prevents marginal firms from using the free market. It is encouraging, however, that efficient firms find it profitable to buy their inputs with free-market foreign exchange purchased at a rate that reflects approximately its opportunity cost. An adjustment in the exchange rate along the lines discussed in Chapter 2 would therefore not be destructive to the efficient firms in the industrial sector, as some have claimed. 4.15 Obtaining licenses to import industrial materials is generally not a problem if the manufacturer has the required foreign exchange. Some manufacturers face serious difficulties, however, in obtaining permission from the Government to charge prices for their products that reflect the actual cost of producing with imported inputs paid for with foreign exchange that was purchased at the open market rate. Because of the severe shortages of foreign exchange and thus of imported inputs, an improved system of allocating both foreign exchange and imports in the short term may be necessary until the pricing system can become a fully effective means of resource allocation. - 46 - 4.16 The Government began allowing commercial banks to deal in foreign currency at free market rates in March 1983. Provided the Government reduces its current level of intervention and control in the foreign exchange operations of commercial banks, and that the exchange shops are allowed to reopen to assure greater competitiveness in the foreign exchange market, this measure should gradually improve the availability of foreign exchange to those industries sufficiently productive to be able to afford inputs purchased at the free market rate. The ultimate solution to the foreign exchange scarcity and thus to the shortage of imported inputs is a longer term matter, however, involving heavy emphasis on export oriented production, particularly from the agricultural sector, and other measures--especially pricing--that will encourage a more appropriate balance in the demand for domestic and imported goods, both in production and consumption. For example, efforts are needed to reduce the heavy use of imported fuels in production and consumption in Sudan--through more efficient use with existing equipment, selection of alternatives (e.g. rail instead of road) which are more energy efficient, and through substitution for imported petroleum by renewable, domestically produced energy forms such as wind, water, sun and biomass where feasible. 4.17 Domestic Inputs: The scarcity and poor quality of domestic inputs is a common complaint among manufacturers as can be seen in the following examples: The stocks of cotton supplied to some of the textile mills by the Cotton Public Corporation suffer in varying degrees from stickiness (honeydew from the whitefly) and from physical deterioration due to improper storage. This makes it difficult to process the cotton efficiently. The shoe industry in the Sudan finds it hard to obtain the volume and quality of leather it needs from domestic sources, in part because the tannery which supplied enough leather for 6,000 pairs per day before nationalization is now unable to produce enough for 1,500 pairs per day (at the same time, the staff has increased substantially). The local tanneries in turn find it difficult to obtain hides, which are largely shipped abroad through various channels. The oil seeds and soap industry has suffered during the past decade because of the fall in cotton production (see Annex 1, Table 7.1). As a result, the industry has turned from cotton seed to groundnuts, which has substantially increased its unit input costs. This in turn has reduced the nation's export earnings. Although groundnut production rose from 340,000 mt to over one million mt between 1970/71 and 1977/78, the volume exported dropped from 280,000 mt to 135,000 mt between 1975/76 and 1977/78, largely because of diversion to the domestic market. - 47 - The high cost of domestic inputs relative to imported alternatives, especially taking into consideration quality differences, is also detrimental to efficient, profitable domestic production. 4.18 The firms that on average have the greatest potential for economically efficient production--those based on domestic raw materials rather than imported inputs--are the ones suffering most from the poor quality of domestic inputs. Measures now being taken by the Government to assure that more efficient agricultural production will directly benefit these industrial firms. Where supplies are constrained by the inappropriate prices set by Government to producers of raw materials, or where manufacturers cannot afford to pay adequate prices because of artificial constraints on prices for their finished product, appropriate actions should be taken. At the same time, care should be exercised that domestic prices adequately reflect the world value of locally produced goods. Also, it may be more appropriate to export high value domestic products such as long staple cotton and oilseeds (particularly groundnuts) and to import cheaper substitutes such as synthetic fibers for blending in the production of low-quality yard goods and low value vegetable oils or animal fats for soap production. Market Size 4.19 The effective size of the market for industrial products is limited by low per capita incomes and the difficulties of reaching consumers in remote areas. This, together with the difficulties of attaining export-competitive industrial production at Sudan's current state of development, limits the potential range of industries in which Sudan could afford to invest because of economy of scale considerations. 4.20 Although economies of scale are not yet a critical constraint at Sudan's current level of industrial development, it already faces problems related to market size; in some industries, installed capacity exceeds the requirements of the national market, forcing underutilization of capacity. In wheat milling, for example, total installed capacity is about 336,000 tons per year, and planned extensions and new construction will raise total capacity well above domestic milling requirements. 4.21 Because of heavy over-investment, there is also an imbalance in the edible oils industry, both between production capacity and market, and between production capacity and inputs. There are numerous edible oil crushing mills in Sudan with a coabined annual capacity exceeding the annual supply of edible oil seeds for crushing. Even if the production of edible oil seeds could be expanded to absorb the crushing capacity, it is doubtful that the production could be sold at adequate prices on the world market. Crushing margins are very thin, and the world value added in crushing, at least for the plants studied, was negative in economic terms at the time of writing.3/ 4.22 To avoid further over-investment in industries already suffering from excess capacity, a policy package is needed that includes: (a) realistic foreign exchange prices that will tend to keep the cost of 3/ Moe, op. cit., p. 26. - 48 - capital too high for new plants to compete with existing plants in the same sector; (b) caution in extending fiscal incentives under the Encouragement of Investment Act, 1980 (such incentives tend to encourage the establishment of factories for access to tax concessions rather than production); and (c) an improved process of investment licensing that would include both a more careful review of the existing state of the industry in which the proposed firm would have to compete and a thorough review of the economic as well as financial returns of the proposed project. Choice of Product, Technique and Location 4.23 The heritage of price signals during the 1970s that did not reflect economic values led investors to choose products, means of production, and locations that are now recognized as suboptimal. 4.24 Choice of Product: Products now being produced in Sudan such as higher quality textiles and metal products tend to require a high percentage of imported capital equipment and inputs. Although there is some scope for alternative technologies that use relatively more domestic resources, the scope for factor substitution would be limited for most of these products if quality were to be maintained at a level sufficient to compete with imported goods. With a severe shortage of foreign exchange and a need to maximize its efficient use, full capacity production of import-intensive products may not be possible or advisable; the economic cost of using installed capacity may in some cases be higher than the cost of leaving it idle. Alternative uses could perhaps be found for some of the equipment. 4.25 Choice of Technique: Because of the prices prevailing in the 1970s, the bias of external aid towards capital-intensive techniques, and the prestige associated with "modern" facilities, some investments were made in products for which Sudan had a comparative advantage, but using techniques that were not appropriate to the local conditions. For example, while Sudan appears to be an efficient grower of sugar cane, the Kenana Mill was built using such advanced technology that economically efficient production may be very difficult. If Kenana has to compete with imports, it may find it difficult to operate at full capacity. If it is offered protection through special purchase contracts with the Government, the economy--and the consumers--will have to bear the cost of a production technique that was not consistent with the resources of the economy. 4.26 Unlike many developing countries, Sudan does not have a major unemployment problem. In fact, one of the key constraints to capacity utilization in Sudanese industry is the shortage of skilled workers and managers. Some unemployment and disguised unemployment exists at low skill levels in urban areas, and on a seasonal basis in rural areas. But a combination of insufficient educational facilities in the country and a high demand in neighboring oil-producing countries for skilled labor and managers from the Sudan has left the country very short of manpower in these areas. 4.27 This manpower problem has had two major effects. First, the shortages of managers and skilled workers have contributed to major delays - 49 -- in implementing the nation's investment program. Much of the nominal capacity is underutilized because the factories have not been completed (this in turn has contributed directly to the current debt service problems). Second, even completed factories which were initially able to hire the staff required for capacity operation have found it difficult to retain them. Recruiters from neighboring oil producing countries have, for example, left with the staff of entire sections of factories. 4.28 Labor is also rather expensive in Sudan, a reflection of its scarcity in certain areas and alternative job opportunities abroad. A recent study of the textile industry indicated, for example, that average wages for textile workers in Sudan were $0.65/hr, compared to $0.40 in Egypt and $0.32 in Pakistan. 4.29 In the face of severe labor shortages in certain skill areas, there is a natural tendency to turn to labor saving, capital intensive alternatives. As long as the exchange rate does not reflect the true opportunity cost of imported goods, this may be financially attractive. But the economic costs of this approach are very high. 4.30 Instead of more equipment to replace labor, direct efforts to improve the supply of skilled labor and managers are required. For example, more emphasis needs to be given in the Sudanese educational system to technical/vocational training and less to the liberal arts, thereby increasing the share of graduates with appropriate skills. The cost of technical/vocational training is higher per student than for liberal arts education because of the required laboratories and workshops. This cost could be met in a number of ways: First, aid funds could be reallocated to vocational training from lower priority, capital intensive projects including costly infrastructure projects and new factories of the type being discussed by the Military Economic Board. Second, countries benefiting from the 'export' of skilled Sudanese generally have foreign assistance programs in the Sudan; they could be asked to increase their assistance for manpower training. Third, a system should be established whereby Sudanese receiving training at Government expense would have to repay a certain share of the training costs. 4/ Fourth, factories could be encouraged through a training tax/rebate program to set up on-the-job 4/ This could be done through a system of student loans. A student would take out a legally binding, low interest loan each semester to pay a given percentage of his training costs. Interest and repayment obligations would begin upon graduation from the course. A fixed percentage of these loans would be forgiven each year for students staying in the Sudan (on the theory that the economy as a whole is capturing the "externalities" of the training). Sudanese migrating from the country to work abroad would be obligated to repatriate earnings sufficient to repay the amount due on their student loans each year. Renewal of passport and work permit would be conditional on timely payment. Since the basis of the obligation would be a legally binding loan, the Government would have clear legal recourse in the event of non-payment. - 50 - training and apprenticeships. The training tax, which would implicitly charge for the benefit of workers educated by the state, would be refunded to an appropriate degree to businesses with appropriate training programs. Competitition from Imports 4.31 Manufacturers in Sudan report competition from imports as a key factor preventing full capacity utilization. This appears to be a particular problem in the textile industry. The country has sufficient installed capacity to meet 110 percent of domestic demand. Output in 1980, however, was only 25 percent of capacity, and over 70 percent of require- ments were imported. 4.32 To a certain extent, inefficient production, due to the problems listed above, makes it impossible for some firms to compete with imports. In cases where there is no economic solution to the underlying problems, the best approach may be to divest, allocating salvageable assets to other more productive enterprises. For example, the weaving sheds in remote locations that have no potential for efficient production should probably be shut down and dismantled. The salvageable equipment could be installed in other plants located closer to sources of raw material and markets, while the buildings could be put to other uses (e.g. storehouses or repair shops). 4.33 Even if the problems listed above could be solved, many industrial plants in Sudan with a good potential for efficient production would still find it difficult to compete with imports because of the current combination of import taxes, smuggling, and an overvalued exchange rate. 4.34 The high tariffs (and in some cases bans) on imported goods such as textiles should have given adequate protection to efficient local producers, but widespread smuggling has nullified their effects. A com- parison of data on exports to Sudan as reported by other countries and imports reported by Sudan from these countries indicate that major flows of goods are not captured in the Sudanese customs data 5/. A majority of the discrepancies are almost certainly a reflection either of outright smuggling or of smuggling through falsification of documents. "Documentary smuggling" can be attacked directly; the International Trade Center is already working in this area with the Government. The direct smuggling will be more difficult to control because of Sudan's long, sparsely populated borders. 4.35 Some control could be sought through cooperation with neighboring countries and by strengthening Sudan's own border patrol units, but the chances for significant improvement through direct control are minimal. The only effective way to control direct smuggling is to reduce the incentives to smuggle. Two policies would be particularly important: first, reliance on an appropriate exchange rate rather than import duties 5/ Based on data from the GATT Trade System as maintained by the World Bank. - 51 - to control imports; second, domestic prices that are not subsidized either directly or through price controls. Price Controls 4.36 According to the Ministry of Industry, the prices of all industrial products produced in Sudan are controlled by Government at the factory, wholesale and retail levels. 4.37 Discussions with industrialists and traders indicate that the price control system effectively covers only the more important products and industrial plants. Nevertheless, since major products and industries are affected, price controls have become a major issue. 4.38 Price controls reduce production efficiency by preventing the manufacturers from earning adequate returns and by encouraging manufacturers to concentrate more of their efforts on trading than on production. Without adequate returns and incentives to focus on efficient production, the producers cannot adequately maintain the capital stock of the plant, keep an adequate supply of working inventories on hand, invest in advertising, or undertake other forms of market and product development that would expand markets and production efficiency. 4.39 Price controls also reduce production efficiency by diverting the attention of the plant managers from managing factory operations to avoiding price controls. In an inflationary environment, manufacturers find that they must apply frequently for price increases. Such increases are supposedly based on cost of production and a "reasonable" profit level, ranging from 5 to 15 percent. However, the price control system is so distorted that financial survival depends on finding ways of avoiding the controls. 4.40 The major distortions in the price controls as now imposed are that (a) real costs of production are ignored and (b) profit margins favor the traders rather than the producers. 4.41 Under current practice, the Industrial Control Department in the Ministry of Industry cannot take into consideration certain major costs. For example, even though most manufacturers must buy the majority of their foreign exchange at free market rates, the price control authorities allow only the offical rate in calculating the costs of imported inputs. This understates foreign exchange costs by about 40 percent 6/. 4.42 Similarly, the price control system allows for only part of the interest cost borne by manufacturers--on the basis that, if the firms were "properly" financed, most of the capital would be in the form of equity rather than debt. The price control officials in Sudan are aware of the 6/ Before the change from the parallel rate of LS 0.90 per dollar to the new official rate of LS 1.30 per dollar, this problem was acknowledged by allowing imports to be calculated at the rate of LS 1.05 per dollar; at time of writing, a similar margin over the new official rate was not allowed. - 52 - difficulties inherent in current policies, but decisions will have to be made at higher levels before the current practices can be changed. Construction Industry 4.43 The domestic construction industry is still in an early stage of development. Local private contractors exist who can handle all forms of residential construction and smaller commercial and industrial buildings. Within the public sector, the Roads and Bridges Public Corporation and the Public Earthmoving Corporation are capable of undertaking substantial civil works projects. 4.44 The critical problems facing the domestic construction industry today are (a) a lack of sufficient skilled worker and managers, (b) a lack of skills in advanced construction techniques, (c) shortages of equipment, (d) shortages of imported inputs, and (e) a lack of working capital. These problems are very similar to those faced by manufacturing industry as discussed above. Some of these problems can only be resolved in time with improvements in the nation's economic situation. However, certain bottlenecks - particularly managerial and technical skills, could be alleviated through more active cooperation between foreign and domestic contractors. 4.45 In summary, the industrial sector in the Sudan currently suffers from widespread inefficiencies related to lack of adequate infrastructure facilities, shortages of inputs, the limited size of the domestic market, excess capacity, inappropriate choice of product, technique and location, management and labor shortages, competition from imports and price controls. For some industries, particularly those heavily dependent on imported capital goods in current inputs, the only solution during the next five to ten years may be to close the plants and salvage the equipment for more productive uses. But in many major industries such as cement, sugar and parts of the textile sector, the Government can implement policies that will overcome the barriers to more efficient industrial production. The industrial sector could become a source not only of further, economically efficient import substitution, but also of exports expansion, thereby helping to re-establish a sustainable external balance. Petroleum 4.46 The first petroleum reserves in the interior of Sudan were found by Chevron in April 1978 in the Unity 1 field. In May 1979 the Abu Gabra well near Mhuglad tested at the rate of 500 bpd. Less than one year later, Unity 2 gave test flows of 2800 bpd. 4.47 Since then, Chevron has steadily expanded its drilling program, widening the search to other areas including Talib, Adar, Yale, Sharif, and Heglig, and drilling a total of around 20 producing wells (current wells and production rates are shown in Annex 1, Table 8.6). In 1983 Chevron expects to spend about $130 million on exploration. 4.48 The Government originally planned to build a refinery in the Kosti area to exploit the nation's petroleum reserves. With the rising level of proven and probable reserves, and the difficulty under current - 53 - economic conditions of finding financing for a refinery (which would be oriented to import substitution rather than export), the Government elected instead to develop an export pipeline. 4.49 Plans for the pipeline are now firm. 7/ Bids were invited in early 1983 and are currently being reviewed, with final award due in September 1983. Construction is to begin in 1984 and would be completed by end-1987. 4.50 The pipeline is designed to carry 50,000 bpd at the outset, but could be expanded to 200,000 bpd by adding pumps and pumping stations. The main 22-24 inch diameter pipe would be paralleled by a smaller 8-10 inch pipe to carry diesel fuel or kerosene. This cutter stock would be used to dilute the very waxy Sudanese crude so that the oil can be pumped without heating. The diluent line would have sufficient capacity to provide various clean, light "white" products to consumers along the line, which will cross areas not currently served adequately with fuel supplies (see Map 3). 4.51 Benefits to Sudan from the pipeline depend essentially on two factors--the share of oil produced that the Government will own, and the value of this oil net of transport costs to the border. 4.52 Chevron has the right to recover all expenses each year in amounts equivalent to up to 30 percent of the value of oil produced. From the remaining 70 percent, the Government gets 70 percent, or 49 percent of the total production during the year. After full cost recovery by Chevron, the Government will retain a larger share of the oil. 4.53 The 49 percent of oil received by Government during the cost recovery period will not be pure profit, however. A transportation tariff, to be paid in oil, will be charged by the White Nile Petroleum Corporation, which will own and operate the pipeline to the Red Sea Coast. The tariff will be sufficient to recover all operating expenses of the pipeline, all debt service on the pipeline construction, and a 15 percent rate of return to the investors (including the Government). It is estimated that Sudan will receive average annual net benefits of at least $180 million in 1982 prices 8/. 4.54 The Government may be able to mobilize some concessional financing for the project, but would probably not be advised to divert a significant share of the existing level of concessional financing from other areas that are less able to produce a commercial rate of return (eg. essential social projects). The Government might also be able to put up 7/ The construction of the pipeline has subsequently been delayed by the armed conflict in the Southern Sudan. 8/ IFC has estimated that the average annual value of the discounted net present value of these benefits expressed in 1983 prices is $113 million. - 54 - part of its share in domestic currency, but since it has no savings at present, this would also have to be borrowed until fiscal performance improves. 4.55 Five other international companies are currently exploring for oil in Sudan, but no significant discoveries have been announced by these companies to date. - 55 - Chapter 5 SERVICES SECTOR 5.01 The Sudanese services sector, including both social and economic services, is relatively large, constituting roughly 50 percent of GDP, compared to an average of about 30 percent for all low income countries. Within this sector, transport and trade dominate. These two subsectors present a variety of critical issues with respect to the nation's economic recovery. Transportation 5.02 Investment in the transport sector consumed a major share of the public investment program during the 1970s--about 23 percent of the total. Nevertheless, an imbalance developed between the rate of transport investment and that in both new agricultural areas and industrial activities. The composition of transport investments was perhaps as important as the absolute level. This section examines the current capacity of the transport sector and the measures that are being taken in each transport mode to improve performance. Capacity 5.03 The capacity of the rail system deteriorated during the 1970s as a result of poor management, lack of spare parts, and deteriorating labor relations. During the same period Government gave increasing priority to roads and airports. Furthermore, the nation's substantial potential for river transport remained undeveloped (Table 5.1), a pattern of development which left industrial and agricultural activities without adequate efficient transport services, particularly in the West and South. Table 5.1 SUDAN: Volume of Transport by Mode, 1971/72-1981/82 1971/72 1981/82 Freight Passengers Freight Passengers Mode of Ton-Km % of Pass-Km % of Ton-Km % of Pass-Km X of Transport Billion Total Billion Total Billion Total Billion Total Rail 2.7 73 1.0 .. 1.5 26 0.9 10 Road 0.9 25 - .. 3.9 67 7.2 82 Pipeline - - - *- 0.3 5 - - River - - 0.1 .. 0.1 2 - - Air - - 0.1 .. - - 0.7 8 Total 3.7 100 1.2 .. 5.8 100 8.7 100 Source: Annex 1, Table 8.9 and Bank staff estimates. - 56 - 5.04 Although freight moved by rail declined in the past decade, the total volume of freight moving through Port Sudan rose steadily. The growing private sector trucking industry, stimulated by improvements in the Khartoum/Port Sudan road and by artificially low prices for equipment and fuel, gained a major share of the freight lost by the rail system. This involved, however, high economic costs to the economy, including import dependency and a relative neglect of the rail system. 5.05 By the end of the 1970s, manufacturers complained regularly about their inability to get railway wagons to move their inputs from Port Sudan to Khartoum. Production in the agricultural sector was similarly constrained, and in many cases farmers found it difficult and costly, if not impossible, to move export products from the fields to Port Sudan. In 1978, for example, a significant share of the bumper groundnut crop was lost because of lack of transport equipment available to move it from the West, a reflection in large part of poor railway performance. In 1981/82, sorghum producers in the rainfed areas experienced similar difficulties. The livestock sector has suffered substantial losses in the past because cattle are driven over long distances from the west in the absence of adequate freight services. The poor rail performance combined with the rapidly rising cost of truck transport seriously eroded the returns to producers in these areas. 5.06 The transport situation today is improving--in part because of the currently depressed macro economic situation. The volume of exports fell by about 15 percent between 1972/73 and 1981/82, which relieved some of the strain on the transport system--particularly the railway. Continued efforts will be needed, however, to assure that the rail system can support rising demands for transport services if economic recovery takes place as planned. Sub-Sector Prospects 5.07 Recent developments within the rail, river, road, air, pipeline the seaport subsectors generally point to improvements in overall transport sector performance, though additional measures will be required in certain areas to assure continued progress and efficient resource use. 5.08 Rail System: The railway system in Sudan, the largest in Africa, deteriorated badly during the late 60s and throughout the 70s. Despite years of efforts to rehabilitate the railways, by 1983 about 20 percent of the freight cars, 40 percent of the heavy locomotives and 50 percent of the passenger wagons were unusable 1/. To rehabilitate the physical capacity of the railways, the Government is now spending LS 15-30 million per year. 5.09 Government is also addressing the organization of the rail system. In 1982, a major restructuring divided the Sudan Railways Corporation into operational regions, decentralizing decision making and repairs that previously had taken place in Atbara. It is too early, however, to judge whether or not this process will actually improve rail operations. The Government has also decided to concentrate efforts to 1/ Annex 1, Table 8.10. - 57 - upgrade rail services on the sectors between Khartoum and the West. The rail system has the greatest comparative advantage on long hauls and in areas like the west where the road network is very inadequate. 5.10 The financial position of the Sudan Rail is weak because of artificially low tariffs set by Government, operational inefficiency and non-payment for services rendered. Rates set by the Ministry of Finance for transport of "strategic goods" such as sugar, petrol, wheat and cotton are estimated to have cost Sudan Rail LS 38 million to date 2/. Effective March 1981, the Government agreed to pay a subsidy of LS 1 million per month to the railways to compensate it for these artificially low rates, which are designed to stimulate exports and make consumption goods cheaper). As of the end of 1982, government ministries and departments owed Sudan Rail LS 11 million in unpaid bills 3/. 5.11 River Transport: The Government is now implementing the 1979 decision to break the monopoly of the River Transport Corporation on transportation along the Nile. A joint venture with the private sector is being established to provide better river transport services. River transport facilities have been improved by the Chevron Company which, in cooperation with the Government, has marked key sections of the White Nile with navigation buoys and has cleared the channel where necessary. Port facilities along the river are being installed, and Chevron has established a substantial tug/barge operation. A review of tariffs for river transport is needed to assure rates that are consistent with full cost recovery and differentiate between main-haul and back-haul travel. 5.12 An approach involving full cost recovery coupled with some cross-subsidization to meet equity objectives could be used for river transport. Since river transport will still have government participation through joint ventures or at least be subject to common carrier regulation, differential rates for various areas and types of freight could be handled administratively. Like rail in the West, river transport in the South has a comparative economic advantage today over other modes. 5.13 Road Transport: Although the rapid expansion of the road transport system during the 1970s does not appear to have been the least cost solution to the nation's transportation problems, the system today is undeniably an important economic asset. The Khartoum/Port Sudan section in particular has made major contributions to relieving the transportation bottlenecks that in the past constrained production in agriculture and industry. 5.14 Despite the many positive aspects of the road transport industry, the Government may wish to consider taking policy actions that would minimize the future economic costs of this sector and maximize its benefits. Most of the policy actions needed relate to pricing. Of these, the most critical is establishment of a flexible pricing schedule for petroleum that will (a) fully reflect the true economic cost (shadow price) of the foreign exchange used to purchase the petroleum, (b) cover in full the domestic costs of transport and distribution, and (c) provide an element of taxation that will contribute to badly needed public revenues. 2/ Sudanow, "Sudan Railways - Terminally Ill?", Nov. 1982, p.17 3/ ibid. - 58 - 5.15 Setting prices that will reflect the first two items would be fairly straightforward. The third is more difficult, for it involves issues of regional equity. An across-the-board fuel tax would tend to penalize consumers in rural areas who have not yet benefited as much as consumers in more urban areas from existing investments in roads. On the other hand, a differential tax would tend to induce blackmarketing of fuel across regional boundaries. 5.16 Despite these problems, petroleum prices should be adjusted to reflect their corresponding value in world markets (c.i.f. prices) plus the inland marketing, distribution and transport costs. For the Khartoum market, this implies increasing the official prices of fuel oil 1500 by 50%, diesel by 43%, and gasoil by 10%. As a second step, a further increase in fuel prices beyond their costs should be considered in line with the Government's policy to increase Government revenue (needed inter alia to support adequate road building and maintenance programs), to conserve foreign exchange, to raise the level of domestic savings and to constrain excess demand. Moreover, from an efficiency point of view, the relative retail prices, including taxes, of the various fuels should be brought in line with their relative costs. At present there are large differences, positive and negative, between the costs and prices of the various types of fuel. In the case of kerosene, however, some departure from the above pricing principles may be warranted, kerosene consumption having special implications for the protection of forestry resources and for the lower income groups. Given the importance of appropriate fuel prices, the Government needs to design and implement an appropriate action program in the near future. 5.17 A final point of concern with respect to the road sector is the overloading of trucks. If not controlled, particularly along the Khartoum/Port Sudan corridor, the paved highway will suffer rapid deterioration, resulting in high repair costs both for the vehicles and for the road itself. 5.18 Airlines: Aside from a few relatively small private charter companies, domestic air transport services are provided solely by the Sudan Airways Corporation, a parastatal which also competes with international carriers on foreign routes. 5.19 After a substantial increase in 1976, passenger traffic seems to have stagnated. Air cargo has dropped since the mid-70s (Annex 1, Table 8.9). These developments reflect a combination of the operational difficulties that Sudan Air has experienced (including lack of foreign exchange to buy fuel), and the major improvements in competing transportation systems, particularly the highways. 5.20 Despite its virtual monopoly position within the Sudan, budgetary data indicate that Sudan Air made losses averaging close to LS 2 million per year in the years 1980/81 and 1981/82. - 59 - 5.21 This situation is likely to be exacerbated by the recent announcement that Egypt and Sudan will expand substantially the level of service between the two countries and will, at the same time, reduce fairs by 60 percent below the existing IATA fare structure. Future IATA rate increases would be applied only after consultations between the countries. Ticket prices, extra baggage and cargo charges would be paid in local currencies. The governments have agreed to subsidize the resulting losses. 5.22 A new international airport at Khartoum has been under discussion for many years. The Government, however, recognized that the cost--probably in excess of one half billion dollars--would be totally inconsistent with economic recovery priorities, so it dropped the project from the public investment program. 5.23 Pipeline: The Port Sudan/Khartoum pipeline has helped to ease the load on the rail system between these two points since it began operation in 1977. Largely because of shortage of foreign exchange to purchase fuel, the pipeline has been operating well below its capacities. Plans for a new pipeline for exporting petroleum products from the Chevron oil fields are well advanced and initial operation is expected by mid-1985 (ref. para. 4.46, ff). 5.24 Sea Port: Prospects for adequate sea port facilities are increasingly bright. After several years of active discussions, the Government has agreed to postpone construction of a new port at Suakin. With this project set aside until it would be economically necessary, the Government can turn its full attention to development of the facilities at Port Sudan. The throughput of this port has risen from 3 million tons in 1974 to 4 million tons including petroleum products in recent years. With current and planned investment projects, the port should have a capacity exceeding 5 million tons by 1990, which is expected to be sufficient to meet the nation's needs given current recovery prospects. By the mid-1990s it may be necessary to begin to develop a second port at Suakin. 5.25 Other Transport Issues: In addition to the issues related to specific transport modes noted above, developments in the areas of new parastatal transport corporations, investment allocation, and management are also of concern. 5.26 The future role of the Military Economic Board in the transport sector is of concern. As noted above, the MEB is already involved in river, road, and air transport. While limited use on an occasional basis of truly excess military capacity could be beneficial to the country, a major increase of MEB activities in the transport sector could be quite harmful for reasons spelled out earlier (ref. para. 2.28, ff). 5.27 A similar concern could be expressed regarding the Regional Governments. Several are now establishing regional parastatal corporations to provide lower cost transport services to their regions. In practice, the goal of lower cost services will almost certainly be translated into providing services below cost, which could prove financially disastrous, both for the regional governments, and for the private entrepreneurs who - 60 - would be forced out of business. This issue will be discussed further in Chapter 6. 5.28 The majority of the investment in the transport sector comes from the public development budget. The Government of Sudan, in preparing its presentation to the Consultative Group held in January 1983, deleted some major low priority investments in the transport sector, including the new port at Suakin and the new airport for Khartoum as noted above. These changes, along with increased priority for river transport facilities and for rural roads, will help assure a more appropriate pattern of investment in the future. Recent announcements from certain parts of the Government regarding both Suakin and a new airport, however, raise questions regarding the Government's commitment to defer these projects. 5.29 Because of public sector salary policies, the lack of parastatal management autonomy, and the loss of skilled workers and managers to the Middle East, the public sector has found it difficult to attract and retain the caliber of managers needed to run its corporations, including those in transport. These problems have been addressed in part through initiatives such as the conversion of selected parastatals (outside the transport sector so far) to corporations under the Private Companies Law. Further action is needed either to improve public sector salaries or to denationalize the corporations. Increased salaries would of course require increased revenues from services or cost savings made through more efficient operations. In addition to salary actions, there is an acute need for training and technical assistance for existing management cadres to upgrade their skills so that they can handle more competently the operation of modern transport enterprises. Trade 5.30 The trading sector in Sudan constitutes nearly 20 percent of GDP, which is large by world standards. The relatively large size of the trading sector per se is not the issue, however. It is the limited economic efficiency and the social inequity associated with this sector. Economic Efficiency 5.31 The prominence of the trading sector in the Sudan results in part from inescapable realities in the economy. Sudan is still in the earlier stages of economic growth. Industry is not well developed, so trade is naturally relatively more important. Sudan is a very large country, which means that distribution channels are long, resulting in a larger share of GDP going into the trading sector. Finally, Sudan has a long tradition of trading, and even those involved in manufacturing and agriculture are often simultaneously engaged in trading. 5.32 The prominence of the trading sector has been emphasized, however, by policy-related factors. First, the level of imports is exceptionally high relative to exports, and most of these imports move through trading channels, not through production processes. If Sudan did not have access to the financing that has made possible the maintenance of this gap, the trading sector would be far smaller. (The issue of the - 61 - imbalance between imports and exports will be discussed further in subsequent chapters). 5.33 Second, the more or less universal system of price controls has created widespread opportunities for highly lucrative black market activities, both within Sudan and in trade across the borders. The high profitability of trading in the Sudan is a key reason for its size. 5.34 The inefficiencies associated with price controls have been discussed above in connection with the agricultural and industrial sector, and will be addressed further below in connection with resource mobilization and the external balance. Equity 5.35 In addition to the negative impacts on economic efficiency, the price controls also appear to have had a significant impact on income distribution. The price controls have generally discriminated against the farmers and in favor of the urban classes. While there are many poor people in the urban areas, many of the subsidies on consumer goods are enjoyed by those who are relatively better off and have the basic income required to purchase significant quantities of these goods. 5.36 Within the urban areas, price controls have generated an adverse income distribution impact against the manufacturers and in favor of the traders. Manufacturers, who must maintain large labor forces, inventories of goods, and costly physical plant, are usually allowed a profit margin of 5-10 percent on costs, and must pay taxes on imported inputs. On the contrary, the traders, who do not have to bear these costs, and who are generally in better position to conceal income from taxation, are allowed profit margins of up to 15 percent on wholesale and retail prices, including profits and taxes paid at earlier levels. The profit rates are higher, the base is higher, and the costs are lower. Thus the rate of return, as determined by government pricing policies, is highly biased in favor of trading and against manufacturing. 5.37 The profits from trading have secondary adverse effects in the form of conspicuous consumption. Perhaps the most visible form of this is the exceptional number of expensive imported cars in the Khartoum area and the boom in luxury residential building. Such expenditures constitute a severe drain on the nation's foreign exchange, and appear to be associated to a significant degree with groups deriving a substantial share of their incomes from trading. 5.38 Elimination of artificial price controls, combined with judicious use of the threat of competition from imports, would eliminate much of the excessive profit-taking by the trading class, to the benefit of the nation both in terms of economic efficiency and equity. - 62 - PART III - FINANCIAL RESOURCES Chapter 6 RESOURCE MOBILIZATION Summary 6.01 Sudan has relied heavily on domestic borrowing and foreign financing rather than its own saving to finance investment since the mid 70s. A significant amount of consumption was also financed. By depending on domestic borrowing and foreign financing rather than taxation and savings, the Government failed to curb private sector demand sufficiently to offset Government's increased demands. The results have been a reduced availability of goods for export, soaring imports, rapid inflation and a debt servicing crisis. Policies need to be adopted that will increase domestic production (ref. Chapters 3-5), reduce Government's borrowing needs, and shift borrowing from external and domestic banking sources to the domestic non-bank private sector. Recent Resource Mobilization Efforts 6.02 Public deficits and foreign financing rose sharply up to 1981/82, while both public and private sector savings fell.1/ Because the public sector commonly financed expenditures by borrowing from the Bank of Sudan ("printing money") rather than by mobilizing resources from the private sector through taxation and appropriate pricing policies, domestic inflation became a major problem, and the country faced a severe external debt crisis. Declining National Savings 6.03 The increasing magnitude of public dissaving and foreign financing can be seen in Table 6.1. 2/ 1/ In the following text and tables, public savings (or dissavings) are defined as the equivalent of the current surplus (deficit) in the Central Government's budget. Thus, the figures shown for private savings (dissavings) include the surpluses (losses) of public enterprises. 2/ It should be noted that Bank staff had to estimate investment and savings in the absence of published Government data on national accounts expenditures since 1978/79. While the exact figures may be questioned and refined, the estimates appear to be consistent with other indications such as the current account deficit in the balance of payments and public sector deficits; it is unlikely that further refinement of the data would change the conclusions presented in this chapter. - 63 - Table 6.1 SUDAN: Sectoral Composition of National Savings and Investment a/ (LS millions) Private Public External D/ Sector S - I 5 Bal. S - I = Bal. Gap 1977/78 206 - 176 = 30 36 - 238 = -202 172 1978/79 281 - 225 = 56 -61 - 206 = -267 212 1979/80 437 - 389 = 48 -63 - 346 = -409 361 1980/81 435 - 477 = -42 -112 - 422 = -534 576 1981/82 118 - 616 = -498 -85 - 545 = -630 1128 a/ The balances are obtained by subtracting sectoral investment from savings. The negative savings for the public sector indicate an excess of current expenditure over current revenues. Stocks have been distributed between the private and public sectors according to these sectors' shares of fixed investment. b/ These figures are equal to the current account deficit of the balance of payments (+ = deficit). Source: Annex 1, Table 2.4 6.04 The "S" and "I" columns in Table 6.1 show gross national saving and investment respectively for the private and public sectors. The "Bal." columns show savings balances, or the amount each sector lends (+) or borrows (-). Public sector dissaving (current budget deficits), which grew from LS 61 million in 1978/79 to LS 112 million in 1980/81, fell to LS 85 million in 1981/82. These deficits, when added to investment by the public sector, led to increasing requirements for financing, that reached LS 630 million (8 percent of GDP) in 1981/82. 6.05 The balance columns in Table 6.1 for the public and external sectors show that public sector borrowing and external sector financing rose rapidly and in parallel . Although considerable portions of the public sector deficits were financed by external sources, not all of this financing went directly to the public sector. The public sector also borrowed heavily from the banking system, thus rapidly expanding the money supply, while commercial banks and the Bank of Sudan borrowed from abroad. - 64 - 6.06 Declines in both national and domestic savings have been paralleled by increased reliance on foreign resource mobilization (Table 6.2). In the early 1970s, domestic saving of 9-10 percent of GDP financed a major portion of investment. Hence, current account deficits, or net foreign financing, were modest, averaging 2 percent of GDP. In the mid-seventies, domestic investment increased sharply, from 12 percent to 18 percent of GDP. This was partly financed by an increase in worker remittances from abroad. However, net capital inflows, averaging 7 percent of GDP, were the most important financing source, leading to a rapid accumulation of external debt. While the line of causality between decreased savings and increased foreign financing is not entirely clear, the two trends were undoubtedly mutually reinforcing. With the easy availability of increased financing from abroad, the pressure to follow policies that would encourage savings was reduced. Simultaneously, the decline in savings rates favored increased dependence on foreign financing. Table 6.2 SUDAN: Gross Savings and Investment (Percentages of Current GDP) a/ Annual Averages 1970/71- 1974/75- 1973/74 1977/78 1978/79 1980/81 1981/82 1. Gross Domestic Savings 10 9 4 3 -1 2. Net Factor Services - -1 -1 -1 -2 3. Net Current Transfers - 3 4 4 4 4. National Savings (1+2+3) 10 11 7 6 1 5. Net Capital Inflow b/ 2 7 6 11 15 6. Total Savings (= Investment) 12 18 13 17 16 a/ See Annex 1, Table 2.3 for savings and investment in constant prices. b/ This is equivalent to the current account balance on the balance of payments. Source: Annex 1, Table 2.4. - 65 - 6.07 In the late seventies and early eighties, domestic savings dropped still further relative to GDP. By 1981/82 domestic savings had in fact turned negative, meaning that all investment was financed either by transfers or borrowing from abroad. By 1981/82, the current account deficit had reached the unsustainable level of 16 percent of GDP. As a result annual increases in foreign borrowing were excessive. Central Government Finances 6.08 The decline in overall savings reflects to a substantial degree the public sector's declining revenue collection and increases in its expenditures. Government current expenditures rose to about 15 percent of GDP in 1980/81, not a particularly high portion. They have grown at about the same rate as the current GDP, also a relatively "normal" occurrence. 6.09 Revenue collections on the other hand, have grown more slowly than current GDP. During the period 1972-80 they declined from 16.5 percent to 12.3 percent of GDP (Table 6.3), implying an overall buoyancy of 0.80 with respect to current GDP. Indirect taxes in general had slightly higher buoyancies (Table 6.4) and constituted the major component of total revenue (65 percent). The buoyancies for direct tax and non-tax revenues (i.e., pension fund contributions and distributions from public corporations) were much lower, but the buoyancy for direct taxes have improved considerably since 1976. Table 6.3 SUDAN: Central Government Operations, FY73-82 (Percentages of Current GDP) FY73 FY78 FY80 FY81 FY82 Total Revenue 16.5 16.6 14.1 13.5 12.3 Total Expenditure a/ 17.7 22.1 22.5 23.3 20.5 Financing Requirement -1.2 -5.5 -8.4 -9.8 -8.2 Financed by: External Borrowing 1.5 1.0 5.8 4.7 4.9 Borrowing from Banks (net) b/ - 0.3 4.5 -2.6 5.1 3.3 a/ Current plus development expenditures. b/ Negative represents net repayment to banks. Source: Annex 1, Table 5.1 - 66 - Table 6.4 SUDAN: Tax Buoyancies, 1972-82 (with respect to current GDP) Item 1972/80 1980/82 Direct Tax 0.83 1.17 Profits Tax 0.80 Income Tax 0.69 Indirect Tax 0.85 0.69 Import Duties 1.01 1.00 Export Duties 0.34 1.50 Excise Duties 0.60 0.27 Total Tax Revenue 0.85 0.76 Non-Tax Revenue 0.63 0.57 Total Revenue 0.80 0.73 Source: Annex 1, Table 5.3. 6.10 The public sector's borrowing was from the banking system rather than from the non-bank public. Private sector demand was not thereby curbed, resulting in rapid inflation. New domestic credit from the banking system during FY78-81 totalled LS 1,323 million, of which the public sector received three-fourths. During this same four-year period private sector consumption plus investment demand rose from 85 percent to 95 percent of current GDP, a clear indication of inadequate suppression of private demand. 6.11 The steady increase in public sector deficits, and the tendency to finance them by borrowing from the banking system when not borrowing abroad, has led to substantial inflation. In the early 70s, gross domestic expenditure (i.e. consumption and investment) was around 100 percent of current GDP, and inflation averaged 8 percent per year. In the mid to late 70s, gross domestic expenditures rose to about 110 percent of GDP, and inflation rose to 12 percent annually. As public borrowing from the banking system expanded still further to finance rising public sector deficits, gross domestic expenditures rose to a high of 115 percent of GDP (FY82). Inflation in 1983 was estimated to be around 30 percent a year. The Foreign Debt Servicing Crisis 6.12 The seeds of the foreign debt servicing problem were sown during the 1972-81 period when the dollar value of external debt owed by the - 67 - central government increased at an average annual rate of 30 percent per year. During this same period, GDP in current prices increased by 19 percent per year and government revenue by only 17 percent per year. The fact that the dollar value of debt service actually paid rose by an average 10 percent per year during this time may have obscured the onset of the debt service crisis. 6.13 The magnitude of the debt crisis today is seemingly overwhelming. Table 6.5 demonstrates this with traditionally calculated debt service ratios for FY82 and as projected for FY84. Table 6.5 SUDAN: Past and Projected Annual Foreign Debt Service Indices FY82 FY84 a/ A. Government Budget 1. Interest on Foreign Debt (LS mls) 60 717 2. Amortization (LS mls) 120 684 3. Interest as % Current Revenue 3% 44% 4. Interest + Amortization as % Current Revenue 16% 87% B. Balance of Payments 1. Interest on Foreign Debt (US$ mls) 190 510 2. Amortization (US$ mls) 97 571 3. Interest as % of Exports gnfs 27% 48% 4. Interest + Amortization as % of Exports gnfs 41% 102% a! Without debt rescheduling. Source: Annex 1, Tables 3.1 and 5.1. 6.14 The debt service ratios for FY84 are those which would have applied in the absence of reschedulings. Data on the debt servicing impact on the government budget are included because servicing the foreign debt, including most if not all of that owed by parastatal entities, is a government obligation to be met through the budget. Table 6.5 shows that government interest payments, amounting to LS 60 million in 1981/82, would have soared to LS 717 million in FY84 without rescheduling. Interest plus amortization would have soared from LS 180 million in FY82 to LS 1,401 million in FY84, the equivalent of 87 percent of projected current - 68 - government revenue. Similarly startling changes in the debt service/export ratios would have occured. 6.15 The debt service ratios presented in Table 6.5 assume that the debt must be serviced from current flows of revenue and exports. However, given the size of the interest payments above, it is evident that even if amortization payments were rolled over or otherwise rescheduled, Sudan would have faced an FY84 debt service ratio of 48 percent. This ratio itself bespeaks the magnitude of the adjustment effort required. 6.16 The questions of how Sudan has coped with this emerging situation during the past year or so and what are the needs, possibilities, and prospects for debt servicing and debt restructuring will be discussed in later sections of this chapter and in Chapter 7. Improving Sudan's Resource Mobilization Efforts 6.17 In general, the public sector should adopt a resource mobilization strategy based on two fundamental principles. The first is that central government current revenues should at least be equal to current expenditures; Government should not dissave, and should as soon as possible generate savings that will contribute to financing the public investment program. The second is that the interest costs of borrowing should be less than or equal to the expected rates of return on investment. The remainder of this chapter will focus on the macro-economic framework within which this strategy can unfold, the measures which Government can take to improve revenues, control expenditures, and stimulate private sector savings, and the policies that can be followed to minimize the cost of financing the residual savings gap. The Macro-Economic Framework 6.18 Table 6.6 shows the summary results of a projection exercise for resolving Sudan's financial crises. The variables in Table 6.6 are in current, not real terms, but they depend on projected real developments up to FY95, notably real GDP growth of around 5 percent and a sharp expansion of exports from their currently depressed state (see Chapter 7 for the full model of the economy from which this public finance section is taken, as well as for the specific assumptions regarding government revenue and expenditure projections). -69 - Table 6.6 SUDAN: Projected Changes in Expenditure Structure (Percentages of Current GDP) Est. Actual Projected FY80 FY81 FY82 FY8f3- FY84 FY85 FY90 FY95 Budgetary Data 1. Interest Service a/ nil nil 1 3 6 7 8 6 2. Other Current Exp. 16 16 13 12 12 11 10 10 3. Development Exp. 7 7 7 7 6 6 5 5 4. Government Revenue 14 14 12 13 14 14 15 16 5. Financing (1+2+3-4) 9 9 9 9 f0 __ 8 - 6. Foreign (6) (6) (6) (6)b/ (6)b/ (5)b/ (5) (3) 7. Domestic (3) (3) (3) (3) (4) (5) (3) (2) National Accounts Data 8. Private Consumption 78 81 89 88 89 87 81 80 9. Public Consumption 16 16 13 13 12 11 10 10 10. Private Investment 9 9 8 8 7 7 7 7 11. Public Investment 8 7 8 7 6 6 5 5 12. Aggregate Demand 111i 113 118 115 114 Ill 103 102 Memo Item Real Consumption per capita (1981 LS) 263 274 282 263 260 259 275 278 a! Local currency cost of interest on foreign debt; historical data indicate amounts actually paid. b/ Estimated to be available and/or promised. Source: Bank staff projections. 6.19 While Table 6.6 presents a scenario for progressively resolving Sudan's economic problems, the domestic financing gap for FY84-89 (e.g., 5 percent of GDP in FY85) is too large to be consistent with the Government's limited ability to borrow from the non-bank public. As a result, the deficits are inconsistent in these years with the projected rate of inflation of about 15 percent per year. Table 6.6 therefore highlights the severe problems that the Government faces during the next several years. In order to reduce its domestic financing requirements, the Government may be compeled to cut expenditures and/or increase revenues beyond what is indicated in Table 6.6. 6.20 Viewed from the longer term perspective, Table 6.6 shows how Sudan can adapt to markedly increased foreign interest payments (line 1) by reducing the shares of consumption and investment in GDP; this would bring - 70 - domestic demand closer to equality with GDP.3/ The magnitude of the required adjustments can be seen in the national accounts data in Table 6.6, most specifically in private consumption (line 8) and real per capita consumption (Memo item). In order to reduce the reliance on foreign financing and support the minimum level of investment required for future growth, upon which restoration of the country's creditworthiness must ultimately depend, the resource balance will have to be reduced considerably over the next decade. This will require restraint in the growth of both private and public consumption. This adjustment was initiated in 1982/83 when real consumption per capita fell from the unsustainably high levels of 1980/81 and 1981/82 back to the 1979/80 level of LS 263 per capita (see Table 6.6, memo item). 4/ It is projected that a further marginal decline in per capita consumtpion will be required in the next two years (1983/84 and 1984/85) in order to reestablish a reasonable balance between total expenditures and domestic production. Starting in 1985/86, a modest increase in real per capita consumption (of around 1 percent per year) is projected for the rest of the 80s. 6.21 As is indicated below in Table 6.7, the projected growth in income coupled with restraint in consumtpion should, by 1990, have reestablished a domestic savings rate comparable to the rate of the mid-1970s (see Table 6.2). 3/ Amortization payments are not included in debt servicing under the assumption that they ca be rescheduled or rolled over, in contrast to interest payments which generally cannot be. If amortization cannot be refinanced, the debt service position would become even less sustainable. 4/ This was still considerably above the mid-70s level of LS 220/capita. - 71 - Table 6.7 SUDAN - Projected Gross Savings and Investment (Percentages of GDP) a/ Est. Average 1980/81- Projected Item 1982/83 1983/84 1984/85 1989/90 1994/95 Gross Domestic Savings 1 3 5 10 11 Net Factor Services -2 -5 -6 -6 -5 Net Current Transfer 4 4 4 3 3 National Savings (1+2+3) 3 2 3 7 9 Net Foreign Borrowing 12 12 11 6 4 Total Savings (Investment) 15 14 14 13 13 a/ Based on constant price data projected in 1980/81 prices. Note: It should be noted that the ratios shown in this table are based on projections in constant 1980/81 prices, whereas the ratios in Table 6.2 represented calculations in current prices. Hence, the ratios in these two tables are not directly comparable. Even though there are some (small) differences in the absolute levels of the ratios as expressed in current and constant prices, the trends in the movements of these ratios are broadly the same. Source: Bank staff estimates. Sudan's considerable interest obligations in future years will, however, constrain the growth in national savings. The current account deficit is consequently projected to remain at a very high level through the mid-80s, then subsequently to fall to a more manageable level of 4-6 percent in the early 90s. Substantial improvements will be required in savings incentives for this scenario to materialize. National income is, however, expected to increase rapidly beginning in 1985 (partly facilitated by the commencement of petroleum exports in 1985/86), and this should facilitate the attainment of a projected average marginal national savings rate of around 20 percent for the late 80s and early 90s. 6.22 The longer-run policy adjustments needed to bring a scenario such as that shown above are discussed next. To implement them, the Sudanese authorities must be willing to develop the administrative capability to - 72 - raise government and public corporation revenues, to tightly control public sector expenditures, and to pursue a regime of monetary, pricing, and exchange rate policies which will serve to contain future growth of private sector consumption and non-essential investments. The next section discusses some of the specific actions that might be required to improve the budgetary position of the Central Government in the face of these mounting debt service obligations. Increasing Government Revenue 6.23 As noted previously, the rate of growth of government revenue has fallen below the growth of GDP and government expenditure. The scenario presented in Table 6.6 postulates that current expenditures other than interest payments will fall from 13 percent of GDP in 1981/82 to 10 percent by 1989/90. Changes in the revenue gathering system would increase revenues to 16 percent of GDP by 1995. To effect such an increase would require raising the buoyancy of the tax system from the present figure of about 0.7-0.8 to slightly over unity. Additionally, revenues from oil, beginning in FY87 plus changes in pension fund collections and public corporation procedures should cause non-tax revenues to rise. 6.24 Increasing the Buoyancy of the Tax System: The need to increase the buoyancy _T of the tax system, or the extent to which tax revenues automatically expand with current GDP, is well known in Sudan. 6/The Government has committed itself to taking relevant measures in this area as indicated in the economic recovery program presented to the 1982 Consultative Group, but at time of writing (1983) there had been only limited action. The Government has not generally switched from specific to ad valorem tax rates and has not significantly speeded the assessment/collection process (currently running 18-24 months in arrears) so as to limit the decline in real tax revenues which result during rapid inflation. Recommendations aimed at increasing the proportion of direct tax in total tax have not been fully implemented, and such taxes remain less than 20 percent of the total. 5/ See, for example, "Tax Reform in Sudan", IMF, February 1980 (not released for public use), and Government of Sudan, Prospects, Programmes and Policies for Economic Development, 1982/83-1984/85, Khartoum, October 1982 (esp. Part 3.3 - "Demand Management and Resource Mobilization"). The term "buoyancy", used throughout, reflects both the natural elasticity of the revenue system and the effects of periodic changes in tax and non-tax laws to increase yields. 6/ Two studies which give detailed recommendations on improving revenue collections are the previous C.E.M. (IBRD Report No. 3551a-SU) and a 1980 IMF paper entitled Tax Reform in Sudan (both papers are of restricted circulation). - 73 - 6.25 Improvements in the tax system to improve its buoyancy would alter its incidence. The relative contribution of direct taxes (from wages and profits) and domestic taxes on consumer items would rise while that from indirect taxes, particularly import taxes, would decline. Trade taxes would still be significant, however, mainly because the gradual devaluations of the Sudanese pound--needed to accommodate differential domestic and international rates of inflation--would raise the domestic price (and therefore tax value) of imports, largely offsetting the expected decline of imports relative to GDP. The overall impact of improvements in the tax system, if accompanied by other policies recommended below, should be to cut private consumption. They would thus be in line with scenario set out in Table 6.6. Such improvements would also reduce import demand. 6.26 Increasing Non-Tax Revenues: Non-tax revenues consist mainly of contributions to pension funds and profit distributions of the public corporations. The pension program, which is supposed to operate on a pay-as-you-go basis, is presently losing money. Between March 1983 when the budgetary allocation for pensions ran out, and the end of fiscal year, the pension fund built up arrears by suspending payments. These were to be paid in a lump sum from the following year's budgetary allocation which, unless contributions were raised, would again fall short. The magnitude of the losses was not large, probably on the order of LS 6 million. However, a fully funded system, based on sound actuarial data, would remove the potential for expanded losses and encourage savings. 6.27 Improving the efficiency, savings and revenue contribution of the public corporations is also essential if the long run scenario in Table 6.6 is to be achieved. This is the case even though oil revenues will swell non-tax revenues beginning in FY86. As with the tax system, the recommendations in a report on the public corporations 7/ have had little impact to date. The Government has begun to denationalize certain corporations, but little headway has been made. Much more attention to the report's recommendations is needed. 6.28 Appropriate pricing policies to parastatal corporation output is vital to their financial survival and for their contribution to domestic savings. At present, their prices are generally too low. They are based on interest and depreciation costs that are undervalued. Prices should be raised to reflect full capital costs even if these are not passed on to the administratively; further prices hikes are warranted to redistribute income from consumer to producers. 6.29 Raising prices and profits of public corporations can help reduce private consumption as long as increased revenues do not leak back into the private sector (e.g., via new wage awards). In the scenario presented in Table 6.6 it is assumed that the Government captures most of the gains, 7/ Public Corporations in Sudan, IBRD, July 1978. - 74 - although public corporations should keep enough to avoid current deficits. The Government can capture the gains by various means: The corporations pay profit taxes, which will increase with profits. Dividend payments to Government should also rise. Alternatively, the Government may choose to markedly increase its on-lending interest charges, in which case non-tax revenue would expand because interest rather than equity payments expand. Controlling Government Expenditures 6.30 Accommodating increased debt service payments will require tight control in other government expenditures. The long run scenario in Table 6.6 assumes a ceiling on other current government expenditures--their share of GDP will gradually decline. However, the Government is implementing two relatively new initiatives--decentralization and the Military Economic Corporations--which could well make the rate of growth in expenditure exceed this ceiling unless cutbacks elsewhere are made. 6.31 Fiscal Impact of Decentralization: The additional central government budgetary cost of decentralization will depend on whether or not Government uses decentralization as an opportunity to cut central government expenditures. 6.32 The rationale for decentralization has primarily been political and administrative; regional and local government units are supposed to be more responsive to people's wants and more efficient in satisfying them. Decentralization is thus primarily viewed as a way of making government work better rather than as a way of controlling expenditures or improving resource mobilization. Decentralization will nevertheless have budgetary consequences. 6.33 Central government transfers to other governmental units grew by 29 percent per year between 1971 and 1981. During the same period, total central government current expenditures grew only at 18 percent per year. As a result, transfers went from 12 percent to 35 percent of total current expenditures. Interviews with officials in two regions visited 8/ leave the impression that decentralization will continue to be implemented in such a way that central government transfers to the regions will grow. 6.34 Transfers from the central government have been a large, fairly constant portion (about 75 percent) of the recipient government units' budgeted revenues and expenditures. Actual figures are not available, but budgeted local revenues appear to overstate actual collections. This implies that actual regional and local units' expenditures have been financed more and more by transfers and have expanded nearly as rapidly as the transfers themselves. Generally, expectations in Sudan are that decentralization will involve further expansion of regional and local 8/ The Northern and Kordofan regions. - 75 - government roles. This implies continued increases in these ,units' expenditures, something which can only occur if (a) the central government devolves functions to the regions so that central government costs decline while transfers continue to expand, (b) regional and local revenues increase considerably or, (c) the regional and local authorities run deficits. 6.35 While some shifting of functions from the central government is occurring, it is not happening rapidly enough to allow central government expenditures to decline sufficiently to accommodate needed increases in transfers. At present the main devolution activity is the shifting of central government staff, and the responsibility for paying them, to the regions. The two regions visited anticipate considerable increases in their wage bills due to the shift. A similar decrease in the central government's payroll, however, is not expected. In fact, regional administrators believed that most central government functions would continue to be performed even when similar functions were handled by the regions. Thus, it seems likely that regional government ministries of agriculture, for instance, would supplement rather than replace activities of the central government. 6.36 The pessimism regarding devolution of responsibilities and declines in central government costs was mirrored in estimates of the regions' ability to raise revenue collections. All revenue measures not specifically claimed by the central government are technically left to the regions. However, the center has already claimed all the important revenue resources. There is a possibility, however, that the regions could more efficiently collect certain central government taxes. 6.37 While decentralization could contribute to solving the central government's fiscal problems if central government expenses fell even faster than required transfers increased, decentralization will probably add to the country's overall fiscal burden instead, and given government revenue constraints, such an outcome would have to be financed by regional and local government deficits. 6.38 In theory, the regional governments are not supposed to run deficits. In practice, deficits have occurred and have been financed by banks and foreign borrowing. Until now the amounts have not been particularly significant. However, lack of financial control from the center, a levelling off of growth in transfers from the central government and mounting pressures for more regional expenditures, will increase pressure on the regions to begin borrowing from banks and from abroad. Such activity, if not carefully controlled, could be catastrophic. Regional governments should be prevented from running deficits (other than those financed from the central government budget) even if, as appears likely, the pace of decentralization has to be slowed. 6.39 The Military Economic Corporations. The Military Economic Board (MEB) and its associated Military Economic Corporations were established in early 1982 to achieve what appear to be very diverse objectives, including - 76 - training for certain groups of military personnel (such as those involved in transport and logistical support), military procurement at lower costs than from private suppliers, and services to civilians such as printing and transport. 6.40 The role and mode of operation of the MEC did not seem to be well thought out by the time the mission visited Sudan in early 1983 to prepare this study. The budgetary relationships were vague. For example, it was not clear whether the capital and recurrent cost needs of the MBE were to be covered by borrowing, by subventions from the defense budget, by the development budget, or by some combination thereof. Such lack of clarity will undoubtedly reduce the accountability for funds and make correct costing and pricing of output extremely difficult. 6.41 It is unclear whether any distributed profits of the MEB are to be retained and used to increase/maintain defense expenditures, or are to be allocated to the General Revenue Fund. If they are retained by the military, the MEB is likely to be of little developmental use to the country, even if it were to be technically more efficient than what it replaces. It would instead simply expand the military use of resources in the country. 6.42 Decentralization and the MEB are thus two recent government initiatives with potentially disruptive fiscal consequences. A careful review of policies with respect to them is needed. Increasing Saving of the Private and Joint Venture Sectors 6.43 Improving resource mobilization in the private and joint sectors involves encouraging them to lower consumption. 9t The scenario in Table 6.6 for adjusting to expanded debt service costs assumes that Government would implement policies that would reduce private consumption from 89 percent of GDP in 1982/83 to 80 percent of GDP in 1994/95. The primary policies for achieving this are raising real interest rates and altering prices and exchange rates so as to shift income from those who consume more to those who consume less. 6.44 Raising Interest Rates to Positive Real Level: At present, interest rates are used neither to allocate credit nor to manage aggregate demand. All interest rates in the economy are significantly negative in real terms and encourage consumption rather than savings. At current rates of inflation, about 30 percent per year, by conservative estimates, even the highest nominal rate, the 20 percent charged by commercial banks, is negative by 10 percent in real terms. All of the intermediation between the private and public sectors, and within the public sector, occurs at much lower nominal rates. Rather than impose positive real interest rates, 9/ The joint sector consists of business enterprises with some, but less than 51% equity participation by government. - 77 - the Government has chosen to impose quantitative controls on credit for the short term and to seek to reduce the rate of inflation over the medium term, thereby increasing the real interest rate (ref. para. 1.18). 6.45 The lack of real interest rates and capital charges has adversely affected both the mobilization and use of domestic sources. Important evidence comes from private sector investment patterns. Recent increases in holdings of foreign assets by the private sector indicate the private sector's lack of interest in investing in domestic assets, be they real or financial. Since most of these foreign assets probably consist of increased holdings of foreign currencies, it is likely that the buildup reflects the potential earnings that can be made by investing in greater stocks of imports and/or of taking advantage of expected exchange rate devaluations. Other evidence of the impact of negative interest rates in the economy is the increasing amount of investment in residential construction and stocks of traded items. Both these are profitable during periods of rapid inflation and negative interest rates, but do little to help the production of tradeable goods. 6.46 Positive real rates would encourage savings and productive investments and would discourage hoarding of goods. Estimates for the scenario in Table 6.6 are that domestic inflation will at best drop to about 15 percent per year by FY86 and will drop no further because of the relatively rapid rate of money supply expansion and a series of devaluations of the Sudanese pound. To achieve a positive real return of about 5 percent per year would, therefore, require a 20 percent nominal rate or a rate currently equal to the highest rate charged for short term money. If longer term interest rates are raised to the 20-25 percent range and if the pricing policies recommended below are implemented, it is highly likely that savings can be increased (real consumption depressed) without excessively dampening private productive investment. Speculative investments would become much more costly, however, and would most likely be somewhat repressed. 6.47 Raising Prices to Shift Income to Savers: Of potentially greater significance than real interest increases will be policies to shift income from those who save less to those who save more. Although empirical evidence is scant, it appears that firms and farmers engaged in production in Sudan tend to save and reinvest larger portions of their income in productive assets than do wage earners and traders. In view of this, shifting income from consumers and traders to goods producers would improve the savings performance of the economy (ref. Chapter 5). 6.48 Accomplishing such an income shift is essentially a pricing issue in Sudan. If price controls are lifted and producer prices rise, the gross savings of such firms (their retained profits plus depreciation) will rise, assuming output is constant. Given pervasive price controls and rationing in Sudan, there appears to be considerable scope for raising prices and producer profits (ref. Chapter 2). Decontrol of prices would result in price and profit increments which in turn will be saved and reinvested, thereby contributing directly to attaining the savings targets that are vital to the nation's economic recovery. - 78 - 6.49 The scenario summarized in Table 6.6 postulates no borrowing by public corporations from non-government sources. Foreign financing of central government deficits remains at 6 percent of GDP initially, but then declines as domestic borrowing and later, revenue collections rise. 6.50 It is assumed in the scenario that the Government chooses a combination of two financing policies to transfer purchasing power from the private sector. First, purchasing power will be transferred directly via govenment issue of bonds bearing positive real interest rates to the non-bank public. This may entail selling bonds yielding 20 percent to 25 percent interest. However, bond issues could carry lower rates if they were auctioned freely, which is recommended. Such auctioning would allow the price (and effective yields) to vary with market and general economic conditions. 6.51 It is unlikely that bond sales alone will suffice to cover the domestic borrowing requirements projected for FY84-90. As a result, Government would need to continue borrowing from the banking system. The inflationary effects of such financing, if unfettered by price controls, would lower the real value of money held by the private sector, thus transfering additional purchasing power to the Government without the .pain" of taxation. To avoid aggravating external imbalances, however, adjustments would have to continue to be made in the exchange rate if this inflationary approach were chosen in preference to resource mobilization through pricing and taxation. 6.52 Normally a major share of the financing requirements could be met, at least for the short term, from foreign sources. But these are not normal times, either for Sudan or for the world economy. Sudan has both a large overhang of external debt and many non-productive investments. This discourages additional lending to Sudan as does the generally tight world credit situation. It is therefore necessary for the Government to take additional measures to reduce financing requirements in the FY84-FY89 period. The long-run scenario discussed here assumes a maximal government revenue collection effort. No new revenue sources or windfalls except the oil revenue are likely to materialize during this period. Additionally, interest obligations on foreign debt must be met if Sudan is to continue to have access to foreign credit. In light of this, reducing the deficit in the intermediate years could require further cutbacks in government consumption and investment beyond the relatively mild reductions assumed in Table 6.6. It was not possible during the mission to undertake the detailed studies required to identify where additional cuts can be made. Expenditure reductions must occur in the intermediate years, however, if the destabilizing effects of excessive inflation are to be avoided. 6.53 It is imperative that the government begin identifying the economic impact of various sorts of government expenditures so that it can - 79 - reduce and reallocate expenditures so as to minimize the negative impacts of cuts. Defense expenditures and low-yielding development projects can be reduced with little loss to society. Expenses for most government services, on the other hand, including revenue collection may already be too low or at least inappropriately allocated so as to overemphasize employment of underskilled workers. In this case, a reallocation toward non-wage recurrent costs, even with some cuts, might well raise productivity to such an extent that the declines in public services are slight. If cuts and reallocation of the sorts just discussed still prove inadequate, consideration must be extended to reducing development expenditures. This would clearly reduce longer term growth prospects, but can only be avoided if government implementation of new policies is so effective that it results in increased confidence in and foreign loans to Sudan. - 80 - Chapter 7 BALANCE OF PAYMENTS OUTLOOK Background and Current Position 7.01 Despite various measures by the Government since 1977/78, the external balance of the Sudan has continued to worsen. The resource gap for 1981/82 was estimated at 18 percent of GDP, and the current account deficit at 15 percent. The deterioration of the current account has to a large degree been a reflection of deficient domestic resource mobilization, as noted in the previous chapter. Investment has been sustained at around 15 percent of GDP over the last couple of years, but domestic saving has fallen drastically -- from above 10 percent of GDP in the mid-seventies, to negative levels in 1981/82. This decline has only partially been offset by increased private transfers from abroad. Faced with increasing debt service obligations in the coming decade, the major task facing the Government will be to restore both internal and external balances. The measures needed to redress the internal balance were discussed in Chapter 6. This chapter focuses on the four major components of the external balance of payments -- exports, imports, private transfers, and capital. It also examines the critical issues that need to be addressed for each of these components if external balance is to be restored. Exports 7.02 By 1980/81 merchandise exports had fallen to their lowest level ever -- only 8 percent of GDP. They remained at about the same level in 1981/82. Adverse external factors were part of the cause; the prices for cotton and groundnuts, two of the major export crops, fell by around 30 percent. But declining prices explain only part of the poor export performance. Of a 25 percent decline in overall export value from 1979/80 to 1981/82, only one-third was due to falling world market prices; the rest came as the result of falling volumes. 7.03 Five agricultural commodities -- cotton, sesame, sorghum, oilseeds, and livestock -- constitute more than 75 percent of exports. Although this still represents a substantial concentration on a relatively few commodities and this increases the risk of serious export earning shortfalls, Sudan has managed to increase the diversity of its exports during the past decade. For example, during the latter part of the 1970s when the irrigated schemes were suffering severe decline in productivity and output, particularly for cotton, the earnings from exports of groundnuts and livestock produced in rainfed areas averted an even worse balance of payments crisis. Conversely, during the period 1981/82-1982/83, the success of the Government's efforts to rehabilitate the irrigated subsector resulted in production and output which allowed merchandise export earnings to climb by over 30 percent in current terms despite stagnant world prices and a sharp decline in production from the rainfed areas because of drought. - 81 - 7.04 Recent investment and policy measures should continue to help restore the growth in agricultural production, and the price outlook may also turn to the better. International commodity prices for Sudan's two major export crops -- cotton and groundnuts -- could increase by 50 and 60 percent respectively over the next two years. 7.05 An uncertain element in the overall export price outlook for the Sudan is, however, the prices for sorghum and sheep exported to Saudi Arabia. These two commodities, constituting around 30 percent of total exports in 1981/82, have both been exported to Saudi Arabia in the past at prices considerably above international prices: the export price for sheep from Sudan in 1981/82 was $120/head (cif, Jeddah), compared with $80/head for sheep from New Zealand; Saudi Arabia imported sorghum from Sudan at $280/mt (cif, Jeddah), compared with $170/mt for sorghum from Thailand. Some of the differences can be attributed to difference in quality, but there is also an elemernt of political goodwill involved. With falling oil prices, it can be questioned whether these prices will be maintained. For example, the Saudi Government recently lowered the import price for sorghum from $280/mt to $240/mt (cif, Jeddah). This price, according to Sudanese exporters, is not sufficient to cover costs, and large quantities of sorghum were being held up in Port Sudan in mid 1983. The price outlook for Sudan's major export goods is therefore mixed. 7.06 As was shown in Chapter 3, declining real producer prices for major agricultural crops were a major reason for the decline in agricultural production during the 70s. Projected international price increases for the next few years should, in general, facilitate increases in producer prices sufficient to induc:e the overall growth in agriculture needed to provide exportable surpluses. Sudan should be able,in terms of physical production capacity, to support an export growth of 15 percent p.a. from 1982/83 to 1990/91. The anticipated average non-oil export growth rate is about 7 percent per year, which should be feasible if current efforts, in terms of both investment and incentive policies, are maintained. This would imply, however, a sustained reversal of past trends as shown in Figure 7.1 below. Figure 7.1 SUDAN: Exports of Major Agricultural Commodities 700.0 Z:: 150.0 *0 700.0 650.0 X 600.0 / 4e50 C CZ 50.0 CO 00.0 -20.0 74 76 76 so St 64 SO of 90 1/ See Annex 1, Section 11, for projections of the physical balances for the major export crops. - 82 - 7.07 For this scenario to materialize, it is important that, in line with policies which the Government outlined in its economic recovery document for the period 1982/83-1984/85: (a) domestic consumption of exportable commodities be constrained; (b) infrastructural bottlenecks be alleviated, particularly transport and power; and (c) a policy of providing adequate producer incentives through appropriate pricing policies is matched with a policy limiting aggregate demand to avoid the reappearance of excessive inflationary pressures that could undermine the nominal incentives given to export producers. 1/ For the increased exports to bring about a lasting improvement on the balance of payments, it will furthermore be necessary to stimulate savings, so that exporters' earnings are saved and invested rather than being spent on consumption imports. Imports 7.08 Merchandise imports increased from 12 percent of GDP in 1977/78 to 23 percent in 1981/82 (measured in constant 1980/81 prices), thereby exacerbating the effects of the drastic fall in exports (see Figure 1.1 in Chapter 1). Imports in 1982/83 remained at about the same level relative to GDP. 2/ The major increase occured in food and other consumer goods, and petroleum products. The composition of imports changed drastically from 1977/78 to 1981/82, the last year for which detailed data are available. % Distribution of Imports 1977/78 1981/82 Consumer goods (incl. food) 19 27 Petroleum 10 28 Intermediate goods 31 23 Capital goods 40 22 o/w machinery spare parts 20 5 Total 100 100 Petroleum products and consumer goods grew to over half the import bill in 1981/82, compared with less than 30 percent in 1977/78. Capital and intermediate goods, both vital for the recovery of production, fell in the same period from nearly three quarters to less than half of the import bill. 1/ This would not be of concern if producer prices were linked directly to export prices through a freely floating exchange rate. Experience in the Sudan indicates, however, that there is a considerable lag between the movement in the internal price level and the required adjustment of the exchange rate. 2/ Imports actually declined in dollar terms in 1982/83 for the first time since the payments crisis in 1976; however, because of exchanige rate adjustments, the pound value of imports rose more or less in line with GDP. - 83 - 7.09 Of a 43 percent increase in imports expenditures between 1979/80 and 1981/82, one quarter was due to volume and three quarters to price. A major factor behind the increased imports was the increase in Government's imports. Two-thirds of the increase between 1979/80 and 1981/82 can be attributed to increased imports of petroleum products, wheat, and sugar -- all commodities imported on the Government's account, and all mostly oriented to final consumption rather than production. This development led to an increase in the Government's share of total imports from 45 percent in 1977/78 to 55 percent in 1981/82. At the same time, the revenues from the Government's major foreign exchange earner, cotton, declined as a percentage of these three commodities from 160 percent in 1977/78 to less than 10 percent in 1981/82. Corresponding with the drop in Government's direct foreign exchange revenues, total local currency revenues fell from 17 to 13 percent of GDP. This reduced the ability of the Government to command the foreign exchange needed, and it took increasing recourse to inflationary central bank financing. The diversion of a large portion of the total foreign exchange to unproductive imports created extra pressure on the free market exchange rate, which was constantly pushed upwards. The existence of this dual exchange system furthermore acted as a disincentive for private exporters, most of whom had to finance their imports throughthe free market, whereas their export proceeds were valued at the official rate. 7.10 The ratio of five to one between merchandise imports and exports that prevailed in 1981/82 was clearly unsustainable. While Government policies are directly focussed on increasing exports, further efforts wil be needed to constrain the future growth in imports, while at the same time increasing the share of productive imports needed to support economic recovery. Recognizing that the exchange rate cannot bear the whole burden of this adjustment, the Government needs to complement this policy instrument with others in order to facilitate the long-run objective of external balance. Although normally not desirable, further quantitative controls in certain areas may be needed until the worst of the crisis has passed. 7.11 To help constrain private luxury imports, the Government in early 1983 banned the import of several categories of goods, most notably passenger cars. The import of several other goods was already restricted through a complex system of quotas and licenses. There are three major categories of restricted goods: First are those subject to full protection. This list consists of around 40 items, including such goods as car batteries, chewing gum, air conditioners, zippers, and combs. Another list, containing 12 products such as textiles, tea cups, and dry milk, is subject to quota regulations, depending on the availability of domestic supply. Finally, certain goods such as cosmetics, glassware, and notebooks are partially protected, subject to approval from the Ministry of Industry. The broadness of some of these categories leaves much discretion to the regulating agencies, opening the door to policy distortions and pressures on customs officials. It would clearly be an improvement if the various product categories could be specified according to the Brussels Tariff Nomenclature (BTN). This would leave less room for interpretation and subjective judgment. - 84 - 7.12 It is far from clear whether the current system is designed to support the objectives of increased efficiency in domestic production and reduced imports of non-essentials. Several items seem to be included with the sole purpose of protecting domestic manufacturers. Whereas potentially efficient new firms have a legitimate right to infant industry protection, prolonged protection through a quota system can only breed inefficiency. The Government needs to rationalize the quota and tariff system so as to gradually expose domestic industries to competition, thereby assuring that the whole trade regime is conducive to the Government's stated macro-economic objectives. 7.13 Government imports have in theory been regulated by the Foreign Exchange Budget which is presented to the Council of Ministers each year together with the annual budget. The Foreign Exchange Budget describes in some detail the prospects for foreign exchange receipts for the whole economy, and the planned uses of these receipts. It suffers from a number of weaknesses, however, and the unrealistic assumptions about avail- abilities of foreign exchange have reduced the operational significance of this document. Government imports have frequently exceeded the amounts indicated in the document. There is no regular updating of the document during the fiscal year, and the use of foreign exchange for Government's imports has therefore been more governed by requests and availabilities of funds than any plan. With its own direct foreign exchange resources dwindling, the Government should consider reducing its role as supplier of certain major commodities (such as sugar, wheat, and petrol) at an overvalued exchange rate. This could be achieved by gradually shifting imports to the private sector at the free market rate which would gradually relieve the pressure on foreign exchange, assuming that overall import growth would be constrained by the increased prices. The Government might wish to retain a marginal presence on the import of a few key commodities to help assure competitive practices. 7.14 The Government has recently indicated its intent of improving the system for monitoring and controlling more tightly the use of foreign exchange. This should increase the possibilities of foreign exchange being made available to priority users. A priority plan for the use of foreign exchange is needed to govern the use of the very limited amount of foreign exchange available. The ultimate objective, however, should be to establish a system where efficient producers, whether public and private, can purchase foreign exchange in a competitive market. Their earnings in local currency would give them the purchasing power necessary to secure access to the required amounts of foreign exchange. 7.15 Such a system would require a change in the pricing policies for public enterprises, away from the current system of underpricing output and services, to a system where prices reflect the marginal value of production as seen in the market. The need for a foreign exchange budget would then be gradually eliminated, and the emphasis would instead shift to the central government budget in local currency. It would not be possible to command scarce foreign exchange through the underpricing of output, and explicit provisions would be needed in the budget if certain commodities were to be supplied to the public at subsidized prices. - 85 - Private Transfers 7.16 The exact number of Sudanese Nationals Working Abroad (SNWA) is not known, but estimates range between 500,000 and one million. _/ The majority of SNWA are employed in Saudi Arabia, Egypt, Libya, and UAE. The inflow of private transfers as reported by the Bank of Sudan has been (in LS million): 1977 1978 1979 1980 1981 1982 15 55 75 155 195 122 These statistics only cover transfers through the official banking system. Thus the drop in 1982 reflects the opening of the free exchange market in that year. No systematic data are available for transactions outside the banking system, but the IMF has recently estimated the inflow of private transfers to be in the range of $350-400 million. A large amount is also coming into the country as goods. 4/ 7.17 The Sudanese Government has tried to attract transfers from SNWA through a variety of policy measures, including a package introduced in 1982, 5/ ranging from customs exemptions, land sales schemes, and preferential exchange rates. In 1982/83, the Government abolished the requirement for a receipt demonstrating the source of foreign exchange when exchanging currency to encourage a freer inflow of foreign exchange. Along with these concessions, however, has come an increased emphasis on the collection of income taxes from SNWA. The various policy initiatives have so far not been able to create the stability necessary to attract increased remittances through official channels. 3/ A GOS study is currently underway to determine the number of SNWA, and their current and potential future use of income earned abroad. 4/ In 1980 there was reported, for example, about $50 million of imports of passenger cars from Saudi Arabia against foreign exchange not purchased through the banking system. 5/ The 1982 policy package included priority access to real estate and government land, and a 25 percent customs exemption for certain specified goods. To be eligible for these privileges, however, an SNWA must have paid income tax for two consecutive years and, in addition, have remitted to the Bank of Sudan an amount in hard currency no less than the amount of the scheduled income tax. The original proposal for income taxes from SNWAs was based on a 10 percent income tax of certain average incomes corresponding to four employment categories. This proposal met, however, with strong opposition among SNWAs, and the subsequent proposal was instead based on fixed tax amounts for each employment category (ranging from LS 200 for workers to LS 2000 for professionals). These new tax amounts lowered the effective tax percent to around 5 percent. - 86 - 7.18 Government policies in this area have been influenced by a concern that more favorable exchange rates may decrease rather than increase the flow of workers' remittances. This could happen to the extent that there is a fixed demand in pounds to meet household expenditures. However, Government's efforts to improve the atmosphere for investment in productive enterprises in Sudan should assure a demand and use for resources that will in turn stimulate increased flows of remittances from abroad. And with more favorable rates of exchange, the profitability of such investments and thus the flow of remittances will increase. 7.19 Private transfers represent a large potential for balance of payment financing, but this is not an altogether secure source of finance. The inflow of remittances represents an inflow of liquidity that is difficult to manage, and that can easily lead to inflationary pressures. Unless some portion of the inflow can be absorbed either via taxation, or as private saving, increased private transfers are likely to boost imports, rather than finance imports. The success of other labor-exporting countries in harnessing this source of income for national development has so far been mixed. Some countries have seen rural savings boosted by the inflow of remittances from relatives working abroad, but other examples of excessive luxury consumption, real estate speculation, and inappropriate investment patterns could be quoted as well. 7.20 Perhaps the best example of a workable system exists in Egypt where special bonds have been issued on advantageous terms to Egyptians working abroad. Special joint venture banks have also been established through cooperation between the Egyptian Government and the authorities in the countries where Egyptian workers are employed. Jordan illustrates a successful way to attract remittances for national priority purposes; the Government there has financed a large portion of its development expenditures by floating "development bond" issues. These bonds can be bought by non-residents, and interest is payable in convertible currency on a tax-free basis. The Sudanese Government could perhaps draw on these ideas to mobilize increased remittances, thereby increasing national savings and improving balance of payments. 7.21 Private transfers move both ways in Sudan. Capital flight has become a major concern, and the Government has introduced various measures such as currency controls at the border to help stem the outward flow. In the longer term, a more stable domestic economy should generate the confidence needed to control capital flight. In the short term, however, some forms of direct control are probably required. External Capital 7.22 Commitments of MLT loans to the Sudan have averaged $700 million per year over the last five years. 6/ (For details, see Annex 1, Section 4.0). Data on grant commitments are weak, but OECD reports an average annual grant commitment level for the period 1979-1981 of around $300 million. Based on information from the Consultative Group meeting in Paris 6/ With the exception of 1981 when commitments dropped to $315 million; commitments were, however, restored to the $700 million level in 1982. - 87 - in January 1983, the expected distribution of commitments for 1983 has been constructed. Table 7.1 SUDAN: Estimated Levels of Commitments, 1983 (US$ Million) DAC Item Program Project Total Loan 20 40 60 Grant 130 170 300 Total 150 210 360 OPEC Program Project Total Loan 100 25 125 Grant 40 10 50 Total 140 35 175 CPE Program Project Total Loan 10 20 30 Multilateral Organization Program Project Total Loan 80 130 210 TOTAL Program Project Total Loan 210 215 425 Grant 170 180 350 Total 380 395 775 Source: Bank staff estimates. As can be seen from this table, around 45 percent of the expected commitments were estimated to be on grant terms, and around 50 percent of total commitments is to be of program-type assistance. Given the difficult balance-of-payments situations of the Sudan, it would be desirable if both the amount of grant- and program-type assistance could be increased further. Donors should also show flexibility in providing program aid and continue trying to make their commitments available in forms consistent with the priorities listed in the economic recovery program by the Government. - 88 - External Debt 7.23 Sudan's external debt (outstanding and disbursed) has been estimated to be around $7.1 billion as of December 31, 1983. 7/ The distribution, as reflected in the World Bank's Debt Reporting System as of mid 1983, is shown below: US$ Billion Medium and Long-term (MLT) debt 5.1 of which principal arrears 1.1 Interest arrears, NLT debt 0.5 Short term arrears 0.7 IMF 0.5 Others 0.3 Total 7.1 By the end of 1982, total debt outstanding and disbursed was equivalent to around 81 percent of GNP. The distribution of the MLT debt as of December 1982 and the scheduled debt service for 1984 among major creditor categories are shown in Table 7.2. OPEC debt alone accounted for around 40 Table 7.2 SUDAN: External MLT Debt (As of December 31, 1982) Creditor Type DOD, 12/82 Debt Service, 1984* Princ. Int. T o t a 1 $ mls % ---- $ million ---- % DAC 811 16 90 34 124 18 CPE 291 6 20 4 24 3 OPEC 2,073 41 251 70 321 46 Commercial Lenders 745 15 65 80 145 21 Multilateral 1,102 22 45 26 71 10 Others 73 1 10 2 12 2 Total 5,095 100 480 217 697 100 * This table shows debt service on existing debt and thus does not include debt service arising from new commitments or disbursements during 1983 or 1984. percent of the total MLT debtoutstanding and disbursed, and debt service due to this creditor group constituted almost half of the scheduled debt service due in 1984. Multilateral institutions and DAC held 10 and 21 percent of the total debt respectively, while the rest was held by commercial lenders and other creditor categories. 7/ The debt data presented in this report is based on information available as of June 30, 1983. A draft final report was issued (but not released for public use) by Peat, Marwick Mitchell & Co.; SUDAN: External Foreign Currency Obligations (August 31, 1983). Although some revisions occurred between June and August, there are no major differences between the currently available information and the data presented below. - 89 - 7.24 The distribution of medium and long-term arrears as of December 1982 is shown below (US$ million): Total Principal Interest mls _ DAC 219 90 309 20 CPE 89 34 123 8 OPEC 478 192 670 43 Multiple Comm. Lenders 144 107 251 16 Multilateral 147 23 170 11 Others 25 7 32 2 Total 1,102 453 1,555 100 m ~~ ~~~~= _ . m Almost 45 percent of all MLT arrears was due to OPEC countries. 7.25 The Paris Club Agreement of February 1983 was settled on terms that seem to be consistent with the balance of payment outlook for the Sudan. This agreement consolidated all overdue amounts up to the end of 1982 and amounts falling due in 1983 on loans contracted before 1983 into a 16-year loan with a six-year grace period. Interest rates were to be negotiated separately with individual creditor countries. The commercial banks accepted an offer of US$30 million in debt service payments during 1983 compared to US$160 million due under the original rescheduling agreement. Agreements are also expected with other creditors for payments falling due in 1983, limiting the total debt service paid during 1983 to around US$240 million, or around 30 percent of exports (gnfs). 7.26 These 1983 rescheduling agreements have, however, not tackled the longer term debt problem of the Sudan. Even if arrears currently outstanding were consolidated and rescheduled on 1983 Paris Club terms with a 10 percent interest rate, Sudan would face debt service ratios averaging 80-90 percent for the rest of the 80s in the absence of further rescheduling, and unless further relief is given on very soft terms, more arrears would accumulate. Future Prospects 7.27 After several years of stagnating growth, dwindling export earnings, and debt service difficulties, the Sudanese economy is faced with the formidable task of restoring growth, boosting exports, and resuming orderly debt service payments, while at the same time maintaining a reasonable level of per capita consumption. The projections presented below give an outline of what will be required to bring the economy back to a self-sustained basis (for detailed assumptions, see the Appendix to this chapter). The scenario is very much similar to the one presented by the Government in its recent recovery program (PPPED, 1983/84-85/86). The general trust of that program is rehabilitation of existing investments, expansion of exports, and increased domestic resource mobilization. Growth and Exports 7.28 The scenario assumes that both investments and imports will be utilized much more efficiently than in the past. GDP growth is projected - 90- at about 5.5 percent p.a. for the recovery program period (1983/84-85/86), with little or no increase in either investment or imports. 8/ Exports are projected to increase by around 25 percent p.a. in the same period Much of this growth would be accounted for by petroleum exports starting in 1987 at 50,000 bpd, an average growth in cotton exports of around 18 percent, and a tenfold increase in groundnuts exports (back to the 1982/82 level). Excluding the exceptional impact of petroleum exports, the average annual growth of exports is projected at an average annual rate of 6-7 percent over the period 1978-80 to 1990. The export projection is based on a detailed assessment of the export potential in the agricultural sector, and the good production performance in the last two years, particularly in the irrigated subsector. The growth rates may seem high, but considering the low base, they are achievable. Looking at the remainder of the decade as a whole, the export growth is a more modest 15 percent per year (7 percent excluding oil). Consumption 7.29 The macro forecast assumes that consumption will decline to about 90 percent of GDP by 1990 compared to an estimated level of around 100 percent in 1982/83. The projected GDP growth and more efficient use of capital should support a modest increase in per capita consumption over the decade, but an initial compression will be required during the three-year period 1982/83-84/85 in order to bring total expenditures more in line with domestic production. A critical test for this scenario will thus be the Government's ability to pursue structural adjustment policies in the coming three years in the face of stagnant or even declining consumption per capita. External Balance 7.30 The annual level of gross commitments required to support Sudan's economic recovery was estimated in 1982 by the World Bank to be around $1.6 billion per year. 7.31 As noted in the previous section of this study, exports since then fell below what had been expected and imports increased more than expected (reaching 25 percent of GDP in 1981/82). These developments, together with an unexpected shortfall in external assistance during 1982, led to further accumulation of arrears. The rescheduling of these arrears during 1983, on terms similar to those of the Paris Club Agreement, will result in considerably higher future debt service obligations, and consequently increase the requirements for external assistance. The recent fall in imports from the high 1981/82 level, on the other hand, could, if sustained, reduce the future financing requirement. As a result of these developments, substantial revisions became necessary in the macro-economic projections. The new projections are shown below: 9 8/ This GDP growth rate is heavily influenced by the commencement of oil exploration in the mid-80s; the average growth rate excluding the petroleum activity is 3.5 percent. 9/ The projections presented below do not presume to be precise forecasts of Sudan's financing requirements for the projection period 1983/84-94/95. The projections should rather be interpreted as indications of the magnitudes and trends that would be expected to emerge on the basis of plausible assumptions about external and domestic economic developments as described below and in the Appendix to this chapter. - 91 - TABLE 7.3 SUDAN: BALANCE OF PAYMENTS, 1982f83-1994/95&/ (Uss MILLION) ----- ---- ----- ---- -------__ - - __-- .- - - - - --------__ _ _ _ --__ _---- _------________ ITEM 1982/83b/ 1983184 1984/85 1989/90 1994/95 - ------------------- _ _ _---- --- -- --- --- : - ---------------- __- _-- _____________-- EXPORTS (GNFS) 839 1,060 1,269 3,089 5,092 MERCHANDISE (FOB) 506 699 879 2,477 4,094 OF WHICH: COTTON 168 324 415 801 1,311 NON-FACTOR SERVICES 333 361 390 612 998 IMPORTS (GNFS) 2,043 2,156 2,302 3,561 5,599 MERCHANDISE (CIF) 1,743 1,835 1,959 3,052 4,842 OF WHICH: PETROLEUM 440 463 515 809 1,286 FOOD 309 291 287 418 653 NON-FACTOR SERVICES 300 321 343 509 757 RESOURCE BALANCE -1.204 -1,096 -1,033 -472 -507 NET FACTOR INCOME C/ -142 -504 -621 -1,278 -1,522 FACTOR RECEIPTS 131 136 141 173 220 FACTOR PAYMENTS 273 640 762 1,451 1,742 (O|W INTEREST) 169 511 627 893 1,060 NET CURRENT TRANSFERS PRIVATE 430 440 450 602 806 CURRENT BALANCE -916 -1,160 -1,204 -1,148 -1,223 OFFICIAL TRANSFERS (GRANTS) 305 335 360 476 621 DIRECT INVESTMENT 70 74 79 105 141 NET M< LOANS d/ 511 23 -62 79 358 DISBURSEMENTS 728 594 572 709 1,060 REPAYMENTS 217 571 634 630 702 RELIEF - 764 877 570 251 DISBURSEMENT - 764 877 701 743 AMORTIZATION - - - 131 492 NET SHORT-TERM CAPITAL - 5 6 7 9 CAPITAL FLOWS NEI - - - - - CHANGE IN NET RESERVES -30 -41 -55 -89 -157 (- INDICATES INCREASE) GROSS COMMITMENTS REQUIRED 2,196 1,868 2,039 2,646 GRANTS 369 389 507 661 RESCHEDULING (ARREARS) 500 - - - DEBT RELIEF 764 876 701 743 OTHER MLT 563 603 831 1,242 Source: Bank staff projections */ See also footnote to paragraph 7.31. b/ As reported by the IMF; debt service shown is actually paid; difference between debt service owed and paid during 1983 was covered by debt rescheduling. c/ Interest transactions; including charges with the IMF. d/ Includes IFF and gapfill requirement after debt relief. - 92 - 7.32 The key assumptions underlying the projections are: (a) an annual growth in cotton production of around 5 percent p.a. over the period 1982/83-1989/90, 10/ and overall agricultural growth of the same order of magnitude. 11/ (b) a slight increase in per capita levels of consumption of edible oil, cake, foodgrain, and sugar over the same period which, in the context of a 5 percent overall agricultural growth, would facilitate an export volume growth of agricultural products of around 10 percent; (c) an average net foreign exchange effect of petroleum exports from 1986 onwards of around $136 million (in constant 1983 dollars); (d) an overall average annual growth (in real terms) for imports of only around 2 percent. This low growth is largely a reflection of the import substitution expected in food - particularly from increased domestic sugar production. If food imports are excluded, the average annual growth of imports would be about 3 percent. The projected restraint in imports will clearly require very determined policies to constrain and redirect import demand; (e) a continued increase in annual private transfers from the current estimated level of around $430 million to around 10/ The 1982/83 levels of cotton production are still relatively depressed compared to levels realized in the mid-70s, even though the Rahad project has since been completed. The average growth projected from the 1972-74 period until 1990 is a relatively modest 3.4 percent p.a. Provided that the Government continues to adjust the mix of long and medium staple cultivation to world market demand, there should be no problem selling the projected levels of output; Sudan's share of the world market would rise from the 1980 level of 2.8 percent to 4.2 percent, which is still significantly lower than the 5.7 percent share it had in 1970. 11/ The projected growth rate is an average trend growth rate consistent with the production scenario presented in Chapter 3, paras. 3.64-3.66. The initial growth rate may be somewhat higher due to rehabilitation efforts. In order to sustain this growth rate throughout the decade, a continuation of pricing policies supportive of agricultural production will be required. - 93 - $450 million in 1984/85, and thereafter a constant level in constant 1980/81 dollars; 12/ (f) an increase in annual net direct foreign investment from the current estimated level of around $70 million to $105 million by 1989/90; (g) a maintenance of the projected 1983/84 commitment levels of aid (both grants and loans) in real terms for the rest of the 80s; 1 / (h) rescheduling of external arrears (estimated at $2.1 billion as of December 31 1982) on terms similar to those of the 1983 Paris Club Agreement; and (i) finally, debt relief averaging around $700 million p.a. for the remainder of the 80s, sufficient to reduce the debt service burden to 30 percent of exports of goods and non-factor services. This pattern of slow import growth and substantial export growth would help to re-establish the balance between imports and exports. The share of imports in GDP would gradually decline from the current level of 23 percent to 18 percent by 1989/90. Exports are projected to regain their 1970/71 weight in GDP (16 percent) by the same period. External Assistance 7.33 An increasing share of the financing required for domestic investment is assumed to come fron national savings over the remainder of this decade. National savings are projected to provide around half of the required financing in 1990 compared with less than a quarter in 1982/83. The current account deficit would, however, remain at around $1.1 billion per year, and this, together with an estimated level of amortization of around $700 million per year, brings the total financing requirement to around $1.8 billion a year. It has been assumed that disbursements of capital assistance provided to the Sudan in the past will be maintained in real terms during the 80s; this is projected to average around $1.1 billion 12/ A successful implementation of the recovery program as presented in the PPPED document could create the confidence required to increase the inflow of remittances beyond what has been assumed in these projections. This would reduce the borrowing requirement, or alternatively, increase the resources available for domestic investment and consumption. 13/ Official development assistance (ODA) to the Sudan is already at a fairly high level, $34/capita; this is substantially higher than the average amount for low-income African countries. While the projections assume a constant real level of assistance for the future, it should be noted that this implies a reduction in the per capita level of assistance. - 94 - per year. The additional $700 required to close the balance of payment gap will have to be provided as debt relief. While these levels of assistance are substantial (amounting to around $90/capita), they should be achievable in light of the donor support provided in 1983. 7.34 Based on present quotas, the IMF would only have been able to provide a positive net flow for one more year (1984). The projections presented are based on the proposed quota increase. But even assuming the most liberal proposed access rule (375 percent of quota), the IMF would be in a negative flow position (including charges) from 1985 onwards in the absence of further increases. Debt Service 7.35 Total debt service, including service on rescheduled debt, will average around $1.3 billion per year over the decade, of which about half will be interest payments. This debt service payment will clearly be beyond Sudan's ability to pay as it would equal about 90 percent of export (GNFS) earnings. With around $700 million in debt relief per year, Sudan would, however, be left with a level of debt service that should be within its ability to pay. This level is estimated to be around 30 percent of exports (GNFS), or 20 percent of exports of goods and services (including remittances). At this level of debt service, and assuming that debt service to multilateral organizations is paid in full, an amount equal to 20 percent of interest due will be available for other creditors (including Paris Club and commercial banks). Full interest payments to these creditors is projected to be feasible some time between 1990 and 1995. 7.36 If Sudan is able to reschedule annually a reasonable share of the debt service falling due during the next few years on favorable terms, the anticipated growth in GNP and exports would gradually reduce the relative debt burden both of debt outstanding and disbursed and of debt service in the longer term, helping to restore a sustainable balance in the nation's external accounts. The country should thus be able to grow slowly out of its current debt problems. 14/ Some key debt indicators are presented below: 14/ A combination of conversion of current debt into grant, debt relief on even softer terms, and more concessional assistance could advance the resumption of full debt service payment. - 95 - Table 7.4 SUDAN: Key Debt Indicators Item 1983/84 1984/85 1989/90 1994/95 ** US$ millions ** 1. Total DS, without relief (US$ million) 1082 1257 1628 2270 2. Total DS, with relief (US$ million) 318 381 927 1527 3. Annual relief required 764 876 701 743 ** percentages ** 4. Interest paid to non-multilateral creditors (% of interest owed) 19 15 78 100 5. Debt outstanding and disbursed/exports (gnfs) 730 670 380 290 6. Debt outstanding and disbursed/GNP 70 64 37 20 7. Interest payments/ exports (gnfs) 48 49 28 21 Source: Bank staff estimates 7.37 Even with major improvements in export production, import restraint, private savings, and domestic resource mobilization, the Sudanese economy will require very high levels of external assistance in the coming years to support what is only a modest increase in real consumption per capita. This exceptional external assistance will need to take the form of additional commitments (largely as balance of payments assistance rather than project aid), debt relief, and debt restructuring. It is vital that these funds be made available, not according to the needs of donor country industries, but in terms of the highest priority needs of the Sudan as it tackles the long road to economic recovery. The alternatives to adequate aid and a realistic payment schedule that would allow Sudan to service its debts regularly (and thus maintain access to external loans), could be a disorderly compression of consumption and--almost certainly--of gross domestic product, depending on how imports were actually reduced in the absence of adequate external financing. Therefore, every effort will have to be made to achieve both adequate flows of aid on appropriate terms and a realistic restructuring of Sudan's external debt. - 96 - Appendix Key Assumptions for the Macro Projections i. GDP and Imports Investment. At the core of the macro-economic projections is a three sector GDP model. Sectoral growth rates are projected exogenously for agriculture, industry and services. Investment is determined as a function of real GDP growth through an incremental capital output ratio (ICOR). Imports are also determined as a function of GDP growth based on import elasticities for five separate categories: food, other consumer goods, petroleum, intermediate goods, and capital goods. Some key assumptions are presented below. Key Parameters GDP Growth Rates 1982/83-89/90 Real GDP (factor cost) 5.3 Real GDP (factor cost), excluding oil 3.5 Agriculture 5.3 Industry, including oil 14.1 Industry, excluding oil 3.7 Services 2.2 ICOR (average, 1983/84-89/90): 3.3 1983/84-85/86 1986/87-89/9 0 Import elasticities Food neg. 0.9 Other Consumer Goods 0.4 1.0 Petroleum 0.5 1.0 Intermediate Goods 0.5 1.0 Capital Goods 0.5 1.0 As noted in the main text of this chapter, the low import elasticities for the period 1983/84-1985/86 reflect major import substitution in food (particularly sugar) and a recovery strategy that stresses rehabilitation, rather than major new investment, and constrained consumption of consumer goods. - 97 - ii. Agricultural Production and Export Volumes. Export volumes for major crops are determined in the model through three separate submodels for cotton, oilseeds, and foodgrains. These are physical balance models in which exports are determined as residuals. Exogenous variables include area and yields for specific crops and domestic consumption. Some key assumptions are set out below: Unit 1982/83 1989/90 Area and Yield: Cotton: Area ('000 fd) 953 1145 Yield (Kantar/fd) 4.2 4.7 Sesame: Area ('000 fd) 1230 2450 Yield (Kg/fd) 114 127 Groundnuts: Area ('000 fd) 1618 2449 Yield (Kg/fd) 310 422 Sorghum: Area ('000 fd) 8491 8965 Yield (Kg/fd) 225 351 Millet: Area ('000 fd) 2678 3000 Yield (Kg/fd) 105 220 Wheat: Area ('000 fd) 236 467 Yield (Kg/fd) 514 648 Domestic Consumption Cotton Lint ('000 MT) 14 60 a/ Edible Oil (Kg/cap.) 8.8 9.8 Oil Cake (Kg/cap.) 12.8 15.8 Foodgrain (Kg/cap.) 130 160 a/ Reflects assumption of substantial import substitution in textiles based on major improvement in the textile industry. Export growth rates were set directly for other exports, including gum arabic, at 3% p.a.; and livestock at 3% p.a. - 98 - Export Prices iii. These have been projected based on commodity price forecasts developed by the World Bank. The ratios used between Sudanese f.o.b. prices and world market prices are based on historical three-year averages: F.O.B./World Market Price Cotton lint (long staple) 1.1 Cotton lint (medium staple) 0.8 Groundnuts 1.2 Groundnut oil 1.0 Groundnut cake 0.9 Sorghum 1.7 a/ a/ Reflects incentive price for Sudanese sorghum in Saudi markets. International and Domestic Prices; Exchange Rate iv. The projected international price is based on World Bank's index for export prices for manufactured goods (SITC 5-9) to developing countries. Domestic inflation rates are staff estimates. The exchange rate has been project such as to maintain its real 1982/83 value (purchasing power parity) in the face of differential inflation rates. 1983/89 1984/85 1985/86 1986/87-1989/90 International inflation (7) 9.5 9.5 8.0 6.0 Domestic inflation (%) 20.0 17.0 15.0 15.0 Exchange rate (US$/LS100) 70.0 66.0 62.0 45.0* * 1989/90 Capital Assistance v. The basic committment levels have been assumed to stay constant in real terms from the 1983 base described above. Disbursement patterns and repayment terms are based on historical averages for representative creditor categories. All debt relief committments are assumed to follow the pattern set by the 1983 Paris Clue Rescheduling with 6 years grace and 16 years maturity; the average interest rate has been set at 10 percent p.a. - 99 - Government Expenditures and Revenues vi. The following elasticities have been used in determining future government expenditures and revenues: Revenues: Direct Tax 1.1 Indirect Tax 1.0 Export Tax 1.0 Import Tax 1.0 Domestic Tax 1.1 Non-tax 1.1 Expenditures: Economic Services 1.0 Social Services 1.0 Regional Government 0.9 Interest - Local 1.0 Other Current Expenditures 0.8 - 0.9 Development Expenditures 0.9 Other Capital Expenditures 0.9 Oil royalties are assumed to accrue to the Government as a non-tax revenue starting at LS 159 million in 1985/86 and increasing to LS 555 million by 1989/ 90. Petroleum Activity vii. The impact of the planned petroleum exploration activity is felt on GDP and the balance of payments in addition to the Government budget. It has been assumed that the value added effect of the exploitation activity is equal to the gross output value minus operating cost. For the balance of payments, the gross sales receipts have been treated as an export item, whereas debt service obligation have been fully accounted for under factor service receipts. - 100 - STATISTICAL ANNEX - 101 - Statistical Annex This annex is based on information stored in the Sudan Data Base. This data base, which contains substantially more data than are shown here, is available for computerized access through HANDE, an interactive timesharing system which can be used for a wide variety of tasks including statistical analysis, graphing and table production. The Sudan data base is partitioned into a series of data sets. There is at least one data set for each basic section of the statistical annex. For sections with extensive data (e.g. "3.0 - Balance of Payments" and "8.0 - Other Sectors"), more than one data set is used. The relevant data set is indicated in the final footnote to each table produced from the Sudan Data Base. The identification number for each timeseries is indicated to the right of its title in the table. Those interested in accessing the Sudan Data Base should contact the Eastern Africa Region, Division 2B, for details. It should be noted that the statistical annex of this report has been reproduced as it appeared in the original grey cover report (issued Nov. 10, 1983). Several data series (e.g. national accounts and population) have been revised since then, particularly for the later years (i.e., 1980/81 to 1983/84). The reader should consequently use the data base for these later years with some caution. Questions concerning these revisions can be directed to the Eastern Africa Region, Division 2B. - 102 - SUDAN: Statistical Annex Part 1 - Social and Demographic Data 1.0 Notes on Social and Demographic Data 1.1 Social Indicators Data Sheet 1.2 Population by Year 1.3 Population by Province 1.4 Estimated 1980 Population by Age and Sex 1.5 Distribution of Economically Active Persons by Sector Part 2 - National Accounts Data 2.0 Notes on National Accounts Data 2.1 Gross Domestic Product by Sector (1977/78 Prices) 2.2 Gross Domestic Product by Sector (Current Factor Cost) 2.3 Gross Domestic Product by Expenditure (1977/78 Prices) 2.4 Gross Domestic Product by Expenditure (Current Prices) 2.5 Financing of Domestic Investment (Current Prices) Part 3 - Balance of Payments Data 3.0 Notes on Balance of Payments Data 3.1 Balance of Payments 3.2 Value of Exports by Commodity 3.3 Volume of Exports by Commodity 3.4 Value of Imports by Commodity 3.5 Volume of Imports by Commodity 3.6 Direction of Trade - Exports 3.7 Director of Trade - Imports Part 4 - External Debt 4.0 Notes on External Debt Data 4.1 Loan Commitments by Creditor Source 4.2 , Disbursements of External Loans by Sectors 4.3 Structure and Terms of External Debt 4.4 Outstanding External Arrears 4.5 Summary of External Public Debt Outstanding Part 5 - Public Finance 5.0 Notes on Public Finance Data 5.1 Central Government Operations (Budget) 5.2 Central Government Operations 5.3 Central Government Revenues 5.4 Central Government Expenses 5.5 Allocation of Development Reserves 5.6 Current Expenditures - Functional Classification 5.7 Foreign Financing of Central Government Budget 5.8 Public Sector Investment Plans 5.9 Sectoral Allocation of Public Investment Program, 5.10 Summary of Tax System 5.11 Military Economic Corporation Structure - 103 - Part 6 - Monetary Accounts 6.0 Notes on Monetary Data 6.1 Monetary Survey 6.2 Factors Affecting Monetary Expansion 6.3 Commercial Bank Credit Outstanding to the Private Sector by Use 6.4 Credit Outstanding to Public Entities 6.5 Interest Rates 6.6 Gross Reserves and Net Foreign Assets 6.7 Reserves, Borrowing and Liquidity Position of Commercial Banks 6.8 Exchange Rate History Part 7 - Agriculture Sector 7.0 Notes on Agricultural Data 7.1 Agricultural Production, Major Crops 7.2 Livestock, Poultry and Fish Production 7.3 Physical Balance, Cotton 7.4 Physical Balance, Sesame 7.5 Physical Balance, Groundnuts 7.6 Domestic Use of Edible Oil and Oil Cake 7.7 Cereals - Supply and Utilization 7.8 Cotton Production Part 8 - Other Sectors 8.0 Notes on Data for Non-Agricultural Sectors 8.1 Indicators of Industrial Production 8.2 Manufacturing Value Added - Market Prices 8.3 Mineral Production 8.4 Domestic Demand for Petroleum Products 8.5 Trade in Crude Petroleum and Petroleum Products 8.6 Domestic Petroleum Resources 8.7 Electricity Demand and Supply 8.8 The Blue Nile Grid 8.9 Transportation Statistics. 8.10 Railway Performance. Part 9 - Prices 9.0 Notes on Price Data 9.1 Price Indices (Index Numbers) 9.2 Price Indices (Rates of Inflation) 1.0: Notes on Social and Demographic Data The nation's first census was taken in 1955/56. The second and most recent census was conducted in April 1973 but was never officially released because the Government felt that it suffered from serious under-reporting. Current demographic data are not particularly reliable. In addition to the problems with the last census (which was taken at the close of the seventeen year civil war with the South), the past decade has seen a high level of population movement across national borders. The rapid expansion of employment opportunities in the Gulf States has led hundreds of thousands of Sudanese to migrate to that region. At the same time, the civil strife in neighboring countries such as Ethiopia, Uganda and Chad has led to a very substantial influx of refugees. A new census is scheduled for November 1982, and preparations for it are now underway. The most recent household budget survey was conducted in 1979/80 and is due to be published in 1982. The previous survey was conducted in 1967/68 and published in 1969. Labor statistics are maintained by the Department of Labor in the Ministry of Civil Service and Administrative Reform. These are of little use because of their relatively limited coverage. The coverage of unemployment statistics from the Labor Department is limited primarily to those applying for C work in the public sector or for permission to work abroad. Industrial sector employment is reported by the Department of Statistics in connection with its national accounts work. Vital statistics (births, deaths, etc.) are maintained by the Department of Statistics but the coverage is thought to average only 10-15 percent for the nation as a whole and to approach zero in rural areas. - 105 - TABLE 1.1 PAGE I SUDAN - SOCIAL lNDICATORS UATA SilEET SUDAN REPIRENCE GROUPS (WEIGliTED AVERAGES) /a MOST (MOST NLCEt.T ESTiMATE-) lb /RCE:T LOW Il'COME MIUDLEL INCOME 1960- 1970-- RE TE- AFII[CA S. OF SA*iARA AFKICA S. UF SAitARA AREA (THOUSAND SQ. IK) TOTAL 2505.8 2505.8 2505.8 AGRICULTURAL 671.8 677.0 684.2 GNP PRU CAPITA (US$) 150.0 190.0 380.0 254.6 1147.9 ENERGY 0ttSUMPTION PER CAPITA (KILOGRAitS OF COAL EQUIVALENT) 58.0 170.0 101.0 79.d 724.2 POPULATION AND VITAL STATISTICS POPULATION,MIU-YEAR (THOUSANDS) 11228.0 13849.U 19242.0 URBAN POPULATION (Z OF TOTAL) 10.3 16.4 25.7 19.5 28.5 POPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILL) 33.7 STATIONARY POPULATION (MILL) IlI.b YEAR STATIONARY POP. REACHED 2135 POPULATION DENSITY PER So. FM. 4.5 5.5 7.5 29.5 56.5 PER SQ. KM. ACRI. LAND 16.7 20.5 27.3 94.1 131.8 POPULATION AGE STRUCTURE (T) 0-14 YRS 43.7 43.7 44.2 45.0 45.9 15-64 YRS 53.2 S3.4 53.0 52.1 51.2 65 AND ABOVE 3.1 2.9 2.8 2.9 2.8 POPULATION GRoWTHI RATE (X) TOTAL 2.0 2.1 3.0 2.8 2.8 URBAN 6.9 6.7 7.1 6.2 5.3 CRUDE BLRThi RATE (PER rHOUS) 46.5 46.7 46.s 47.9 47.6 CRUUE DEATH RATE (PER THOUS) 24.5 22.1 18.4 19.2 15.2 GROSS REPRODUCTION RATE 3.3 3.3 3.3 3.2 3.2 FAMILY PLANNING ACCEPTORS, ANNUAL (TtiOUS) USERS (1 OF MARRIED WOMEN) .. .. FOOD AND ffRITION INDEX OF FOOD PROD. PER CAPITA (1969-71-100) 92.0 100.0 104.0 37.8 95.7 PER CAPITA SUPPLY OF CALORIES (S OF REQUIREMENTS) 83.0 91.0 101.0 88.0 97.1 PROTEINS (GRAMS PER DAY) 65.0 66.0 69.0 51.2 56.0 OF WHICH ANIMAL AND PULSE 24.0 22.0 22.0/c 18.1 17.2 CHILD (AGES 1-4) DEATH RATE 40.1 32.4 20.8 25.7 23.6 HEALTH LIFE EXPECT. AT BIRTil (YEARS) 39.6 41.8 46.6 47.4 51.9 INFANT MORT. RATE (PER THOUS) 168.0 150.4 121.8 126.5 117.6 ACCESS TO SAFE WATER. (ZPUP) TOTAL .. 19.0 46.0/d 24.7 25.4 URBAN ,, 61.0 49.07- 56.8 70.5 RURAL .. 13.0 45.o7d 18.3 t2.3 ACCESS TO EXCRETA DISPOSAL (U OF POPULATION) TOTAL .. 16.0 22.0/e 2d.1 URBAN .. .. .. 65.7 RURAL .. .. .. 21.9 POPULATION PER PHYSICIAN 33420.0 14060.0 8800.0 27420.6 12181.6 POP. PER NURSING PERSON 3030.0/f 1720.0 1410.0 3456.2 2292.0 POP. PER rlOSPITAL BED TOTAL 980.Of/ 920.0/R 1010.0/c 1183.2 1075.4 URBAN 130.0f7L, 190. OA 450.07& 380.6 402.3 RURAL 4400.0/f,_ 5120.0Li 1760.O/c 3177.5 3926.7 ADMISSIONS PER HOSPITAL BED .. .. HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL .. 5.1 URBAN .. 5.7/h RURAL .. .. AVERAGE NO. OF PERSONS/ROOM TOTAL .. .. URBAN .. 2.5/h RURAL .. .. ACCESS TO ELECT. (Z OF DWELLINGS) TOTAL .. .. URBAN .. 26.4/h RURAL .. .. _________________________________________________________________________________________________________________ -106 - TABLE 1. 1 PAGE 2 SUDAN - SOCIAL INDICATORS DATA SllEET SUDAN REFERENCE GROUPS (WEIGHTED AVERAGES) /a MOST (MUST RECENT ESTIMATE) lb /b lb RECENT lb LOW INCOME MIDDLE INCOME 1960- 1970- ESTiMATE- AFRICA S. OF SAHARA AFRICA S. OF SAdARA EDUCATION ADJUSIED ENKOLLAENT RATIOS PRltKARY: rTrAL 25.0 38.0 51.U 63.9 97.2 HlALE 35.0 46.0 6U.u 73.6 103.1 FEliALE 14.0 29.0 43.0 51.6 88.5 s"G;:.uART: TOTAL 3.0 7.u 16.V 12.5 17.2 MbALL 5.0 10.0 2U.0 16.7 23.5 FLIIALL 1.0 4.0 12.0 8.1 14.2 VOCATiONAL (Y. OF SECONDARY) 3.4 1.4/i 4.0/i,j 7.3 5.2 PUPIL-TEACIiER RATIO PRIA,tY 41.0 47.0 34.0 46.4 42.9 SECONDARY 20.0 17.u 20.0 25.1 23.7 ADULT LITERACY RATE (X) 13.1 14.7/h 32.0 36.5 37.1 CONSUMPTION PASSENGER CARS/TIIOUSAND POP 1.4 2.0 .. 3.3 18.8 RADIO RECEIVERS/TIIOUSAND POP 17.0/k 80.4 71.2 45.3 97.8 TV RECEIVERS/T1iOUSAND POP O.87T 3.2 5.6 2.2 18.6 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PEN THOUSAND P'OPULATION 4.4 ,. 1.0 4.7 18.2 CINEMA ANNUAL ATTENDANCE/CAPITA 0.9 .. 0.6 1.0 0.6 LABOR FORCE rUTAL LABOR FORCE (1rOUS) 3722.0 4544.0 6086.0 FEFALE (PERCENT) 9.6 10.2 10.9 34.5 36.1 AGRICULTIURE (PERCENT) 86.0 82.0 72.0 76.9 56.8 INDUSTRY (PERCENT) b.0 8.0 10.0 9.8 17.5 PARTICIPATION NAVE (PERCENT) TOTAL 33.2 32.8 31.6 40.9 37.0 MALE 59.3 58.2 55.6 53.0 47.1 FEMALE 6.4 6.8 7.0 28.9 27.0 ECUNOMIC DEPENDENCY RATIO 1.4 1.4 1.5 1.2 1.3 INCOFfE DISTRIBUTION PERCENr OF PRlVATE INCOME RECEIVED BY HIGHEST 5X OF HOUSEHOLDS 20.9/I,D ..m HIGAEST 20% OF HOUSEHOLDS 50. 1/,I: 49.2/n LOWEST -20% OF HOUSEHOLDS 5.71 I 5.i7 LOWEST 402 OF iOUSEIlOLDS 13:97 1t 14.57. POVERTY TARGET GROUPS ESTIMATED ABSOLUrE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. ,, 137.U/o 165.9 534.2 RURAL .. .. 80/e B7.4 255.9 ESTIMATED RELATIVE POVERTY INCOME LEVEL (US0 PER CAPITA) URBAN ., 115.O/o 100.8 491.5 RURAL .. .. 100.07W 64.6 188.1 ESTIMATED POP. BELOW ABSOLUTE PUVERTY INCOME LEVEL (X) URBAN .. .. .. 39.5 RURAL .. .. B5.0/e 69.0 .. OT AVAILABLE NOT APPLICABLE N 0 T E S /a The group averages for each indicator are population-weighted arithmnetic means. Coverage of countries among the Indicators depends on availabillty of data and is not uniform. /b Unless otherwise noted, "Data for 1960" refer to any year between 1959 and 1961; "Data for 1970" between 1969 and 1971; and data for "Most Recent Estimate" between 1979 and 1981. /c 1977; /d 1976; /e 1975; /f 1962; /S Government hospital establishments; /h 1966; /i Beginning 1970, the duration of general secondary education was reduced from 8 to 6 years; /i Includes programe of 5 training centers operated by Department of Labor and 17 short-term centers operated by Itinistry of Youth and Sport; /k 1963; /1 1964; /m Oindurman, urban; /n 1967-68; /o 1978. Miay 1983 - 107 - TABLE 1.I1 __2 Patfl: Alth-ugh tba data r. draw 4 rot f ourtt -1nathl J)odgad aba sct abOit -t11 to, at. reIbe tsol 10h ...d tat b . . Io. b. ....r. thla,uaa odsrtha(1 ordar ofttioe laiat t.d .4 anIbrStraa r o a..lot dtff.erao- b-t-r -o,otrta.. The refarantegreta?. ara Il the earns wontey troop f tha tobOac no.ntry end .0 ......r gr Ith -.h.,ce ht,h.r -rs... ron. than tha .o.ntr. Itet.. acOla-tutora I ftinit sal. Inth. re-rn- S-oP data tIP..pouato ne Ihtd art tbe r en -o ab )icorndswnooaea t LhMPA&YA (tbojagad &q.bs.l euaiwoa hmtt rtpuaSala 4toid.d by -luste we PeantIlln phy- Tata1 - Total - sra..e. epI a oa remdtla .....aoan ulild*r,amsa.atcl tai-mOily lav-l. tarinoltoral tati,IoSao trclos at.uIi.eret ot -r roately Paua(j.ruarc aao Popult diodd by Inea Opeota. G? PUR CAPITA 10 -M?Par -caca -a.ea anorcnmrkS.t PrIto. oat- ura. d ru... ) dIoLde d bo tLbi teprr ume fbaIttbad. al tI.yao .oossa sathod .c World auk 'nla I(1977-19 bsa;190,0, -omLal.U If -ubli sod P---o.t. geo..a co d ..rerali-ed ho-aa SIde 197g. sod i97dat.hbittr ete. Ocptl r taisert saool nfe by at lae o. e phsca. Ptbllst rvdn rolat utda UZIACI CU09 1P 04't' PER CAPITA - Ant-a nowPrio oforta Lrg rs rar ar a nldd us optl,hoee.Icoahat e al and "ltg.te PetroI.l .....ottue got and hydc-. Iute n wtamltn tnasnnyreairaefolh hare htb edIh lh eatnt tfiy tohLogrc ftsaaoletPint .Pit,. 1960. 19(0. Sod lOft scr 1,4idife.,eo. c Iff., In-Pat t-t - -rstd.to o ted dOt I thitofrans o se tre haITia o ca.la ~YOn ra op XSrnAT3 V71ITAL STATISTICS aynt ions1 ord ruO. a i eep.I ng-: and m.d.. te ..ls.w.t..t4ntara. TatalpirotaO- Old-Year (.IilIto... h of JILy 1: 1960. 1970,. cd 1978 Ad!ttln ,:r,,:ate !3d` - loYa nurar of .dt .mn. .oot dlnara data. trcsILLaapiiate dtiodad by th. .-m'or of bade. Ira oo.totreiotootl-Ptio of ltb:. ta,total popolatisa; esetoyrle 10. 90 ad 197d8 t d.,.A-rsa I.o lcohl rloaca cueod non2al ua and eweal- Occa o t.p$.l4:7 * bcueebot coalt a af Itou- %F;cocoldul hac Iht 110100 qucrt.ra Louei o X.tar20 C- ---ree popuIttLoo peleo.tlona ara baaad en 1990 cod thai tacml. Ahadro ogr a,styinh olddI ta.a PoPol1ti.. by Iacan .aagd ioalr acr.iIty ai frtlty rate., the Iotaold for IntiaioL -oaoeI fenlnyscrdnI otoorlsn n pas 't ta p Toca p.rf.tu... heest lrect cecn fAelial- oa.ubn n;um lat oooryI.the ae gud ceat hew tw cshoottoe f oralty acertoalIa Ilrg wthalct5nly 0 tOngriTOta w ereaeg adfrit.tead far -r2cio upa. tmtl rar n ua olig epoiay Stanlunaro ,orolatto In- a---i tutoefn. .o...aiPaw there is-lo growthgatw thahtm, antIstqut o n. nai ets,an PIotaae iutr a- tICT maine nooanau. This It aoO.ved only etarfrli rnadebe o ojte ttomrt Pati the rptacesat anal t uni osireprourwioa rae, whn sac genrattot ~ ad taale -leosetota, mul Sod eLst atoc tat! Rcaunttrbeslc -b c(oorsa ad-IIs -p-c roitr a.1te C nc aloe boao i .. AsaOOaclcddSe Eo,dar 1ht-- tntaL.-. o.aed fto1: - (ceptto an 50.: aac1.t fatl re. aollyof11toV'(eca f tecorrfonrreocret ttittolR soly. cocatlacat asyollanoc~f , P" "Ieen cco.udr)orcdtioohlLd% Otni. lotin 191 9! c 90dat uu-ece o It-rhcr ,oLuecud-1 - oa c,dcmr.oldc Poulc ionboothftc.yee.r:l -nhca -Thu. acrbrte fttiaa riayedtoo~rcooI t.a , noaher..of Lac aIortI TZuainIrebtt I erIcl ulY-..a..gash as.atutt 1t0 Adl dlte.cy<,e racat -LIinaeeolada I c reftd rie leIyna for b15-h.d 190'.So 600. wprt tug"fttlautpplt gd1 at i ys Crud Mith aa eerticnaadl Acost iosbtrho ar hcoandof t.dyh- titiy rcs aal o-ersasw riti 91 91 end 1917. hr Il o n ft no tenera %ubirpt .huodr ....rlo. fcoode utli- PatOr lacana- coucr Aac-bl-Iac --kua aelrntarctce oead tcevat nc.Ottm.aI £...r a r..er .io .f.r.di got 19?- -d i.~~~~~~~~~~~t nutee sdi yoar when 're otraioo'- anacm0 fst P,M ..tlo ..0r Pow....e.r Ctnito er bua!oueiol-Sot-astaaiclr pradocaico~~ ~ ~~~ oaltoio odie. rrd 19o ecuds0 en odfed n riino dsocdpOeolya byoelc -eta no.Iti-cria C,O uednya ai. Co!lsaw ploygoalg uaaa oh diy Ifo apsea ea fou tl-.meaeLo iatt f car 1` 01mb arc -dbl ace to -i b r er.t.. lg offe n itn oulhcedocro a n rrYa-radc h oap-e th tetloma 19aag 0proaca tell n197ts:190-5g 91,n 99daa o caaul Car crl. siurWlo oAreie.e,,nec oLrntrteia -Ctyot ts n. o aLa6b 1470da, o .. Onitot.ata apnor.hrwIhs g .501. lorot eesihrfwea yraig ytrlthetr. !0o.s.hurtuewo of..r.Ait ;-g. ne -b- fd- hrt. is -etnt. .ropia tdotz...l.,srnset I- Rab grtrm io-.. a..ccca. o seu h-t srcfItatod Loeepofi. twha flp0~ aic-e sIudibe V1ina pstet.Tha stnd uotOyaea.o oa scl! cola.tc feta.:. lab -.or -oe Jo ordal ar ce htnha f7 em of ocAl brtw4 nd0.ge..e moctaa of toAl, table sod -he ...lda p paltcoa lt -lage ecprtvly acstesatI waetetrteiot,pauafyP0a h hr 96.1(.tO17 aa ha e 0.' atoIsborearfeto of t od ury 196-gb 170 ad 97 data.. ga-mo .1t,tI.. wtIlurc lth ppoato. dttgtm Lotay. A tow esdti-. L(, omacmt n altat oatprdy lh-S_97,A 97dOS ooi bI ___ed_____ . FOOD AND ITION L. -tli..~~~~~~~Proaaeo PRo Lnst Iot..r -gbo t i ecshc hw t toci. by raet. UAI.Th ~~~~~~~~~~~~~~~1);.ll 1 d,X L:- l i_ fpoweton .. rtas i0 p.rso. p- aas 20 drc. I ard pocea`a .O..ea. PtIrt:tO' 1671 andd9(9ddata 1LfrttM07A~7...tlt..Alt.ta2oP0l-ta.s.l amtea ifceo.d-aayer pOw to d-t t.? C00X7(POI 1 - 4- MtaS a hAtndIo hrhe sim& asltePor7L!te. Lai tl -uha e rrl fewseo t soiaglesa wntr ic tattw aba.saieptkartl. ..lost. of the ornt- . cehantd cat tm der-oad tet L- oa Pcadrda aa ahnrscal laacatcfMS.Ierlsas tctwt dotwn s itrmto titi eomae eosco -c -tae ofa -sct Liap tro theboteit oema -edt fthehueb -4 bl j. it . ....ga end stildab iaewlCLee bLNayb 1983":4b. ... d. TABLE 1.2 SUDAN: POPULATION BY YEAR (millions) _ _____------------------------------------------------------------------- Year Urban Rural Total -----------------------------------------------------------------__-------- 1965 1.6 10.9 12.5 1966 1.7 11.1 12.8 1967 1.8 11.3 13.1 1968 1.9 11.5 13.4 1969 2.1 11.7 13.8 1970 2.3 11.8 14.1 1971 2.3 12.1 14.4 0 1972 2.4 12.3 14.7 X 1973 2.4 12.7 15.1 1974 2.5 13.1 15.6 1975 2.6 13.4 16.0 1976 2.6 13.9 16.5 1977 2.7 14.4 17.1 1978 2.8 14.8 17.6 1979 2.9 15.2 18.1 1980 3.0 15.7 18.7 1981 3.1 16.1 19.2 1982 3.1 16.7 19.8* 1983 3.2 17.2 20.4 -------------------------------------------------------------------__------ SOURCE: BANK STAFF ESTIMATES BASED ON 1973 CENSUS. *The 1983 census indicates 21.6 million as of February 1983. TABLE 1.3 page 1 of 2 SUDAN: Population by Province, 1955/56 and 1973/74 Territorial Area Cultivated Area Resident Population _ Provincial Pop. Variation Territorial PROVINCE Thousands % Thousands % (Thousands of Units) Population 55/56-73174 Density 1/ of sq.km. of sq.km. 1955/56 1973/74 1955/56 1973/74 Th. of %Annual Inhabit/sq.km Units Average 55/56 73/74 NORTH 1,857.8 74.2 11,045 65.3 7,479.4 11,361.4 72.9 80.1 2,892.0 2.3 4.9 7.4 KHARTOUM 21.0 0.8 45 0.3 504.9 1,112.5 4.9 7.8 607.6 4.5 24.0 53.0 KASSALA 340.7 13.6 2,200 13.0 941.0 1,512.8 9.2 10.7 571.8 2.4 2.8 4.4 BLUE NILE 142.1 5.7 4,321 25.5 2,069.6 3,631.5 20.2 25.6 1,561.9 3.2 15.2 26.6 DARFUR 496.4 19.8 1,309 7.7 1,328.8 2,077.3 12.9 14.7 748.5 2.5 3.5 5.5 KORDOFAN 380.5 15.2 2,874 17.0 1,762.0 2,097.5 17.2 14.8 335.5 1.0 4.6 5.5 NORTHERN 477.1 19.1 296 1.8 873.1 929.8 8.5 6.5 56.7 0.4 3.2 3.4 SOITTH 648.0 25.8 5,860 34.6 2,783.1 2,810.4 27.1 19.9 27.3 -- 4.3 4.3 BAHR EL GHAZAL 213.7 8.5 3,161 18.7 991.0 1,330.4 9.7 9.4 339.4 1.6 4.6 6.2 EOUATORIA 198.1 7.9 881 5.2 903.5 719.8 8.8 5.1 -183.7 -1.3 4.6 3.6 IUPPER NILE 236.2 9.4 1,818 10.7 888.6 760.2 8.6 5.4 -128.4 -0.9 3.8 3.2 SUDAN (TOTAL) 2,505.8 100.0 16,905 34.6 10,262.5 14,171.7 100.0 100.0 3,909.2 1.8 4.7 6.5 SOURCE: Democratic Republic of Sudan. Second Population Census (1973) Vol. 1, 1977. 1/ The index of territorial density of the population was calculated excluding from the area the following desert zones: 6,000 sq. km. in the province of Blue Nile (hunting reserve), 122,000 sq. km. in the province of Darfur, and 206,000 sq. km. in Northern province. June 1981 N.B. See note on Territorial Distribution on following page. Table 1.3 page 2 of 2 Territorial distribution. In several stages after 1973, the existing provinces were split into 18 new provinces. In 1980, a regionalization act was passed creating a level of regional government in the rest of the country similar to that in the Southern Region since 1973. These regions correspond closely to the former provincial boundaries. Provincial organization is as follows: Pre-1973 1980-82 1983 Provinces Provinces Regions Regions Provinces Northern Northern, Nile Northern Northern Northern, Nile Kassala Kassala, Red Sea Eastern Eastern Kassala Red Sea Khartoum Khartoum Khartoum Province Khartoum Khartoum Blue Nile Blue Nile, Gezira, White Nile Central Central Blue Nile White Nile El Gezira Kordofan Northern Kordofan, Southern Kordofan Kordofan Kordofan N. Kordofan S. Kordofan Darfur Northern Darfur, Southern Darfur Darfur Northern Darfur S. Darfur Bahr el Ghazl Bahr el Ghazl, El Buheyrat Southern Bahr el Ghazal El Buheyrat Upper Nile Upper Nile, Jonglei Southern Upper Nile Upper Nile Jonglei Equatoria Western Equatoria, Eastern Equatoria Southern Equatoria Western Equatoria Eastern Equatoria Table 1.3 SUD/CEM/TAB-2 10/20/83 - ll - Table 1.4 SUDAN: Estimated 1980 Population by Sex and Age ('000 persons) Both Sexes Male Female Number Percentage Number Percentage Number Percentage Northern Sudan 0- 4 2,662.9 18.66 1,355.5 18.87 1,307.5 18.44 5- 9 2,114.5 14.82 1,076.9 15.00 1,037.6 14.63 10-14 1,750.1 12.26 889.6 12.39 860.5 18.14 15-19 1,477.4 10.35 749.7 10.44 727.7 10.26 20-24 1,243.3 8.71 628.1 8.75 615.2 8.68 25-29 1,841.4 7.30 524.3 7.30 517.1 7.29 30-34 867.9 6.08 434.7 6.05 433.2 6.11 35-39 720.5 5.05 359.3 5.00 361.2 5.09 40-44 594.9 4.17 295.9 4.12 299.0 4.22 45-49 486.1 3.41 240.5 3.35 245.7 3.46 50-54 392.4 2.75 192.2 2.68 200.1 2.82 55-59 311.0 2.18 150.1 2.69 60.0 2.27 60-64 235.4 1.65 112.2 1.56 123.2 1.74 65 374.4 2.62 172.5 2.40 201.9 2.80 Total 14,272.2 100.10 7,181.3 100.0 7,090.9 100.00 Southern Sudan 0- 4 705.5 17.28 352.5 17.4 355.0 17.16 5- 9 528.5 12.91 264.8 13.07 263.7 12.74 10-14 454.4 11.10 227.7 11.24 226.6 10.95 15-19 400.4 9.78 200.2 9.88 200.2 9.68 20-24 352.7 8.61 175.3 8.66 177.4 8.57 25-29 309.3 7.55 152.9 7.55 156.3 7.55 30-34 270.0 6.59 133.6 6.60 136.4 6.59 35-39 232.9 5.69 115.3 5.69 117.7 5.69 40-44 198.7 4.85 97.5 4.81 101.2 4.89 45-49 167.8 4.10 81.8 4.04 86.1 4.16 50-54 140.6 3.43 67.9 3.35 72.7 3.51 55-59 114.0 2.78 54.2 2.68 59.8 2.89 60-64 87.5 2.14 41.3 2.04 46.3 2.24 65+ 130.5 3.18 60.4 2.99 70.1 3.38 Total 4,094.9 100.00 2,025.5 100.00 2,069.4 100.00 Source: Bank Staff estimates. TABLE 1.5 SUDAN: DISTRIBUTION OF ECONOMICALLY ACTIVE PERSONS BY SECTOR 1976/77-1979/80 (in thousands) 1979/80 1976/77 IBRD Staff Esti3te Percentage Change Sector No. Share No. Share 1976/77-1979/80 Agriculture 3,435.3 68.5 3,432.6 65.8 - 2.7 Industry and Mining 185.1 4.46 183.3 3.5 -1.8 Utilities 45.6 0.91 59.2 1.1 13.6 Construction 92.3 1.84 107.6 2.1 15.3 Commerce and Finance 245.7 4.9 220.8 4.2 -24.9 Transport and 169.0 3.37 198.8 3.8 29.8 communication Services 521.6 10.4 679.8 13.0 158.2 Unallocated 320.5 5.12 340.5 6.5 20.0 Total 5,015.0 100.0 5,222.6 100.0 207.5 Source: SYDP and IBRD Estimate 2.0: National Accounts Data Data on production and expenditure at the national level in Sudan are prepared by the National Accounts Section of the Department of Statistics (DOS) within the Ministry of National Planning. These data are published in National Income Accounts and Supporting Tables. The latest volume, for 1978/79 was issued in March 1983. The efforts of the Department of Statistics to produce timely and comprehensive data on national accounts have been hampered by inadequate resources and by the low quality of primary data sources. Consequently, the national accounts data on the Sudan are often several years out of date. Furthermore, in areas such as small scale industry, traditional construction, horticulture and livestock, the data do not appear to be consistent with reality. Part of the problem lies in the fact that the value added calculations are based on outdated production parameters. The usefulness of the national accounts data is diminished by the fact that they are available for recent years only in current prices. Production data are based on value of sales rather than physical output, and adequate deflators are not available. The only price indices are for lower and higher salaried workers in the Khartoum area. These indices may not accurately reflect average price movements through the country. However, in the absence of a better deflator, a GDP deflator has been estimated based on a variety of factors including the cost of living indices published by the Department of Statistics for the Khartoum area. There is no clear a priori bias in this approach. On the one hand, the price basket is out of date (1966/67) and some of the products in it are periodically subject to price controls. On the other hand, inflation in the rural areas is probably lower than in the Khartoum area; outside Khartoum and other major towns, economic life tends to be dominated either by export agriculture (which is linked fairly closely to the relatively slower world price movements) or by subsistence agriculture. In the absence of current GDP estimates from the DOS, the Planning Advisory Team in the Ministry of Planning has developed a methodology based on selected indicators such as output of certain crops for projecting GDP growth. So far there has been a reasonably close correlation between these estimates and the DOS data when issued. As there are no estimates from within the country since1978/79-on basic expenditure aggregates, these have been estimated. Investment was calculated on the basis of trends in the import of capital and intermediate goods such as building materials, and of expenditures on public investment. Consumption and savings were derived as residuals. For years where official data for national accounts on an expenditure basis were available, the import and export data published by the Bank 6f Sudan was used. Years beyond the published data were estimated on the basis of data from the balance of payments (Table 3.1). 10/20/83 TABLE 2.1(a) SUDAN: GDP BY SECTOR (1981/82 PRICES), 1976/77-1982/83 (LS MILLIONS) ITEM 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 -------------------------------------------------------------___--------------__---------------- PRODUCTION SECTORS 180 3,072.4 3,256.5 2,813.0 2,816.0 2,960.0 3,133.0 3,000.0 AGRICULTURE 181 2,307.6 2,518.1 2,095.0 2,028.0 2,133.0 2,265.0 2,095.0 MANUFACTURING & MINING 182 377.5 360.1 395.0 438.0 456.0 471.0 482.0 ELECTICITY & WATER 183 96.9 93.2 86.0 105.0 111.0 117.0 123.0 CONSTRUCTION 184 290.4 285.0 237.0 245.0 260.0 280.0 300.0 SERVICES SECTORS 185 2,814.7 2,968.8 2,756.0 2,911.0 3,030.0 3,134.0 3,095.0 DISTRIBUTION & HOTELS 186 1,052.8 1,162.3 1,085.0 1,220.0 1,314.0 1,349.0 1,350.0 TRANSPORT AND TELECOM 187 624.0 660.4 652.0 547.0 587.0 647.0 580.0 FINANCIAL SERVICES 188 374.0 368.8 337.0 350.0 365.0 380.0 395.0 PERSONAL & HOUS. SERV. 189 142.4 135.7 139.0 142.0 145.0 148.0 150.0 GOVERNMENT SERVICES 190 621.5 641.5 543.0 652.0 619.0 610.0 620.0 GDP-FACTOR COST 191 5,887.1 6,225.4 5,569.0 5,727.0 5,990.0 6,267.0 6,095.0 4 GDP GROWTH RATE (Z) 904 -100.0 5.7 -10.5 2.8 4.6 4.6 -2.7 GDP DEFLATOR 192 35.4 41.4 52.0 65.0 83.0 100.0 130.0 INFLATION RATE (Z) 902 -100.0 16.9 25.6 25.0 27.7 20.5 30.0 GDP-FACTOR COST, CUR. PRICES 193 2,084.0 2,577.3 2,895.9 3,722.6 4,971.7 6,267.0 7,923.5 INDIRECT TAXES-SUBSIDIES 194 256.0 305.0 358.0 400.0 460.0 588.0 886.0 GDP-CURRENT MARKET PRICES 195 2,340.0 2,882.3 3,253.9 4,122.6 5,431.7 6,855.0 8,809.5 MEMO ITEMS GNP - CURRENT US $ 901 6,668.3 8,228.0 6,855.7 6,957.8 8,577.3 7,994.8 7,364.9 EFF. EXCHANGE RATE (PT/$) 905 34.8 34.8 47.0 58.8 62.8 88.9 122.9 POPULATION (MLS) 44 17.1 17.6 18.1 18.7 19.2 19.8 20.4 PER CAPITA GNP (US$) 903 390.0 467.5 378.8 372.1 446.7 404.3 361.6 SOURCE: MINISTRY OF PLANNING- PROSPECTS, PROGRAMS AND POLICIES FOR ECONOMIC DEVELOPMENT 1983/84-1985/86. TABLE SUD/2N/10 10/20/83 TABLE 2.1 (b) SUDAN: GDP BY SECTOR (1980/81 PRICES), 1974/75-1982/83 (MILLIONS OF SUDANESE POUNDS) __________________________________________________________________________________________________________________ ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 PRIMARY PRODUCTION 101 1,484.0 1,543.0 1,916.6 2,092.4 1,743.2 1,689.0 1,776.5 1,887.9 1,748.4 AGRICULTURE 102 1,472.3 1,529.7 1,913.1 2,089.2 1,737.6 1,683.5 1,770.4 1,880.0 1,738.9 MINING 103 11.7 13.3 3.6 3.2 5.6 5.5 6.1 7.9 9.5 SECONDARY PRODUCTION 104 457.9 550.9 630.4 609.4 590.3 648.7 680.3 712.5 741.6 MANUFACTURING 105 242.9 266.8 309.4 295.6 321.9 358.1 372.4 383.0 390.6 CONSTRUCTION 106 161.9 213.8 240.7 236.5 196.7 203.4 215.8 232.4 249.0 PUBLIC UTILITIES 107 53.0 70.3 80.3 77.4 71.8 87.2 92.1 97.1 102.1 SERVICES 108 1,464.5 1,892.1 2,333.5 2,463.1 2,285.5 2,416.5 2,514.9 2,601.2 2,568.9 TRANSPORT & STORAGE 109 224.4 458.0 517.3 547.9 540.5 454.1 487.2 537.0 481.4 COMMERCE 110 543.4 637.6 872.8 964.3 900.2 1,012.8 1,090.6 1,119.7 1,120.5 BANKING, INSURANCE & FIN. 111 232.2 288.2 310.1 306.0 279.3 290.5 303.0 315.4 327.9 ROUSING 112 - - - - - - - - - PUBLIC ADMIN. & DEFENSE 113 389.6 426.3 515.2 532.3 450.4 541.3 513.8 506.3 514.6 PERSONAL SERVICES 114 74.9 82.1 118.0 112.6 115.2 117.9 120.4 122.8 124.5 GROSS DOMESTIC PRODUCT 115 3,406.3 3,986.0 4,880.6 5,164.9 4,619.0 4,754.2 4,971.7 5,201.6 5,058.9 INDIRECT TAXES, NET 133 428.2 554.5 598.6 612.0 571.0 510.9 460.0 459.4 483.8 GDP - MARKET PRICES 34 3,834.5 4,540.5 5,479.2 5,777.0 5,190.0 5,265.1 5,431.7 5,661.0 5,542.7 GDP DEFLATOR (1980/81-100.0) 42 39.4 40.7 42.7 49.9 62.7 78.3 100.0 128.0 166.4 EXCHANGE RATE (AG) US$/LS100 43 287.2 287.2 287.2 287.2 212.8 170.2 159.2 112.5 81.4 SOURCE: IBRD STAFF ESTIMATES DATA FILE: D/SUD12N/D TABLE SUD/2N/5 10/20/83 TABLE 2.2 SUDAN: GDP BY SECTOR (CURRENT PRICES), 1974/75-1982/83 (MILLIONS OF SUDANESE POUNDS) ------------------------------------------------------------__---------------__----------------------------------- ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 PRIMARY PRODUCTION 117 584.7 628.0 818.4 1,044.1 1,093.0 1,322.5 1,776.5 2,416.5 2,909.0 AGRICULTURE 118 580.1 622.6 816.9 1,042.5 1,089.5 1,318.2 1,770.4 2,406.3 2,893.2 MINING 119 4.6 5.4 1.5 1.6 3.5 4.3 6.1 10.1 15.8 SECONDARY PRODUCTION 120 180.4 224.2 269.2 304.1 370.1 507.9 680.3 912.0 1,234.0 MANUFACTURING 121 95.7 108.6 132.1 147.5 201.8 280.4 372.4 490.3 649.8 CONSTRUCTION 122 63.8 87.0 102.8 118.0 123.3 159.3 215.8 297.5 414.3 PUBLIC UTILITIES 123 20.9 28.6 34.3 38.6 45.0 68.3 92.1 124.3 169.9 SERVICES 124 577.0 770.1 996.4 1,229.1 1,433.0 1,892.2 2,514.9 3,329.6 4,274.2 - _____ _____ ___--- - -- -- - -- - -- -- - -- - -- -- - -- - -- -- - -- - - - - - - -~ -~~~~ - a -------- TRANSPORT & STORAGE 125 88.4 186.4 220.9 273.4 338.9 355.6 487.2 687.4 801.0 COMMERCE 126 214.1 259.5 372.7 481.2 564.4 793.0 1,090.6 1,433.2 1,864.4 BANKING, INSURANCE & FINANCE127 91.5 117.3 132.4 152.7 175.1 227.5 303.0 403.7 545.5 HOUSING 128 - - - - - - - - - PUBLIC ADMIN. & DEFENSE 129 153.5 173.5 220.0 265.6 282.4 423.8 513.8 648.1 856.2 PERSONAL SERVICES 130 29.5 33.4 50.4 56.2 72.2 92.3 120.4 157.2 207.2 GROSS DOMESTIC PRODUCT 131 1,342.1 1,622.3 2,084.0 2,577.3 2,896.1 3,722.6 4,971.7 6,658.1 8,417.2 ======-==== ======== ======== ==== ===_==== =====.=_ =-_... INDIRECT TAXES, NET 136 168.7 225.7 255.6 305.4 358.0 400.0 460.0 588.0 805.0 GDP - MARKET PRICES 14 1,510.8 1,848.0 2,339.6 2,882.7 3,254.1 4,122.6 5,431.7 7,246.1 9,222.2 GDP DEFLATOR (1980/81=100.0) 42 39.4 40.7 42.7 49.9 62.7 78.3 100.0 128.0 166.4 EXCHANGE RATE (AG) US$/LS100 43 287.2 287.2 287.2 287.2 212.8 170.2 159.2 112.5 81.4 ------------------------------------------------------------------__---------__---------------------------------- SOURCE: IBRD STAFF ESTIMATES TABLE SUD/2N/4 10/26/83 TABLE 2.3 (a) SUDAN: GDP BY EXPENDITURE (CONSTANT 1980/81 PRICES), 1974/75-1982/83 (LS MILLION) -------------------------------------------------------------------------__--__----------------------------------- ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 -------------------------------------------------------------__--------------__----------------------------------- CONSUMPTION 21 3,701.7 3,957.1 4,997.9 5,747.0 4,939.3 4,921.2 5,256.0 5,584.8 5,359.4 PRIVATE 22 3,159.3 3,390.0 4,331.7 5,043.1 4,294.0 4,105.5 4,380.0 4,858.8 4,651.3 GENERAL GOVERNMENT 23 542.4 567.1 666.2 703.9 645.4 815.7 876.0 726.1 708.1 GROSS DOMESTIC INVESTMENT 24 672.8 1,050.4 936.1 829.1 688.0 938.7 899.0 907.0 840.8 FIXED 25 544.2 889.4 732.3 647.9 541.3 759.9 709.0 723.4 690.6 PRIVATE 26 284.3 611.5 368.4 27 5.6 282.8 402.3 37 6.0 38 3.6 366.0 PUBLIC 27 259.9 277.9 363.9 372.3 258.5 357.6 333.0 339.8 324.5 CHANGE IN STOCKS 28 128.7 160.9 203.7 181.2 146.7 178.8 190.0 183.6 150.3 GROSS DOMESTIC EXP. (GDX-C+I) 39 4,374.5 5,007.5 5,934.0 6,576.0 5,627.4 5,859.8 6,155.0 6,491.9 6,200.2 EXPORTS (GOODS & NFS) 29 482.6 696.2 632.9 538.6 538.8 609.2 439.0 596.1 626.6 TERMS OF TRADE ADJ (TADJ) 41 44.4 -59.7 47.1 146.1 -22.0 5.6 - -132.1 -99.1 EXPORTS (IMPORT CAPACITY) 55 527.0 636.6 680.0 684.7 516.8 614.8 439.0 464.0 527.5 IMPORTS (GOODS & NFS) 30 1,022.6 1,163.2 1,087.7 1,337.7 976.2 1,204.0 1,162.3 1,427.0 1,284.11 RESOURCE BALANCES EXPORTS - IMPORTS (RB) 53 -540.0 -466.9 -454.8 -799.1 -437.4 -594.8 -723.3 -830.9 -657.6 IMP CAPACITY - IMPORTS 57 -495.6 -526.6 -407.7 -653.0 -459.5 -589.2 -723.3 -963.0 -756.7 NET FACTOR INCOME (FSY) 31 -38.1 -43.8 -41.6 -35.7 -51.7 -44.1 -44.0 -109.0 -104.8 NET CURRENT TRANSFERS (NCT) 32 58.4 128.9 140.3 154.2 179.9 156.8 191.6 243.1 317.5 CUR A/C BAL - EXT SAVINGS 33 -475.3 -441.5 -309.1 -534.5 -331.3 -476.5 -575.7 -829.0 -544.0 PRODUCT GROSS DOMESTIC (GDX+RB) 34 3,834.5 4,540.5 5,479.2 5,777.0 5,190.0 5,265.1 5,431.7 5,661.0 5,542.7 ___,_,,_ -------- -------- -------- -------- -------- -------- -------- -------- GROSS NATIONAL (GDP+FSY) 40 3,796.4 4,496.7 5,437.6 5,741.3 5,138.2 5,220.9 5,387.7 5,552.0 5,437.8 INCOME GROSS DOMESTIC (GDP+TADJ) 59 3,878.9 4,480.9 5,526.2 5,923.0 5,167.9 5,270.7 5,431.7 5,528.9 5,443.6 GROSS NATIONAL (GDY+FSY) 61 3,840.8 4,437.1 5,484.6 5,887.4 5,116.2 5,226.5 5,387.7 5,419.8 5,338.7 SAVINGS GROSS DOMESTIC (GDY-C) 63 177.2 523.8 528.3 176.0 228.6 349.5 175.7 -56.0 84.2 GROSS NATIONAL (GDS+FSY) 65 139.1 480.0 486.8 140.4 176.9 305.4 131.7 -165.0 -20.7 GROSS NATIONAL (GDS+FSY+NCT) 67 197.5 608.9 627.0 294.6 356.7 462.2 323.3 78.0 296.8 PRIVATE 69 108.7 513.1 506.6 223.2 454.5 543.1 435.5 144.1 264.5 GOVERNMENT 35 90.1 95.8 121.8 72.1 -98.9 -81.0 -112.2 -67.6 32.3 SOURCE: BANK OF SUDAN TABLE SUD/2N/3 10/20/83 TABLE 2.4 SUDAN: GDP BY EXPENDITURE (CURRENT PRICES), 1974/75-1982/83 (LS MILLION) ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 CONSUMPTION 1 1,418.2 1,604.8 2,087.9 2,700.2 3,114.9 3,837.1 5,256.0 7,384.2 9,301.7 PRIVATE 2 1,210.4 1,374.8 1,809.6 2,369.5 2,707.9 3,201.1 4,380.0 6,424.2 8,072.7 GOVERNMENT 3 207.8 230.0 278.3 330.7 407.0 636.0 876.0 960.0 1,229.0 GROSS DOMESTIC INVESTMENT 4 265.1 427.5 399.7 413.7 431.4 735.0 899.0 1,161.0 1,399.0 FIXED 5 214.4 362.0 312.7 323.3 339.4 595.0 709.0 926.0 1,149.0 PRIVATE 6 112.0 248.9 157.3 137.5 177.3 315.0 376.0 491.0 609.0 PUBLIC 7 102.4 113.1 155.4 185.8 162.1 280.0 333.0 435.0 540.0 CHANCE IN STOCKS 8 50.7 65.5 87.0 90.4 92.0 140.0 190.0 235.0 250.0 GROSS DOMESTIC EXP. (C+I) 19 1,683.3 2,032.3 2,487.6 3,113.9 3,546.3 4,572.1 6,155.0 8,545.2 10,700.7 EXPORTS (GNFS) 9 183.4 222.8 246.8 242.4 328.7 469.1 439.0 626.0 1,030.7 IMPORTS (GNFS) 10 355.9 407.1 394.8 473.6 620.9 918.6 1,162.3 1,925.1 2,509.2 1 RESOURCE BALANCE (X-M) 50 -172.5 -184.3 -148.0 -231.2 -292.2 -449.6 -723.3 -1,299.1 -1,478.5 NET FACTOR SERV. INC. (FSY) 11 -15.0 -17.8 -17.8 -17.8 -32.4 -34.5 -44.0 -139.6 -174.4 1 NET CURRENT TRANSFERS (NCT) 12 23.0 52.5 59.9 76.9 112.8 122.8 191.6 311.1 528.3 CUR A/C BAL - EXT SAV 13 -164.5 -149.7 -105.9 -172.0 -211.9 -361.3 -575.7 -1,127.6 -1,124.7 PRODUCT AT MARKET PRICES GROSS DOMESTIC (GDX+RB) 14 1,510.8 1,848.0 2,339.6 2,882.7 3,254.1 4,122.6 5,431.7 7,246.1 9,222.2 GROSS NATIONAL (GDP+FSY) 20 1,495.8 1,830.2 2,321.8 2,864.9 3,221.7 4,088.0 5,387.7 7,106.5 9,047.7 SAVINGS GROSS DOMESTIC (GDP-C) 62 92.6 243.2 251.7 182.5 139.2 285.4 175.7 -138.1 -79.5 GROSS NATIONAL (GDS+FSY+NCT) 66 100.6 277.8 293.8 241.7 219.5 373.7 323.3 33.4 274.3 (O/W GOVERNMENT) 15 35.0 39.0 51.4 35.6 -61.3 -63.3 -112.2 -84.5 53.8 OTHER INDICATORS INDIRECT TAXES, NET 136 168.7 225.7 255.6 305.4 358.0 400.0 460.0 588.0 805.0 GDP DEFLATOR (1980/81-100.0) 42 39.4 40.7 42.7 49.9 62.7 78.3 100.0 128.0 166.4 EXCHANGE RATE (AG) US$/LS100 43 287.2 287.2 287.2 287.2 212.8 170.2 159.2 112.5 81.4 POPULATION (MILLIONS) 44 16.0 16.5 17.1 17.6 18.1 18.7 19.2 19.8 20.4 GNP (US$) 45 4,295.9 5,256.3 6,668.3 8,228.0 6,855.7 6,957.8 8,577.3 7,994.8 7,364.9 GNP PER CAPITA (US$) 47 268.5 318.6 390.0 467.5 378.8 372.1 446.7 404.3 361.6 GNP PER CAPITA (US$ ATLAS) 51 269.2 285.5 309.1 339.7 370.6 360.0 380.0 - - SOURCE: BANK OF SUDAN TABLE SUD/2N/2 10/ 20/83 TABLE 2.5 SUDAN: FINANCING OF DOMESTIC INVESTMENT (CURRENT PRICES), 1974/75-1982/83 (LS MILLION) ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 DOMESTIC SAVINGS 62 92.6 243.2 251.7 182.5 139.2 285.4 175.7 -138.1 -79.5 (O/W GOVERNMENT) 15 35.0 39.0 51.4 35.6 -61.3 -63.3 -112.2 -84.5 53.8 EXTERNAL RESOURCE GAP 52 172.5 184.3 148.0 231.2 292.2 449.6 723.3 1,299.1 1,478.5 CLOSED BY: NET FACTOR INCOME 11 -15.0 -17.8 -17.8 -17.8 -32.4 -34.5 -44.0 -139.6 -174.4 NET CURRENT TRANSFERS 12 23.0 52.5 59.9 76.9 112.8 122.8 191.6 311.1 528.3 EXTERNAL CAPITAL /A 54 164.5 149.7 105.9 172.0 211.9 361.3 575.7 1,127.6 1,124.7 GROSS DOMESTIC INVESTMENT 4 265.1 427.5 399.7 413.7 431.4 735.0 899.0 1,161.0 1,399.0 S_====== = ,, = ==_,_ ,,S _ ======== ====,===...... == =====.s,s ,nn a_.sflf SOURCE: MINISTRY OF FINANCE & ECONOMIC PLANNING AND BANK STAFF ESTIMATES A/ EQUIVALENT TO THE CAPITAL ACCOUNT IN THE BALANCE OF PAYMENTS. TABLE SUD/2N/6 3.0 (p. 1 of 3) 3.0: Trade Data and Balance of Payments Trade Data Data on imports and exports based on customs invoices are published by the Bank of Sudan and by the Depatment of Statistics in Planning. The Customs Department in the Ministry of Finance also prepares trade data from customs invoices, but these data are not published. The trade data presented in this report are from the Bank of Sudan. The Bank of Sudan documents include quarterly and annual editions of Foreign Trade Statistical Digest as well as an Annual Report. Selected trade data are also published by the Bank of Sudan in its Economic and Financial Statistics Review, which is issued quarterly. These documents are normally available with only a few months delay. The quarterly version of the trade digest presents most of the standard trade data for the current quarter with comparative information for the prior quarter. The annual version is much more complete; tables are presented giving detailed historical series in both calendar and fiscal years on imports, exports by commodity and commodity group. Direction of trade data are also presented in a very useful format. The Department of Statistics strives to publish monthly bulletins on trade data as well as annual reports. However, the only regular publication is the annual edition of Foreign Trade Statistics, which presents data on imports, exports and re-exports by country at the seven digit SITC level. This report contains a fairly complete description of the conventions used by Government in classifying trade data. The data, though reported by a delay of a year or so, appear to be reasonably accurate. These data are forwarded to the UN in general and eventually are available to the World Bank in computerized form through trade tapes from the UN Statistical Office in New York. In addition to Foreign Trade Statistics, the Department of Statistics also publishes, more or less on an annual basis, the document Foreign Trade Analysis. This provides summary information on value, volume and unit value of selected imports and exports in terms of both absolute and index numbers. It also provides absolute and percentage value information on directions of trade with selected trading partners. The "bottom line" of the document is a table at the end showing an estimate of the terms of trade position during recent years. The document is a very useful reference source. However, it has not been used as a source of data here because: (a) The data are available only on a calendar year basis, and everything else such as balance of payments, national accounts and public finance is on a fiscal year basis; (b) The data deal only with 3.0 (p.2 of 3) selected commodities, and as there are no broad categories or "other" items to fill out these categories, it is impossible to calculate subtotals and totals; (c) The data are available only with considerable delay; the latest volume in this series covers only through 1979. As such, the data are of little use for current analysis; (d) The import price index according to the document's own introductory notes is overstated because of qualitative changes in capital goods imports. This in turn distorts the reported terms of trade indices. Although the Department of Statistics appears to spend more time refining its trade data than does the Bank of Sudan, the latter's presentation and timeliness were deemed to more than compensate for any likely qualitative differences. In any event, these appar to be very slight. For example, though there was an average devitation of about six percent in total export values between the two sources from 1976 to 1979, the cumulative deviation was minimal, which implies that the differences are largely due to timing rather than coverage. In the past imports of crude oil to the Port Sudan refinery were excluded for various technical reasons (ref. note on petroleum in 8.0), as were imports under the nil-value license import scheme, which from 1976-1979 allowed persons (e.g. Sudanese working abroad) who had offshore foreign exchange assets to import against these funds on the basis of a nil-value license. In this report adjustments have veen made in the import detail tables for the unreported oil imports. Balance of Payments data The only published balance of payments data in the Sudan come from the Annual Report of the Bank of Sudan. These data are reproduced in the Economic Survey published by the Economic Research Section of the Ministry of Finance. The Bank of Sudan balance of payments data cannot be used for macro-economic analysis because the payments shown are only those which have passed through the Bank itself. The data are on a payments rather than on a transactions basis. While this approach captures, for example, imports using foreign exchange from the Bank of Sudan, it does not cover transactions financed with the foreign exchange from the free market or from certain external loans. Nor does it cover goods brought in my travelers returning from abroad. For these reasons, the physical or visibles portion of the Bank of Sudan balance of payments is not a reliable guide to actual import/export movements and must be adjusted by reference to trade data based on customs invoices. Even these appear not to capture special classes of imports (e.g. equipmenmt and supplies for oil exploration flown in directly by special agreement). Also omitted is the apparently significant trade across Sudan's lengthy borders. Furthermore, there is evidence of under-invoicing exports. No adjustment has been made for these likely discrepancies in the customs invoice data. 3.0 (p.3 of 3) The data on invisibles in the current account are somewhat more reliable, but apparently fail to capture worker's earnings remitted by importing goods or by ringing in currency that does directly into the free exchange market. Data on worker's remittances has been placed in transfers rather than under factor services because most of the workers stay abroad for more than 12 months. Estimates of average wages and savings of workers abroad indicate that only a fraction of the true earnings are repatriated and adequately recorded. Some adjustments have been made by the BOS on the invisibles account, but it is reasonable to assume that worker's remittances are higher. Data regarding external debt transactions on both current and capital account are very weak for reasons mentioned in note 4.0. The balance of payments presented here has been adjusted taking into account information from other sources regarding external debt transactions. In particular, efforts have been made to assure consistency with information in the Debt Reporting system where this was thought to be more complete. Note 3.0 SUD/CEM/NOTES 3 October 20, 1983 10/21/83 PAGE 1 TABLE 3.1 SUDAN: BALANCE OF PAYMENTS, 1973/74-1982/83 (US$ MILLION) ITEM 1973/74 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 EXPORTS (GNFS) 98 479.6 526.7 639.9 708.9 696.1 699.4 798.4 698.9 704.2 839.0 MERCHANDISE (FOB) 3 418.2 452.9 550.6 594.1 551.2 526.9 594.0 478.9 381.2 506.0 OF WHICH: COTTON 246 164.1 159.5 300.4 285.7 295.9 320.8 334.3 182.1 69.2 168.1 NON-FACTOR SERVICES 230 61.4 73.8 89.3 114.8 144.9 172.5 204.4 220.0 323.0 333.0 IMPORTS (GNFS) 99 618.6 1,022.1 1,169.2 1,134.0 1,360.0 1,321.3 1,563.5 1,850.4 2,165.7 2,042.5 MERCHANDISE (CIF) 4 540.8 918.2 1,063.2 986.0 1,188.1 1,115.8 1,338.9 1,631.4 1,884.7 1,742.5 OF WHICH: PETROLEUM 247 52.0 87.6 87.0 107.7 121.5 158.5 263.3 394.2 494.7 439.6 SUGAR 248 56.9 119.8 91.0 58.6 43.7 28.0 124.1 183.6 158.5 52.5 NON-FACTOR SERVICES 231 77.8 103.9 106.0 148.0 171.9 205.5 224.6 219.0 281.0 300.0 RESOURCE BALANCE 100 -139.0 -495.4 -529.3 -425.1 -663.9 -621.8 -765.1 -1,151.5 -1,461.5 -1,203.5 NET FACTOR INCOME /A 101 -26.2 -43.1 -51.2 -51.0 -51.1 -69.0 -58.8 -70.0 -157.0 -142.0 FACTOR RECEIPTS 249 1.4 3.7 - 3.8 8.9 8.8 8.7 88.0 130.0 131.0 FACTOR PAYMENTS 250 27.6 46.8 51.2 54.8 60.0 77.8 67.5 158.0 287.0 273.0 (M< INTEREST PAID) 18 18.1 27.0 31.3 44.8 52.8 72.0 60.0 105.0 190.0 169.0 CURRENT PRIVATE TRANSFERS 251 24.4 66.1 150.7 172.0 221.0 240.0 209.0 305.0 350.0 430.0 CURRENT BALANCE 103 -140.8 -472.4 -429.8 -304.1 -494.0 -450.8 -614.9 -916.5 -1,268.5 -915.5 (INCLUDING PUB. TRANSF.) OFFICIAL TRANSFERS (GRANTS) 252 - - - 11.3 23.0 17.0 84.0 122.0 173.5 305.0 DIRECT INVESTMENT 253 - - - - - - 10.0 20.0 50.0 70.0 NET M< LOANS (DRS) 244 250.0 354.2 470.9 293.3 287.1 588.4 572.8 412.8 587.7 320.0 DISBURSEMENTS 206 291.0 433.7 539.6 332.1 332.9 618.3 615.1 499.0 685.0 491.0 REPAYMENTS 207 41.0 79.5 68.7 38.8 45.8 29.9 42.3 86.2 97.3 171.0 OTHER M< (NET) 254 - - - - - - - - - - NET CREDIT FROM IMF 241 26.9 51.6 28.9 -8.2 0.9 57.5 115.3 289.9 55.4 190.6 DISBURSEMENTS 53 32.9 56.8 44.7 15.4 26.5 93.3 159.7 340.9 88.9 237.0 REPAYMENTS 54 6.0 5.2 15.8 23.6 25.6 35.8 44.4 51.0 33.5 46.4 NET SHORT-TERM CAPITAL 255 - - - - - - - - - - CAPITAL FLOWS NEI /B 119 -12.9 -6.9 -6.0 -0.6 -1.1 -1.8 - - - - ACCUMULATION 256 - - - - - - - - - - ERRORS AND OMISSIONS /C 245 -140.3 6.2 -130.5 2.4 107.7 -159.9 -112.8 158.9 130.8 - CHANGE IN NET RESERVES 65 17.1 67.3 66.5 5.9 76.4 -50.4 -54.4 -87.1 271.1 98.9 (- INDICATES INCREASE) 10/21/83 PAGE 2 TABLE 3.1 SUDAN: BALANCE OF PAYMENTS, 1973/74-1982/83 (US$ MILLION) ITEM 1973/74 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 MEMO: TRADE BALANCE (MERCH.) 257 -122.6 -465.3 -512.6 -391.9 -636.9 -588.8 -744.9 -1,152.5 -1,503.5 -1,236.5 GOODS & SERVICES BALANCE 258 -165.2 -538.5 -580.5 -476.1 -715.0 -690.8 -823.9 -1,221.5 -1,618.5 -1,345.5 EXPORTS (G&S) 259 481.0 530.4 639.9 712.7 705.0 708.2 807.1 786.9 834.2 970.0 O/W SERVICES 260 62.8 77.5 89.3 118.6 153.8 181.3 213.1 308.0 453.0 464.0 IMPORTS (G&S) 261 646.2 1,068.9 1,220.4 1,188.8 1,420.0 1,399.1 1,631.0 2,008.4 2,452.7 2,315.5 O/W SERVICES 262 105.4 150.7 157.2 202.8 231.9 283.3 292.1 377.0 568.0 573.0 SOURCE: BANK OF SUDAN AND IMF THE TABLE FORMAT WILL BE CHANGED ACCORDING TO THE BALANCE OF PAYMENT MANUAL PARA.104 WHEN THE NECESSARY INFORMATION BECOMES AVAILABLE. A/ INTEREST TRANSACTIONS; INCLUDING CHARGES WITH THE IMF -> B/ COMPENSATION PAYMENTS C/ INCLUDES BUILD UP OF ARREARS TABLE SUD/3B/5 06/27/83 PAGE I TABLE 3.2,(a) SUDAN: VALUE OF EXPORTS BY COMMODITY, 1974/75-1981/82 (THOUSAND SUDANESE POUNDS) ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/8 2 * * EXPORTS - VALUES * * COTTON 1 55,552 104,585 99,474 103,026 128,326 157,322 91,034 60,023 LONG STAPLE 2 47,579 91,027 77,300 80,173 82,989 96,664 63,474 42,281 OTHER COTTON 3 7,973 13,558 22,174 22,853 45,337 60,658 27,560 17,742 GUM ARABIC 4 14,584 10,654 11,875 12,279 15,982 21,230 24,553 37,004 SESA1IE 5 19,191 11,469 21,605 19,320 11,057 20,042 24,717 36,821 GROUNDNUTS 6 28,680 40,223 35,990 27,909 10,239 6,178 52,328 42,088 FOOD GRAIN 7 4,214 2,164 5,337 3,415 4,062 34,133 49,246 57,600 DURA 8 3,846 1,790 4,503 2,991 3,515 33,640 48,817 57,009 DUKHN 9 34 85 273 55 71 295 178 465 PULSES 10 161 44 154 244 349 26 0 - WHEAT BRAN 11 173 245 407 125 127 172 251 126 SENNA PODS & KARKADEH 12 1,607 1,059 2,024 908 1,083 1,802 2,362 2,701 OTHER AGRICULTURE 13 822 1,592 648 811 129 120 930 3,145 LIVESTOCK 14 7,472 3,961 8,199 9,342 11,997 17,304 32,094 49,851 SHEEP & LAMBS 15 2,406 161 2,435 3,966 6,988 9,987 22,796 39,824 CATTLE 16 929 5 803 890 1,209 937 2,093 3,069 CAMELS 17 29 276 225 343 233 106 142 311 GOATS 18 - - 103 153 45 12 44 204 HIDES & SKINS 33 4,108 3,519 4,633 3,990 3,522 6,262 7,019 6,443 SEEDS 19 1,306 1,738 1,976 1,065 1,747 3,120 4,923 11,405 OILS 20 5,524 995 1,906 2,992 10,641 4,115 8,437 8,916 COTTON SEED 30 3,590 - - 0 - - - - SESAME 31 558 143 17 851 438 985 1 252 GROUNDNUT 32 1,376 852 1,889 2,141 10,203 3,130 8,436 8,664 CAKE/MEAL 21 1,794 5,646 9,145 3,065 8,430 8,899 15,548 13,821 COTTON SEED 22 952 2,762 3,485 877 2,114 939 66 60 SESAME 23 214 1,695 2,815 289 1,803 853 3,290 3,690 GROUNDNUT 24 628 1,189 2,845 1,899 4,513 7,107 12,192 10,071 OTHER EXPORTS 25 1,509 2,218 1,491 483 754 1,589 2,408 1,121 MISC EXPORTS (PRICE BASED) 34 409 475 451 612 602 2,452 4,862 8,407 06/27/83 PAGE 2 TABLE 3.2(a) SUDAN: VALUE OF EXPORTS BY COMMODITY, 1974/75-1981/82 (THOUSAND SUDANESE POUNDS) ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 RE-EXPORTS 26 7,000 4,925 6,734 6,705 5,718 5,887 17,846 13,075 PETROLEUM PRODUCTS 27 5,898 4,025 5,896 5,552 5,545 5,883 17,626 12,956 OTHER RE-EXP 28 1,102 900 838 1,153 17 3 4 220 119 TOTAL EXPORTS 29 149,664 191,704 206,855 191,932 210,767 284,193 331,288 345,978 =======5= ======== =Wu==S= ======== 5======= 3=asss== =s====== ======== BOP ADJUSTMENT 35 8,031 - - - - - - - TOTAL EXPORTS (ADJUSTED) 36 157,695 191,704 206,855 191,932 210,767 284,193 331,288 345,978 m=s=sms = ======= -=--= msss=== =3===m ======= =s == =s====== EXPORT PRICE INDEX 80 38 32 39 45 61 77 100 105 SOURCE: BANK OF SUDAN, FOREIGN TRADE STATISTICS (CUSTOMS INVOICE BASIS) TABLE SUD/3T/1 07/08/8 3 PAGE 1 TABLE 3.2(b) SUDAN: VALUE OF EXPORTS BY COMMODITY, 1974/75-1981/82 (THOUSAND US DOLLARS) ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 * * EXPORTS - VALUES * * COTTON 1 159,545 300,368 285,689 295,891 320,815 330,253 182,068 69,244 LONG STAPLE 2 136,647 261,430 222,006 230,257 207,473 203,478 126,948 48,307 OTHER COTTON 3 22,898 38,939 63,684 65,634 113,343 126,775 55,120 20,937 GUM ARABIC 4 41,885 30,598 34,105 35,265 39,955 42,923 32,832 43,112 SESAME 5 55,117 32,939 62,050 55,487 27,643 40,685 34,133 41,691 GROUNDNUTS 6 82,369 115,520 103,363 80,155 25,598 13,097 65,611 48,070 FOOD GRAIN 7 12,103 6,215 15,328 9,808 10,155 69,938 71,929 65,070 DURA 8 11,046 5,141 12,933 8,590 8,788 68,794 71,353 64,393 DUKHN 9 98 244 784 158 178 684 239 532 PULSES 10 462 126 442 701 873 60 0 - WHEAT BRAN 11 497 704 1,169 359 318 399 337 144 SENNA PODS & HARKADEH 12 4,615 3,041 5,813 2,608 2,708 4,181 3,172 3,093 OTHER AGRICULTURE 13 2,361 4,572 1,861 2,329 323 278 1,249 3,601 LIVESTOCK 14 21,460 11,376 23,548 26,830 29,993 35,802 43,802 56,975 SHEEP & LAMBS 15 6,910 462 6,993 11,390 17,470 20,423 31,314 45,486 CATTLE 16 2,668 14 2,306 2,556 3,023 2,174 2,811 3,514 CAMELS 17 83 793 646 985 583 246 191 356 GOATS 18 - - 296 439 113 28 59 234 HIDES & SKINS 33 11,798 10,107 13,306 11,459 8,805 12,931 9,427 7,385 SEEDS 19 3,751 4,992 5,675 3,059 4,368 7,238 6,612 13,059 OILS 20 15,865 2,858 5,474 8,593 26,603 8,378 11,467 10,460 COTTON SEED 30 10,310 - - 0 - - - - SESAME 31 1,603 411 49 2,444 1,095 2,118 2 280 GROUNDNUT 32 3,952 2,447 5,425 6,149 25,508 6,260 11,465 10,180 CAKE/MEAL 21 5,152 16,215 26,264 8,803 21,075 18,165 21,544 15,805 COTTON SEED 22 2,734 7,932 10,009 2,519 5,285 2,056 96 70 SESAME 23 615 4,868 8,085 830 4,508 1,753 4,218 4,251 GROUNDNUT 24 1,804 3,415 8,171 5,454 11,283 14,356 17,230 11,484 OTHER EXPORTS 25 4,334 6,370 4,282 1,387 1,885 3,686 3,234 1,284 MISC EXPORTS 34 1,175 1,364 1,295 1,758 1,505 5,689 6,530 9,626 07/08/83 PAGE 2 TABLE 3.2(b) SUDAN: VALUE OF EXPORTS BY COMMODITY, 1974/75-1981/82 (THOUSAND US DOLLARS) ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 RE-EXPORTS 26 20,104 14,145 19,340 19,257 14,295 13,658 23,967 14,971 PETROLEUM PRODUCTS 27 16,939 11,560 16,933 15,945 13,863 13,649 23,672 14,835 OTHER RE-EXPORTS 28 3,165 2,585 2,407 3,311 433 9 295 136 TOTAL EXPORTS 29 429,835 550,574 594,088 551,229 526,918 593,963 508,149 396,059 =======s =saf==Ss ======s s======= ==w===_= sf==s=== ===fl=== ======= BOP ADJUSTMENT 35 23,065 - - - - - - - TOTAL EXPORTS (ADJUSTED) 36 452,900 550,574 594,088 551,229 526,918 593,963 508,150 396,059 0 ======== ==s==sS ======== ====5==== ======= ==-=5sS=f ===s===== =======5 EXPORT PRICE INDEX 80 72 61 72 84 100 105 100 79 SOURCE: BANK OF SUDAN, FOREIGN TRADE STATISTICS. DERIVED FROM TABLE SUD/3T/1 10/06/83 TABLE 3.3 SUDAN: VOLUME OF EXPORTS BY COMMODITY, 1974/75-81/82 (METRIC TONS, UNLESS INDICATED) ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 COTTON (THOU BALES) 41 562 1,147 792 749 884 969 466 260 LONG STAPLE 42 442 962 592 601 484 512 281 157 OTHER COTTON 43 120 185 200 148 399 456 185 103 GUM ARABIC 44 18,060 23,834 29,595 31,559 35,400 34,861 25,518 31,343 SESAME 45 92,671 60,413 108,617 93,444 37,265 40,063 45,121 63,642 GROUNDNUTS 46 146,709 279,280 223,971 135,061 40,014 19,375 69,923 118,284 FOOD GRAIN 47 90,058 54,845 134,755 193,585 65,288 351,388 327,261 263,261 DURA 48 74,797 39,117 108,583 58,246 55,521 340,829 320,360 259,785 DUKHN 49 374 2,007 5,680 1,827 1,639 2,815 1,556 2,486 PULSES 50 3,802 945 1,285 1,379 1,697 287 0 - WHEAT BRAN 51 11,085 12,776 19,207 132,133 6,431 7,457 5,345 990 SENNA PODS & KARKADEH 52 3,406 2,485 7,491 3,428 3,113 3,687 3,604 3,611 OTHER AGRICULTURE 53 4,048 11,083 4,218 4,913 657 820 3,404 6,522 SHEEP & LAMBS (HEAD) 55 182,019 17,194 144,425 271,990 240,924 268,067 409,969 479,673 CATTLE (HEAD) 56 12,632 50 10,493 10,162 10,967 6,491 9,757 10,368 CAMELS (HEAD) 57 419 4,103 3,009 3,986 2,579 787 562 982 GOATS (HEAD) 58 - - 14,371 18,515 4,152 1,330 2,219 8,280 HIDES & SKINS 73 9,708 5,653 8,589 5,237 3,850 4,435 4,058 6,443 SEEDS 59 17,601 22,445 32,699 10,988 15,882 15,712 26,278 33,202 OILS 60 19,463 5,847 15,520 19,378 41,346 21,688 32,930 18,603 COTTON SEED 70 10,700 - - - - - - - SESAME 71 1,723 501 65 2,615 1,605 2,313 20 730 GROUNDNUT 72 7,040 5,346 15,455 16,763 39,741 19,375 32,910 17,873 CAKE/MEAL 61 56,027 224,179 209,645 79,033 185,971 155,110 145,954 105,703 COTTON 62 34,431 130,332 94,317 19,949 62,262 22,534 1,039 593 SESAME 63 5,250 49,144 36,651 4,711 28,118 12,423 17,169 24,346 GROUNDNUTS 64 16,346 44,703 78,677 54,373 95,591 120,153 127,746 80,764 OTHER EXPORTS 65 54,886 48,799 40,092 9,569 17,294 14,427 23,562 9,391 PETROLEUM PRODUCTS 67 248,261 220,500 302,757 240,268 204,036 95,000 192,000 94,900 _______________________ ----__________----___----__________--- -------- ----- SOURCE: BANK OF SUDAN, FOREIGN TRADE STATISTICS TABLE SUD/3T/2 10/05/83 PAGE 1 TABLE 3.4 (a) SUDAN: VALUE OF IMPORTS BY COMMODITY, 1974/75-1981/82 (MILLION SUDANESE POUNDS) ------------------------------------------------------------__---------------__-------------------------- ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 -------------------------------------------------------------__--------------__-------------------------- CONSUMER GOODS 125 83.2 87.3 69.8 77.1 77.8 156.9 206.3 262.3 FOOD & BEVERAGES 141 66.5 58.6 50.0 48.6 44.7 131.4 168.3 197.4 FOOD 81 62.9 53.3 44.5 42.5 39.9 126.8 157.2 185.6 RICE 82 - 0.1 0.1 0.4 0.6 1.7 2.7 4.0 WHEAT 83 10.1 9.2 10.2 6.1 4.7 18.2 6.6 33.9 WHEAT FLOUR 84 - 1.3 - 1.1 1.8 22.4 15.2 29.9 SUGAR 85 41.7 31.7 20.4 15.2 11.2 58.4 91.8 79.2 TEA 86 4.9 4.1 5.3 11.5 10.8 9.9 13.8 12.9 COFFEE 87 2.0 1.8 2.7 2.0 1.0 1.9 5.6 2.3 DAIRY PRODUCT 88 0.9 1.5 1.5 2.0 3.5 2.1 5.4 9.2 EDIBLE OIL 133 0.1 0.1 0.3 0.4 0.8 0.7 0.8 1.2 OTHER FOOD 89 1.6 2.1 2.6 2.1 3.7 8.9 12.2 8.9 MISC FOOD 134 1.6 1.4 1.4 1.7 1.8 2.6 3.1 4.1 BEVERAGES AND TOBACCO 90 3.6 5.3 5.5 6.1 4.8 4.6 11.1 11.7 BEV,NON-ALC (PRICE-BSD) 135 - 0.1 0.1 0.2 0.3 0.6 0.5 1.1 BEVERAGES 91 0.5 0.5 0.6 0.8 1.5 2.5 6.0 5.5 TOBACCO 92 3.1 4.7 4.8 5.1 3.0 1.5 4.6 5.2 OTHER CONSUMER GOODS 93 16.7 28.7 19.8 28.5 33.1 25.5 38.0 65.0 MED&PHARM 94 6.8 10.2 7.9 13.5 12.6 13.1 16.4 10.0 PERFUMES & COSMETICS 95 0.8 0.8 1.1 1.0 1.2 0.6 2.4 3.1 SPECIAL TEXTILE FABRICS 96 1.2 1.1 0.7 1.0 1.0 0.4 0.8 0.1 MADE-UP TEXTILE FABRICS 97 3.0 2.1 2.0 2.3 2.6 2.9 4.0 8.4 TV & RADIO 98 0.3 0.8 0.8 1.3 0.9 2.0 1.2 1.2 DOMESTIC ELECT EQUIP 99 0.2 0.1 0.2 0.1 0.4 0.5 0.9 1.1 ROAD PASSENGER CARS 100 2.0 10.9 4.5 4.9 10.8 3.0 6.7 34.0 MOTORCYCLES 101 0.1 0.1 0.1 0.1 0.2 0.1 0.2 0.3 BICYCLES 102 0.1 0.2 0.2 0.6 0.6 0.4 0.5 1.3 FOOTWEAR 103 0.1 0.1 - 0.2 0.1 0.1 0.3 0.6 PRINTED MATTER 104 2.0 2.1 2.0 3.1 2.3 2.1 3.1 3.8 TOYS AND SPORTING GOODS 105 0.1 0.2 0.4 0.5 0.4 0.4 1.5 1.1 PETROLEUM 106 30.5 30.3 37.5 42.3 63.4 123.9 162.8 262.3 …___ ____ - -- - - - - - - - - - - - -- - - - - - - -- - - -- - - - - - - - - - -- - - -- - - -- - - - - - - - - - 10/05/83 PAGE 2 TABLE 3.4 'a) SUDAN: VALUE OF IMPORTS BY COMMODITY, 1974/75-1981/82 (MILLION SUDANESE POUNDS) ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 ________________________________________________________________________--________________________________ INTERMEDIATE GOODS 109 116.9 107.3 99.5 129.2 135.9 189.5 236.2 220.6 CRUDE MATERIALS 110 0.7 0.4 0.9 0.7 0.5 0.8 5.0 7.1 FERTILIZERS 126 6.4 12.9 6.0 1.2 4.7 5.6 5.9 5.0 INSECTICIDES 127 9.8 6.8 5.3 8.6 8.2 11.3 14.6 16.9 OTHER CHEMICALS 111 0.1 0.1 0.2 0.1 0.1 0.3 0.3 0.9 IRON & STEEL 128 12.7 9.0 6.1 9.2 11.2 7.7 12.8 5.5 METALS MANUFACTURES 129 10.6 12.3 20.5 26.6 29.7 54.7 57.2 67.0 JUTE & SACKS 130 7.8 4.3 2.9 3.6 5.1 12.6 18.7 8.0 ASBESTOS CEMENT PIPES 131 1.3 8.4 5.0 6.9 10.7 9.6 14.2 8.3 OTHER MANUFACTURED GOODS 112 15.5 13.3 14.3 21.1 21.7 24.7 48.1 43.8 OTHER TEXTILES 113 37.3 23.9 24.5 33.4 20.7 30.4 23.1 19.7 MISC CRUDE MATERIAL 136 0.4 0.5 0.2 0.2 0.5 0.2 0.4 0.5 MISC CHEMICALS 137 10.7 10.1 9.7 12.8 16.9 28.2 30.2 29.0 SCIENT INST. 138 2.0 3.5 2.2 3.1 4.6 2.2 3.0 3.5 MISC MFD GOODS 139 1.7 1.9 1.7 1.7 1.3 1.2 2.7 5.6 CAPITAL GOODS 114 89.3 145.0 136.5 165.1 169.2 173.4 176.1 212.1 MACHINERY 115 45.5 95.2 98.1 127.2 112.6 111.6 113.5 134.3 MACHINERY, ELECTRIC 116 2.6 2.2 7.3 2.3 7.0 20.2 16.8 14.4 MACHINERY, NON-ELECTIRC 117 14.2 26.2 26.3 30.4 34.6 37.5 38.9 28.8 MACHINERY SPARE PARTS 118 22.8 51.5 45.0 82.0 48.9 44.4 45.8 47.9 TRACTORS 119 3.8 6.3 3.0 3.5 5.9 3.3 6.6 16.5 TEXT MACH & PARTS 195 2.1 9.0 16.5 9.0 16.2 6.1 5.4 2.1 MIS. MACHINERY 197 - - - - - - - 24.6 TRANSPORT EQUIPMENT 120 43.8 49.8 38.4 37.9 56.6 61.8 62.6 77.8 TRUCKS 132 11.6 19.1 11.0 9.1 12.9 15.7 13.0 35.2 EQUIPMENT 121 10.7 7.5 2.9 3.8 2.3 2.9 2.1 2.9 TIRES & TUBES 122 5.6 3.6 5.4 7.6 9.8 10.4 10.4 6.1 SPARE PARTS AUTO 123 13.9 14.3 13.6 15.4 29.1 32.2 35.3 27.6 LOCOMOTIVE 140 1.1 3.0 3.5 1.0 1.9 0.4 1.4 4.9 AIRCRAFT 194 0.9 2.3 2.0 1.0 0.6 0.2 0.4 1.1 TOTAL IMPORTS 124 319.9 369.9 343.3 413.7 446.3 643.7 781.4 957.3 = .... . ....... s . ..................= 10/05/83 PAGE 3 TABLE 3.4(a.) SUDAN: VALUE OF IMPORTS BY COMMODITY, 1974/75-1981/82 (MILLION SUDANESE POUNDS) ________________________________________________________________________________________________________-- ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 -------------------------------------------------------------___--------------__------------------------ * * PRICE INDICES - DERIVED * CONSUMER GOODS 201 48.4 51.5 39.5 38.7 49.7 58.7 100.0 93.7 FOOD & BEVERAGES 200 47.7 45.6 35.2 31.2 38.0 54.4 100.0 91.0 FOOD 202 47.8 44.5 33.3 29.1 36.2 54.5 100.0 91.3 BEVERAGES & TOB 203 44.6 60.7 65.8 61.9 63.1 50.9 100.0 86.7 OTHER CONSUMER GOODS 204 51.7 69.7 57.0 65.5 85.4 98.4 100.0 103.2 PETROLEUM 205 29.4 30.4 35.8 31.5 49.0 89.5 100.0 216.2 INTERMEDIATE GOODS 206 50.5 49.0 54.4 58.0 69.3 95.4 100.0 96.5 CAPITAL GOODS 207 39.8 41.3 47.2 44.3 78.7 81.9 100.0 79.9 MACHINERY 208 40.4 39.3 50.5 54.1 86.2 84.1 100.0 91.3 TRANSPORT EQUIPMENT 209 39.3 45.8 40.5 27.6 67.1 78.2 100.0 65.8 TOTAL IMPORTS 210 43.7 44.1 45.6 44.5 64.0 78.9 100.0 106.9 MEMO ITEM: PRICE INDICES (US$ BASED) INTERNATIONAL 211 46.5 47.4 51.3 60.5 77.6 101.0 100.0 100.5 OTHER FOOD (EPD) 212 239.9 160.6 118.8 100.0 102.8 145.5 - - UN CAPITAL GOODS 213 78.8 84.2 89.2 100.0 127.8 165.6 - - SOURCE: BANK OF SUDAN, FOREIGN TRADE STATISTICS. TABLE SUD/3T/3 10/ 17/ 83 PAGE 1 TABLE 3.4(b) SUDAN: VALUE OF IMPORTS BY COMMODITY, 1974/75-1981/82 (MILLION US DOLLARS) ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 * * IMPORTS - VALUE * * CONSUMER GOODS 125 239 251 200 221 195 326 413 525 FOOD & BEVERAGES 141 191 168 144 140 112 273 337 395 FOOD 81 181 153 128 122 100 264 314 371 RICE 82 - 0 0 1 2 4 5 8 WHEAT 83 29 26 29 18 12 38 13 68 WHEAT FLOUR 84 - 4 - 3 5 47 30 60 SUGAR 85 120 91 59 44 28 121 184 158 TEA 86 14 12 15 33 27 21 28 26 COFFEE 87 6 5 8 6 3 4 11 5 DAIRY PRODUCT 88 3 4 4 6 9 4 11 18 EDIBLE OIL 133 0 0 1 1 2 1 2 2 OTHER FOOD 89 5 6 7 6 9 19 24 18 MISC FOOD (PRICE-BASED) 134 5 4 4 5 5 5 6 8 w BEVERAGES AND TOBACCO 90 10 15 16 18 12 10 22 23 BEV,NON-ALC (PRICE-BSD) 135 - 0 0 1 1 1 1 2 BEVERAGES 91 1 1 2 2 4 5 12 11 TOBACCO 92 9 13 14 15 8 3 9 10 OTHER CONSUMER GOODS 93 48 82 57 82 83 53 76 130 MED&PHARM (PRICE-BASED) 94 20 29 23 39 32 27 33 20 PERFUMES & COSMETICS 95 2 2 3 3 3 1 5 b SPECIAL TEXTILE FABRICS 96 3 3 2 3 3 1 2 0 MADE-UP TEXTILE FABRICS 97 9 6 6 7 7 6 8 17 TV & RADIO (PRICE-BASED) 98 1 2 2 4 2 4 2 2 DOMESTIC ELECT EQUIP 99 1 0 1 0 1 1 2 2 ROAD PASSENGER CARS 100 6 31 13 14 27 6 13 68 MOTORCYCLES 101 0 0 0 0 1 0 0 1 BICYCLES 102 0 1 1 2 2 1 1 3 FOOTWEAR 103 0 0 - 1 0 0 1 1 PRINTED MATTER 104 6 6 6 9 6 4 6 8 TOYS AND SPORTING GOODS 105 0 1 1 1 1 1 3 2 PETROLEUM 106 88 87 108 121 159 258 326 525 10/17/83 PAGE 2 TABLE 3.4(b) SUDAN: VALUE OF IMPORTS BY COMMODITY, 1974/75-1981/82 (MILLION US DOLLARS) ------------------------------------------------------------------__---------__-------------------------- ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 INTERMEDIATE GOODS 109 336 308 286 371 340 394 472 441 CRUDE MATERIALS 110 2 1 3 2 1 2 10 14 FERTILIZERS 126 18 37 17 3 12 12 12 10 INSECTICIDES 127 28 20 15 25 20 24 29 34 OTHER CHEMICALS 111 0 0 1 0 0 1 1 2 IRON & STEEL 128 36 26 18 26 28 16 26 11 METALS MANUFACTURES 129 30 35 59 76 74 114 114 134 JUTE & SACKS 130 22 12 8 10 13 26 37 16 ASBESTOS CEMENT PIPES 131 4 24 14 20 27 20 28 17 OTHER MANUFACTURED GOODS 112 45 38 41 61 54 51 96 88 OTHER TEXTILES 113 107 69 70 96 52 63 46 39 MISC CRUDE MATERIAL 136 1 1 1 1 1 0 1 1 MISC CHEMICALS (PRICE-BASED)137 31 29 28 37 42 59 60 58 SCIENT INST. (PRICE-BASED) 138 6 10 6 9 12 5 6 7 MISC MFD GOODS (PRICE-BASED)139 5 5 5 5 3 2 5 11 CAPITAL GOODS 114 256 416 392 474 423 361 352 424 MACHINERY 115 131 273 282 365 281 232 227 269 MACHINERY, ELECTRIC 116 7 6 21 7 18 42 34 29 MACHINERY, NON-ELECTIRC 117 41 75 76 87 87 78 78 58 MACHINERY SPARE PARTS 118 65 148 129 236 122 92 92 96 TRACTORS 119 11 18 9 10 15 7 13 33 TEXT MACH & PARTS 195 6 26 47 26 40 13 11 4 MIS. MACHINERY 197 - - - - - - - 25 TRANSPORT EQUIPMENT 120 126 143 110 109 142 129 125 156 TRUCKS 132 33 55 32 26 32 33 26 70 EQUIPMENT 121 31 22 8 11 6 6 4 6 TIRES & TUBES 122 16 10 16 22 25 22 21 12 SPARE PARTS AUTO (PRICE-BASED) 123 40 41 39 44 73 67 71 55 LOCOMOTIVE (PRICE-BASED)140 3 9 10 3 5 1 3 10 AIRCRAFT (PRICE-BASED) 194 3 7 6 3 2 0 1 2 TOTAL IMPORTS 124 919 1,062 986 1,188 1,116 1,339 1,563 1,915 10/17/83 PAGE 3 TABLE 3.4 (b) SUDAN: VALUE OF IMPORTS BY COMMODITY, 1974/75-1981/82 (MILLION US DOLLARS) …----------------------------------------------------------------__----------__-------------------------- ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 …------------------------------------------------------------__--------------__-------------------------- * * PRICE INDICES - DERIVED * CONSUMER GOODS 201 70 74 57 56 62 61 100 94 FOOD & BEVERAGES 200 68 65 51 45 47 57 100 91 FOOD 202 69 64 48 42 45 57 100 91 BEVERAGES & TOB 203 64 87 95 89 79 53 100 87 OTHER CONSUMER GOODS 204 74 100 82 94 107 102 100 103 PETROLEUM 205 42 44 51 45 61 93 100 216 INTERMEDIATE GOODS 206 72 70 78 83 87 99 100 96 CAPITAL GOODS 207 57 59 68 64 98 85 100 80 MACHINERY 208 58 56 73 78 108 87 100 91 TRANSPORT EQUIPMENT 209 56 66 58 40 84 81 100 66 TOTAL IMPORTS 210 63 63 65 64 80 82 100 107 MEMO ITEM: PRICE INDICES (US$ INTERNATIONAL 211 67 68 74 87 97 105 100 101 OTHER FOOD (EPD) 212 240 161 119 100 103 146 - - UN CAPITAL GOODS 213 79 84 89 100 128 166 - - …------------------------------------------------------------------------__--__-------------------------- SOURCE: BANK OF SUDAN, FOREIGN TRADE STATISTICS. 1/ BANK OF SUDAN FIGURE INDICATES LS11,000. THIS FIGURE HAS BEEN ADJUSTED TO FIT TREND; LS2.0 MILLION HAS BEEN DEDUCTED FROM "OTHER FOOD". TABLE SUD/3T/3 10/17/8 3 PAGE 3 TABLE 3.4(c) SUDAN: VALUE OF IMPORTS BY COMMODITY, 1974/75-1981/82 (PERCENTAGES) ---------------------------------------------------------------__------------__-------------------------- ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 * * PRICE INDICES - DERIVED * CONSUMER GOODS 201 48 51 40 39 50 59 100 94 FOOD & BEVERAGES 200 48 46 35 31 38 54 100 91 FOOD 202 48 45 33 29 36 55 100 91 BEVERAGES & TOB 203 45 61 66 62 63 51 100 87 OTHER CONSUMER GOODS 204 52 70 57 66 85 98 100 103 PETROLEUM 205 29 30 36 31 49 90 100 216 INTERMEDIATE GOODS 206 50 49 54 58 69 95 100 96 CAPITAL GOODS 207 40 41 47 44 79 82 100 80 MACHINERY 208 40 39 50 54 86 84 100 91 TRANSPORT EQUIPMENT 209 39 46 41 28 67 78 100 66 TOTAL IMPORTS 210 44 44 46 45 64 79 100 107 0 MEMO ITEM: PRICE INDICES (US$ BASED) INTERNATIONAL 211 47 47 51 61 78 101 100 101 OTHER FOOD (EPD) 212 240 161 119 100 103 146 - - UN CAPITAL GOODS 213 79 84 89 100 128 166 - - -------------------------------------------------------------------------__--__-------------------------- SOURCE: BANK OF SUDAN, FOREIGN TRADE STATISTICS. 1/ BANK OF SUDAN FIGURE INDICATES LS11,000. THIS FIGURE HAS BEEN ADJUSTED TO FIT TREND; LS2.0 MILLION HAS BEEN DEDUCTED FROM "OTHER FOOD". TABLE SUD/ 3T/ 3 10/6/83 TABLE 3.5(a) PAGE 1 SUDAN: VOLUME OF IMPORTS BY COMMODITY, 1974/75-81/82 (THOUSAND METRIC TONS, UNLESS INDICATED) ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 RICE 142 - 1 1 3 4 8 11 15 WHEAT 143 141 134 165 124 84 171 60 287 WHEAT FLOUR 144 - 15 - 22 25 195 99 181 SUGAR 145 151 136 154 171 113 295 188 202 TEA 146 14 12 14 19 15 10 12 11 COFFEE 147 7 5 4 4 5 2 3 2 DAIRY PRODUCT 148 2 3 3 4 5 4 5 9 EDIBLE OIL 193 1 1 1 1 2 4 1 2 OTHER FOOD 149 10 12 15 12 12 26 26 20 BEVERAGES,ALC. (LITERS) 151 635 529 775 1,314 1,706 3,629 9,415 8,408 TOBACCO 152 2 2 2 2 1 1 1 1 PERFUMES & COSMETICS 155 1 1 1 1 1 1 1 4 SPECIAL TEXTILE FABRICS 156 3 2 1 2 1 1 1 1 MADE-UP TEXTILE FABRICS 157 3 2 2 2 2 3 3 4 DOMESTIC ELECT EQUIP(NO.) 159 1 0 1 0 1 1 1 2 ROAD PASSENGER CARS(NO.) 160 2 3 3 3 3 1 2 9 MOTORCYCLES (NO.) 161 1 0 0 0 0 1 1 1 BICYCLES (NO.) 162 3 9 8 14 22 8 11 12 FOOTWEAR (PAIRS) 163 32 1 - 69 39 44 399 143 PRINTED MATTER 164 2 5 4 3 3 1 6 2 TOYS & SPORTING GOODS 165 0 0 1 1 0 0 2 1 PETROLEUM 166 984 946 994 1,276 1,230 1,314 1,546 1,152 10/6/83 TABLE 3.5 PAGE 2 SUDAN: VOLUME OF IMPORTS BY COMMODITY, 1974/75-1981/82 (THOUSAND METRIC TONS, UNLESS INDICATED) -----------------------------------------------------------__----------------__--------------------------- ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 CRUDE MATERIALS 17 0 5 2 6 5 1 2 15 20 FERTILIZERS 186 92 339 119 28 74 36 41 35 INSECTICIDES 187 19 8 8 12 8 14 10 20 OTHER CHEMICALS 171 0 0 1 0 0 0 0 0 OTHER MANUFACTURED GOODS 172 71 60 71 106 130 67 97 81 IRON & STEEL 188 72 41 34 73 49 22 40 23 METALS MANUFACTURES 189 29 38 65 69 85 87 97 96 JUTE & SACKS (THS) 190 476 260 205 259 209 321 522 272 ASBESTOS CEMENT PIPES 191 13 110 80 128 132 93 128 101 OTHER TEXTILES 173 34 20 16 25 14 19 12 10 MACHINERY, ELECTRIC 176 5 2 8 2 3 8 7 9 MACHINERY, NON-ELECTRIC 177 17 24 26 30 22 15 22 17 MACHINERY SPARE PARTS 178 28 48 43 62 27 34 21 22 TRACTORS (NO.) 179 1 3 1 3 1 1 1 2 TEXT MACH & PARTS 196 2 30 12 8 7 3 2 1 TRUCKS (NO.) 192 3 4 2 5 2 2 1 3 EQUIPMENT (NO.) 181 1 0 0 0 0 0 0 4 TIRES & TUBES (NO.) 182 1,276 603 1,056 1,557 893 990 546 327 …--------------------------------------------------------------------__------__-----------------------------. SOURCE: BANK OF SUDAN, FOREIGN TRADE STATISTICS. TABLE SUD/3T/4 10/06/83 10/06/83 TABLE 3.6 TABLE 3.7 SUDAN: DIRECTION OF TRADE - EXPORTS, 1979-1982 SUDAN: DIRECTION OF TRADE - IMPORTS, 1979-1982 (PERCENTAGES) (PERCENTAGES) ITEM 1979 1980 1981 1982 ITEM 1979 1980 1981 1982 WESTERN EUROPE 1 32.6 31.9 35.7 35.8 WESTERN EUROPE 40 50.9 44.5 39.7 36.2 BELGIUM 2 0.9 1.3 1.7 1.7 BELGIUM 41 1.9 3.5 1.9 4.0 FRANCE 3 5.3 2.9 3.5 8.4 FRANCE 42 7.6 8.3 7.2 6.2 GERMANY, F.R. 4 4.6 4.3 4.6 4.0 GERMANY, F.R. 43 10.2 9.6 6.6 6.4 GREECE 5 2.1 1.7 1.2 1.1 ITALY 44 4.9 2.5 2.8 2.7 ITALY 6 12.5 12.3 8.0 9.6 NETHERLANDS 45 2.6 2.8 3.0 3.3 NETHERLANDS 7 1.5 1.5 6.1 3.6 SWEDEN 46 0.8 0.4 0.9 0.5 SPAIN 8 0.7 1.0 0.2 0.2 U.K. 47 15.6 12.6 14.0 10.3 U.K. 9 2.7 2.4 3.2 3.9 OTHERS 48 7.4 4.8 3.4 2.8 OTHERS 10 2.4 4.6 7.3 3.4 CHINA AND EAST EUROPE 50 9.5 7.7 8.3 5.4 CHINA AND EAST EUROPE 11 34.0 31.5 16.1 10.0 -------- -------- -------- -------- ------- --- - --- -------- -------- CHINA 51 4.6 3.2 3.7 2.9 BULGARIA 12 0.3 0.5 - - CZECHOSLOVAKIA 52 1.2 1.2 0.6 0.3 CHINA 13 11.7 16.6 5.1 3.6 POLAND 53 0.4 0.8 1.8 0.1 CZECHOSLOVAKIA 14 1.3 0.4 0.5 1.0 ROMANIA 54 0.8 0.5 0.3 0.5 GERMANY, PDR 15 0.9 - - - USSR 55 0.1 0.0 0.1 0.0 HUNGARY 16 0.9 0.5 - - YUGOSLAVIA 56 1.5 1.0 0.9 0.2 POLAND 17 1.5 1.3 1.1 1.1 OTHERS 57 1.0 0.9 1.1 1.3 ROMANIA 18 3.0 2.4 1.6 0.4 USSR 19 5.3 5.1 4.1 2.1 ASIA 60 15.5 14.5 15.2 12.0 YUGOSLAVIA 20 9.1 4.8 3.8 1.8 -------- -------- -------- -------- BANGLADESH 61 1.2 1.8 1.9 0.5 ASIA 21 16.0 12.5 10.5 9.4 INDIA 62 3.7 2.6 2.2 1.8 - - - --- -------- -------- -------- JAPAN 63 7.0 4.0 4.8 4.6 INDIA 22 3.4 0.4 0.1 0.5 PAKISTAN 64 0.3 1.8 0.7 0.4 JAPAN 23 7.8 7.1 7.7 7.4 OTHERS 65 3.3 4.3 5.6 4.7 OTHERS 24 4.8 5.0 2.7 1.5 WESTERN HEMISPHERE 67 6.6 11.2 12.7 12.5 WESTERN HEMISPHERE 25 2.4 2.4 7.8 3.1 -------- -------- -------- ----- - - ------- -------- -------- -------- USA 68 5.6 9.7 7.7 11.8 USA 26 2.3 2.4 7.8 3.1 OTHERS 69 1.0 1.4 5.0 0.7 OTHERS 27 0.1 - - - AFRICA 71 0.3 0.5 0.9 0.8 AFRICA 28 5.7 2.1 2.7 5.1 -------- -------- -------- -------- -------- -------- --- ---- -------- ETHIOPIA 72 - 0.2 0.2 0.1 EGYPT 29 5.5 2.0 2.5 5.0 KENYA 73 0.2 0.3 0.2 0.5 OTHERS 30 0.2 0.1 0.2 0.1 oTHERS 75 0.2 0.0 0.5 0.3 ARAB COUNTRIES 31 9.0 19.2 27.1 36.5 ARAB COUNTRIES 76 16.7 21.4 22.7 32.4 OTHER COUNTRIES 32 0.3 0.3 0.1 0.1 OTHER COUNTRIES 77 0.5 0.3 0.5 0.7 TOTAL 33 100.0 100.0 100.0 100.0 TOTAL 78 100.0 100.0 100.0 100.0 …______- -------- -------- -------- ........ ....... ..... ........_,__ SOURCE: BANK OF SUDAN SOURCE: BANK OF SUDAN NOTE: THIS DATA WILL NOT CORRESPOND DIRECTLY TO THE BALANCE OF NOTE: THIS DATA WILL NOT CORRESPOND DIRECTLY TO THE BALANCE OF PAYMENTS DATA BECAUSE THE DATA HERE ARE ON A CALENDAR YEAR PAYMENTS DATA BECAUSE THE DATA HERE ARE ON A CALENDAR YEAR BASIS AND HAVE NOT BEEN ADJUSTED FOR UNDERREPORTING, ETC. BASIS AND HAVE NOT BEEN ADJUSTED FOR UNDERREPORTING, ETC. TABLE SUD/3D/1 TABLE SUD/3D/2 4.0: Notes on External Debt Data Data on external debt in the Sudan are drawn primarily from the computerized files of the Debt Reporting System maintained by the World Bank. For the most part, these files reflect data submitted by the Government on a periodic basis. Data on new commitments should be reported on a quarterly basis within one month after the end of the quarter. Complete data on all transactions (commitments, disbursements, amortization and interest) during the calendar year should be reported within one to three months after the end of the calendar year. The data reported by the Government are cross-checked with data supplied through the Creditor Reporting System and with any other available sources. Discrepancies are revolved in consultation with the government. In the case of the Sudan, information on external debt is neither fully up-to-date, nor complete, and should be used with caution. The data shown in the following tables are based on partial reports from the Government, on fragmentary information from other sources, and on Bank staff estimates. Among the additional sources of information that have been tapped are the work done by Morgan Grenfell & Co. and by 4 Peat, Marwick, Mitchell & Co. in support of the debt rescheduling efforts of the Bank of Sudan. The fragmentary nature of data on Sudanese external debt reflects the fragmented mechanism within the country for external debt management. A Debt Management Unit has been established in the Ministry of Finance, but it has not been fully effective. It lacks the necessary staff, the full support of those responsible for contracting external debt, and the mechanisms for communication and coordination with the half dozen or more units within Government also responsible for various aspects of debt management. These units include, for example, the Loans Department of the Ministry of Planning, the Foreign Exchange Deprtment, and the Debt Rescheduling Unit in the Bank of Sudan, and other units within the Ministry of Finance. Note 4.0 SUD/CEM/NOTES 3 Table 4. 1 Loan Commitments by Creditor Source (US$ Millions) 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 Suppliers Credits 51 45 223 53 89 36 n.a. n.a. - - Financial Institutions 50 184 80 161 14 59 101 61 65 16 Multilateral Loans 46 116 118 84 86 170 237 357 149 284 African Development Bank - 8 - - - 6 - - 7 - African Development Fund 5 - 6 - - 8 10 26 - Arab African Bank - 4 26 - 20 21 - 5 7 - Arab Fund Ec. & Soc. Dev. - 27 32 37 17 - 2 19 9 - Arab Monetary Fund - - - - - 7 51 19 7 194 European Development Fund - - - - - - 12 11 - - IBRD - - - 20 12 - - - - - IDA 46 35 60 13 25 78 56 170 73 53 IMF Trust Fund - - - - - 37 28 24 0.3 - IFAD - - - - - - 15 15 - - Islamic Development Bank - - - - 9 10 65 76 6 - OPEC Special Fund - 37 - 8 3 10 - 8 13 30 UN/FAO World Food PR - - - - - - - - - 7 Bilateral Loans 139 167 150 310 380 488 401 326 98 400 China - - - - - - 39 31 - 45 Czechoslovakia _- - - - 30 - - Denmark - 4 - - - 7 - 20 - - France - - - - 7 16 - 32 13 Germany 23 14 42 60 - 60 - - - 87 Iran - 61 - - - - - - - - Iraq - 10 31 33 30 - - - - - Italy - - - - - - - - 10 20 Japan - - - 10 - 24 - - - 10 Kuwait 26 - 44 15 31 25 32 5 - 100 Netherlands - - 5 5 2 - - - - - Poland - - - - - - 2 - - - Qatar - 14 - - - - - 10 - - Romania - - - - - - - 8 16 - Saudi Arabia - - 28 160 255 365 236 71 30 100 Spain - - - - - - 17 - - - UAE - 54 - 25 47 - - 151 - - UK 42 - - - - - - - USA 23 7 - - 14 - 59 - 10 25 Others 25 3 - 2 1 - - - - - TOTAL 286 512 571 608 569 753 739 744 312 700 SOURCE: IBRD, Debt Reporting System Table 4.2 DISBURSEMENTS OF EXTERNAL LOANS BY SECTORS (US$ Millions) Sector 1974 1975 1976 1977 1978 1979 1980 1981 1982 Agriculture 14 13 8 6 47 3 18 107 53 Manufacturing 107 95 100 17 12 12 65 85 - Electrical & Water Supply 1 14 13 15 14 7 1 24 17 Construction - 6 21 27 13 - 2 11 - _ Transportation & Communications 79 120 63 23 64 69 113 92 54 Public Defense and Budget Support 19 29 20 19 19 15 36 2 7 Balance of Payment Support 193 44 247 53 111 426 183 141 247 Restaurants, Hotels, Tourist Trade - - - - 3 7 6 - - Financial Institution - - - - 6 5 5 12 - Contribution to Current Imports 10 13 64 - 19 Food Aid - - - - - - 29 10 10 Unspecified 50 68 18 33 34 61 93 56 12 TOTAL 463 389 490 193 333 618 615 540 419 Source: IBRD, Debt Reporting System June 3, 1983 Table 4.3 Structure and Terms of External Debt Commitments Jan. 1, 1972 - Dec. 31, 1982* Debt Repayable in Foreign Currency and Goods (in thousands of U.S. Dollars) Grant Period Ending Amount** Interest Maturity Grace Element Grant Total (M) (Yrs) (Yrs) (%) Equivalent Amount*** 7212 168,205 3.243 21.5 6.9 46.7 78,541 168,205 7312 276,590 4.434 23.2 5.5 39.4 108,936 276,590 7412 518,573 5.539 14.6 4.8 28.0 145,264 518,573 7512 625,759 5.408 18.0 4.5 29.9 187,317 625,759 7612 635,505 5.145 17.4 5.6 30.9 196,182 635,505 7712 628,992 5.356 14.1 4.7 27.0 169,770 628,992 7812 752,884 4.204 24.1 6.5 41.8 314,456 752,884 > 7912 739,214 4.434 20.2 5.8 38.0 280,922 739,214 8012 744,234 3.033 25.6 6.2 49.5 368,719 744,234 8112 312,867 7.257 24.1 5.7 32.7 102,341 312,867 8212 700,564 3.594 20.6 5.6 42.0 293,913 700,564 -------------------------------------------------------------__--------------__------------------------ 6,103,387 4.613 20.1 5.6 36.8 2,246,361 6,103,387 ~~~== ___ Source: IBRD Debt Reporting System * Includes increases during this period to debts with original commitment dates from Jan. 1, 1900 to Dec. 31, 1982. ** Total loans having interest, grace period and maturity information available, used to compute average terms. *** Total of all loans in this breakdown regardless of availability of interest, grace period, and maturity information. - 144 - Table 4.6 SUDAN: Outstanding External Arrears (US$ Millions) Item June 30, 1981 June 30, 1982 Dec. 30, 1982 k/ Bilateral 599.1 952.0 1152.0 OECD Countries 274.5 116.0 Paris Club 1 (87.4) . 0 608.0 1/ Paris Club II (40.0) (108.0) Other Bilateral (0.1) ) - Other Suppliers (55.9) b/ (8.0) l Other Financial Institutions (126.1) b/ J F 544.0 Eastern Bloc 53.8 82.0 h/ Oil Producers 270.8 738.0 g/ Multilateral 77.8 c/ 130.0 123.0 Suppliers 26.8 536.0 244.0 Financial Institutions 188.5 d/ 122.0 i/ 218.0 m/ Other Multiple lenders 111.8 Arab financial institutions 76.7 d/ Total medium & long term 892.2 a/ 1740.0 1737.0 Short-term 859.0 N.A. N.A. Financial Institutions 323.0 e/ Suppliers credits 536.0 f/ Total 175.2 N.A. N.A. Source: IMF and Peat Marwick Mitchell a/ Committed by December 31, 1981; includes arrears on principle and interest. All data converted to US dollars at rates prevailing December 31, 1981. Excludes interest on arrears. b/ Some of this may not be guaranteed by creditor governments. c/ Includes Arab Monetary Fund, Arab African Bank, Arab Fund for Economic and Social Development Islamic Development Bank, African Development Bank, OPEC Special Fund, African Development Fund International Fund for Agricultural Development, and European Development Fund. d/ Assumes principal payments are rolled over and interest is paid at LIBOR. e/ Includes Islamic Development Bank. f/ May include overlap with the OECD and Eastern bloc suppliers' credit listed above. g/ Includes $484 million of liabilities under rescheduling negotiations., h/ Includes $12 million under rescheduling negotiations to Czechoslovakia. i/ Amount due on July 6, 1982, including rough estimates of short-term banking facilities in arrears. Arrears may be understated to the extent that unknown suppliers' credits exist. On the other hand, some arrears to supplies have been liquidated privately. Arrears to banks outside of the rescheduling framework are not fully known, particularly those related to short-term banking facilities. k/ Source for this column is Peat Marwick Mitchell. 1/ This amount includes the obligations to be rescheduled under the Round III Protocol. m/ This amount includes the obligations refinanced as of April 5, 1983. Table 4.7 SUDAN: Estimates of Medium- and Long-Term Publicly Guaranteed External Debt Outstanding (In millions of U.S. dollars) As of 12/31 1980 1981 1982 International organizations 556 836 1,346 Foreign governments 1,777 2,172 3,959 Arab oil exporting countries 968 -- 2,049 Members of the Club of Paris 557 -- 1,487 Eastern bloc, Yugoslavia & China 252 -- 423 Financial institutions 530 636 1,040 Suppliers' credits 255 217 379 Total outstanding debt (disbursed only) a/ 3,118 3,714 6,724 =_ Memorandum items: Debtor balance under bilateral agreement with Egypt -- -- 121 Military debt (est.) -- -- 300 Sources: 1981 - World Bank Debtor Reporting System. 1982 - Data provided by the Sudanese authorities. a/ Excludes balances under bilateral payments arrangements with Egypt and military debt. 5.0: Notes on Public Finance Data Sources of Data The Director of Accounts maintains, finalizes and closes the accounts of central government revenues and expenditures. The final accounts for year ending June 30 are supposed to be ready by December 15, but in actual practice may not be available until April/May of the following year. These accounts are mimeographed and submitted to the Auditor General, who is in the legislative branch. He publishes the accounts after audit and submits them to the National Assembly. These published accounts are the official and final source of fiscal data but are at least a year out of data and are published only in Arabic. The data of the Director of Accounts have a smaller time lag, are generally as valid as those of the Auditor General and are usually available in English as Final Accounts (mimeo). The comptrollers of revenue and expenditure in the Ministry of Finance and National Economy also keep accounts of public revenues and expenditures. These figures are provisional, and the time lag is very small. These data are used for preparing periodic reviews of fiscal situation for internal use. They are also commonly supplied to visiting missions. As these figures are provisional and differ significantly from the Director of Accounts figures, it is preferable to use the final figures of the Auditor General or of the Director of Accounts. The annual Economic Survey published by the Ministry of Finance uses figures of the Director of Accounts. Budgetary Classification of Current Expenditure The current expenditures of the central government are divided into three chapters: Chapter One includes expenditure on salaries and wages. Chapter Two covers expenditure on services, debt repayment and interest on internal and external loans, transfers to local and regional governments, transfers to universities and technical institutes, subsidies, and defense expenditure. Chapter Three includes expenditure on new minor items such as furniture, equipment and cars. Since 1979/80, the equity share of the central government in joint-venture investments and capital subscriptions to various international organizations have been shown separately as the Equity Budget. Previously, these expenditures were included in the current budget. In addition to the personnel expenditures on Chapter One, a large proportion of the expenditures on defense, grants to universities and technical institutes, and transfers to local and regional governments is for salaries and wages. Detailed fiscal data are available, and it is possible to derive functional and economic expenditure has been attempted in this annex (ref. Table 5.6). page 2 Budgetary Classification of Capital Expenditures The majority of government expenditures are under either the current or the development budget. This division is roughly synonymous with the normal concepts of current and capital expenditures. To be technically precise, however, the following should be noted: First, as mentioned above, Chapter 3 of the current budget includes minor items of capital expenditure such as for motor vehicles. Second, the development budget includes expenditures on wages and salaries for projects not yet completed. As these may legitimately be treated as capitalized expenditures, no significant distortion is introduced. The development budget of the Central Government is divided into two major sections -- government and self-financed units. These cover all public sector investment expenditures except those associated with joint venture investments with the private sector (e.g. Kenana). Such investments are found in the equity budget. The self-financed units (the Sudan Railways, Seaports Corporation, Sudan Telecommunications and Sudan Air) are placed in a class separate from the rest of the departmental and parastatal units because, as self-financed units, they in theory provide the local currency component of their development expenditures out of current savings. Local and Regional Government Data on regional government, aside from the Southern Region, are not yet available. Data for the Southern Region are of dubious quality. Information on local government revenues and expenditures is basically non-existent. Local government have spent beyond their resources and, in the absence of borrowing powers, have accumulated arrears in payments to local suppliers and contractors. These arrears, combined with normal problems of record keeping, have meant that many local government accounts have not been reconciled and closed for years. Parastatal Enterprises Partial accounts of the parastatal enterprises exist; they are of varying quality. No central, consolidated and published source of such information exists, though data for selected units are found in the Economic Survey published by the Ministry of Finance. Frequent reorganizations, particularly of the parastatal holding companies, make it very difficult to present meaningful time series on parastatal operations. Other Public Sector Data Data on joint venture ("mixed sector") projects and on projects in the Southern Region are available in the Sudan data base but are not presented here because they are still too incomplete. For similar reasons, data on parastatal budgets and the consolidated public sector have been omitted from this annex. o7/15/83 PAGE 1 TABLE 5.1 SUDAN: CENTRAL GOVERNMENT OPERATIONS (BUDGET), 1974/75-1982/83 (LS MILLIONS) ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 -------------------------------------------------------------__--------------__----------------------------------- REVENUES 42 277.2 337.3 448.3 552.7 686.2 912.0 1,005.6 1,048.0 1,342.6 TAX REVENUES 68 165.3 184.7 250.4 280.8 366.0 413.4 448.4 793.0 1,007.7 NON-TAX REVENUES 69 111.9 152.6 197.9 271.9 320.2 498.6 557.2 255.0 334.9 CURRENT EXPENDITURES 70 268.3 304.4 378.0 489.4 660.9 820.7 944.7 1,045.7 1,202.0 CURRENT BALANCE 79 8.9 32.9 70.3 63.3 25.3 91.3 60.9 2.3 140.6 DEVELOPMENT EXPENDITURES 80 156.6 131.6 254.2 306.9 202.9 284.9 329.9 476.0 502.2 OTHER EXPENDITURES /A 88 - - - - - - - 50.0 39.9 TOTAL EXPENDITURES 142 424.9 436.0 632.2 796.3 863.8 1,105.6 1,274.6 1,571.7 1,744.1 OVERALL BALANCE 87 -147.7 -98.7 -183.9 -243.6 -177.6 -193.6 -269.0 -523.7 -401.5 GROSS DOMESTIC PRODUCT 110 1,510.8 1,848.0 2,339.6 2,882.7 3,219.1 4,052.2 5,427.6 7,231.2 8,871.8 MEMO: PUBLIC SECTOR DEVELOPMENT EXP 114 188.0 176.7 303.7 341.5 247.2 392.9 443.6 601.5 646.0 TRANSPORT & COMM 112 70.5 80.8 99.6 119.3 92.2 155.6 181.6 207.3 231.4 CENTRALLY FINANCED 83 39.1 35.7 50.1 84.7 47.9 47.6 67.9 81.8 87.6 SELF-FINANCED III 31.4 45.1 49.5 34.6 44.3 108.0 113.7 125.5 143.8 OTHER SECTORS 113 117.5 95.9 204.1 222.2 155.0 237.3 262.0 394.2 414.6 -----------------------------------------------------------------__----------__----------------------------------- SOURCE: THE DEMOCRATIC REPUBLIC OF THE SUDAN, MINISTRY OF FINANCE, DIRECTOR OF ACCOUNTS. A/ INCLUDES FINANCIAL INVESTMENTS BY GOVERNMENT, OTHER LENDING OPERATIONS AND EXTRABUDGETARY EXPENSES. TABLE SUD/5B/1 10/12/83 PAGE 1 TABLE 5.2 SUDAN: CENTRAL GOVERNMENT OPERATIONS (ACTUALS), 1974/75-1982/83 (LS MILLIONS) ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 REVENUES 42 284.1 322.5 383.8 458.8 504.2 581.9 732.1 890.6 1,240.3 TAX REVENUES 68 222.7 273.0 310.0 360.6 413.9 471.7 591.6 736.0 1,038.0 NON-TAX REVENUES 69 61.4 49.5 73.8 98.2 90.3 110.2 140.5 154.6 202.3 CURRENT EXPENDITURES 70 249.1 283.5 332.4 423.2 565.5 645.2 844.3 975.1 1,186.5 CURRENT BALANCE 79 35.0 39.0 51.4 35.6 -61.3 -63.3 -112.2 -84.5 53.8 DEVELOPMENT EXPENDITURES 80 102.4 113.0 155.4 185.8 164.6 221.3 290.5 306.4 443.0 AGRICULTURE 81 21.5 31.4 42.1 43.2 55.4 46.9 59.7 59.6 113.4 INDUSTRY 82 36.1 35.7 32.1 39.0 33.5 37.9 32.0 88.9 119.0 TRANSPORT & COMMUNICATION 83 23.1 27.9 39.0 55.0 26.2 33.7 39.6 44.3 77.3 SERVICES 84 20.3 9.7 17.0 15.9 - - - - - OTHER 85 1.4 8.3 25.2 32.7 49.5 102.8 159.2 113.6 133.3 OTHER EXPENDITURES /A 88 - - - - 74.7 61.7 128.4 205.9 180.0 TOTAL EXPENDITURES 142 351.5 396.5 487.8 609.0 804.8 928.2 1,263.2 1,487.4 1,809.5 OVERALL BALANCE 87 -67.4 -74.0 -104.0 -150.2 -300.6 -346.3 -531.1 -596.8 -569.2 EXTERNAL FINANCING 175 103.1 74.7 40.0 28.2 146.4 237.6 253.1 354.0 429.2 LOANS (MLT) 89 98.8 64.8 34.7 21.8 146.4 237.6 253.1 354.0 429.2 DISBURSEMENT 90 113.7 84.5 53.5 49.7 146.4 237.6 253.1 354.0 429.2 AMORTIZATION 118 14.9 19.7 18.8 27.9 - - - - - CASH & COMM. OPS. 34 4.3 9.9 5.3 6.4 - - - - - CENTRAL BANK FIN. (NET) 151 22.9 25.9 95.5 173.0 149.8 143.2 299.2 121.3 110.0 OTHER 108 -58.6 -26.6 -31.5 -51.0 4.4 -34.5 -21.2 121.6 30.0 GROSS DOMESTIC PRODUCT 110 1,510.8 1,848.0 2,339.6 2,882.7 3,219.1 4,052.2 5,427.6 7,231.2 8,871.8 10/12/83 PAGE 2 TABLE 5.2 SUDAN: CENTRAL GOVERNMENT OPERATIONS (ACTUALS), 1974/75-1982/83 (LS MILLIONS) ---------------------------------------------------------------__ ------------__ -------------------______ ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 MEMO: PUBLIC SECTOR DEVELOPMENT EXP 172 117.2 145.9 176.9 200.6 187.2 251.2 290.5 306.4 443.0 TRANSPORT & COMM 170 37.9 60.8 60.5 69.8 48.7 63.6 39.6 44.3 77.3 CENTRALLY FINANCED 83 23.1 27.9 39.0 55.0 26.2 33.7 SELF-FINANCED 176 14.8 32.9 21.5 14.8 22.6 29.9 - - - OTHER SECTORS 171 79.3 85.1 116.4 130.8 138.5 187.6 250.9 262.1 365.7 SOURCE: AUDITOR GENERAL AND MINISTRY OF FINANCE, DIRECTOR OF ACCOUNTS. A/ INCLUDES FINANCIAL INVESTMENTS BY GOVERNMENT (EQUITY BUDGET),OTHER LENDING OPERATIONS, AND EXTRABUDGETARY EXPENSES. TABLE SUD/5A/1 07/05/83 PAGE 1 TABLE 5.3 SUDAN: CENTRAL GOVERNMENT REVENUES (ACTUALS), 1974/75-1982/83 (LS MILLIONS) ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 TAX REVENUES DIRECT TAXATION 1 30.9 32.2 41.7 48.2 56.0 70.7 109.8 134.9 198.0 BUSINESS PROFIT TAX 2 22.3 24.3 30.9 35.5 41.7 38.2 - - - PERSONAL INCOME TAX 3 8.3 7.6 9.2 11.2 13.0 12.4 - - - DEVELOPMENT TAX ON BUSINESS 4 - - 1.1 0.7 0.2 1.0 - - - PROFITS & RENTAL INCOME TAX 5 0.2 0.2 0.4 0.6 0.7 2.3 - - - CAPITAL GAINS TAX 6 0.1 0.1 0.1 0.2 0.4 0.8 - - - PROPERTY TAX 23 - - - - - - - - _ OTHER 43 - - - - - 16.0 - - - O/W DEFENSE TAX 7 - - - - - 0.2 - - - INDIRECT TAXATION 8 191.8 240.8 268.3 312.4 357.9 401.0 481.8 601.1 812.0 TAXES ON FOREIGN TRADE 136 135.6 161.9 157.2 202.8 248.7 244.9 327.7 421.8 617.0 _ ~ ~ ~ ~ ~ - - -__ _ - - - - - - - --- Ul IMPORT DUTIES 9 94.2 118.3 123.5 170.9 180.5 222.0 286.0 390.6 590.0 CUSTOMS DUTIES 44 71.8 92.4 92.3 127.5 132.8 185.4 236.9 321.3 480.0 OTHER IMPORT CHARGES 45 22.4 25.9 31.2 43.4 47.7 36.6 49.1 69.3 110.0 ADDITIONAL TAX 46 16.9 18.7 17.5 22.6 23.5 - - - - DEV. TAX ON IMPORTS 47 5.5 7.2 13.7 20.8 21.8 7.8 - - - DEFENSE TAX 48 - - - - 2.4 28.8 43.2 65.3 105.0 OTHER 49 - - - - - - 5.9 4.0 5.0 EXPORT DUTIES 11 14.0 16.0 20.8 22.8 25.6 22.9 41.7 31.2 27.0 EXPORT DUTY 50 9.9 11.0 11.8 12.3 13.7 9.7 41.7 23.3 15.0 EXPORT ROYALTY 51 0.9 1.1 0.8 1.0 1.2 - - - - DEV. TAX ON EXPORTS 52 3.2 3.9 8.2 9.5 10.7 13.2 - 7.9 12.0 EXCHANGE TAXES 12 27.4 27.6 12.9 9.1 42.6 - - - - TAXES ON DOMESTIC TRADE 137 54.1 76.7 109.0 107.1 105.9 148.0 154.1 175.7 190.0 CONSUMPTION DUTIES 10 11.0 9.0 13.0 16.7 17.5 19.5 23.7 26.8 25.0 EXCISE DUTIES 13 34.9 37.0 43.6 48.2 58.4 59.7 62.8 60.9 75.0 PETROLEUM PRODUCTS 53 15.9 13.9 13.9 15.8 16.4 17.7 - - - SUGAR 54 2.2 1.9 0.1 2.2 4.9 1.0 - - - COTTON TEXTILES 55 - 0.2 0.4 0.8 1.4 1.6 - - - CIGARETTES 56 4.2 7.1 6.0 7.2 9.1 8.9 - - - WINE 57 2.3 2.4 3.2 3.7 4.4 5.7 - - - BEER 58 2.4 2.4 3.2 3.2 2.8 2.5 - - - WHEAT FLOUR 59 0.4 0.5 0.5 0.5 0.5 0.7 - - - BOOTS & SHCES 60 1.7 2.2 2.8 2.0 2.4 2.5 - - - VEGETABLE OILS 61 1.1 1.2 2.0 1.1 1.1 1.3 - _ _ ELECTRICAL APPLIANCES 62 0.8 0.8 1.3 1.6 2.0 2.5 - - - OTHER 63 3.9 4.4 10.2 10.1 13.4 15.3 - - - 07/05/83 PAGE 2 TABLE 5.3 SUDAN: CENTRAL GOVERNMENT REVENUES (ACTUALS), 1974/75-1982/83 (LS MILLIONS) ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83* DEVELOPMENT TAX - DOM. MFG. 14 2.3 3.4 6.9 10.1 14.0 15.4 36.9 27.5 35.0 STABILIZATION FUND EXCISES 64 5.9 2.6 4.5 5.8 13.0 20.7 - - - SUGAR MONOPOLY PROFITS 26 - 24.7 41.0 26.3 3.0 32.7 30.7 60.5 55.0 STAMP AND OTHER TAXES 36 2.1 2.2 2.1 2.5 3.3 8.1 - 3.6 5.0 TOTAL TAXES 68 222.7 273.0 310.0 360.6 413.9 471.7 591.6 736.0 1,010.0 NON-TAX REVENUES LICENSES 15 - - - - - - - - - FINES 16 - - - - - - - - - ROYALTIES (MINERALS) 17 - - - - - PENSION CONTRIBUTION 40 2.6 2.0 3.3 3.8 9.2 11.4 21.0 24.4 30.0 FEES & CHARGES 18 15.4 17.4 22.6 32.7 18.7 32.1 53.3 75.9 85.0 , DEPARTMENTAL FEES & CHARGES 19 12.6 14.3 20.5 31.6 17.2 - - - - EXCHANGE FEES 20 - - - - - - - _ _ WATER & ELECTRICITY 21 - - - - - - - - - PUBLICATIONS 22 - - - - - - - -- MISCELLANEOUS 138 2.8 3.1 2.1 1.1 1.5 32.1 53.3 75.9 RENTS FROM GOVT LANDS & BLDGS 24 0.3 0.2 0.3 1.4 0.4 - - - - PROFITS FROM GOVT. ENTERPRISE 25 14.9 8.7 15.7 31.3 32.6 29.9 30.7 29.0 33.0 STJDAN GEZIRA BOARD COTTON 27 1.8 - 3.0 6.0 7.0 - - - - ARREARS OF GOVT. SHARE IN GEZIRA COTTON & SEED 67 - - - - - - - - - BANKING SYSTEM RETURNS 28 6.1 5.9 8.7 12.4 16.2 23.7 27.1 23.5 33.0 SUDAN DEVELOPMENT CORP. 29 - - - 1.2 1.0 - 2.3 - - PROFITS FROM TRADING CORP. 30 0.9 0.4 0.2 0.3 1.5 0.6 - - - PROFITS FROM INDUST CORP. 31 - - - - - - _ _ _ PROFITS FROM COTTON PUB COR 32 2.2 1.5 3.0 10.5 4.5 1.0 - - - EXPORT INCENTIVES 33 - - - - - - _ _ OTHER ENTERPRISES 132 0.2 - - 0.9 2.4 - - - COTTON SPRAYING FEES 35 3.7 0.9 0.8 - - - - - - OTHER 135 - - - - - 4.6 1.3 5.5 07/05/83 PAGE 3 TABLE 5.3 SUDAN: CENTRAL GOVERNMENT REVENUES (ACTUALS), 1974/75-1982/83 (LS MILLIONS) ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83* OTHER INTEREST EARNED 37 3.1 2.1 2.3 2.5 6.7 11.5 20.1 6.0 8.0 REIMBURSEMENT & INTER-DEPT SERVICES 38 9.9 11.0 12.2 11.5 5.9 5.5 - - - UNCLASSIFIED REVENUE 39 14.1 8.1 17.3 14.8 16.2 19.7 3.7 18.6 30.0 SALES OF GOVT PROPERTY 41 1.1 - 0.2 0.2 0.6 - 11.7 0.7 16.0 LOCAL COUNTERPART FOR COM- MODITY & PRICE DIFF. 34 4.3 9.9 5.3 6.4 - - - - - TOTAL NON-TAX REVENUE 69 61.4 49.5 73.8 98.2 90.3 110.2 140.5 154.6 202.0 (UNADJUSTED) /A 97 65.7 59.4 79.1 104.6 90.3 110.2 140.5 154.6 202.0 TOTAL REVENUE 42 284.1 322.5 383.8 458.8 504.2 581.9 732.1 890.6 1,212.0 ======5=_=====_- s==== n==s____ =a=====_ ====n===_ ====_== __==S=========_=_s (UNADJUSTED) /A 134 288.4 332.4 389.1 465.2 504.2 581.9 732.1 890.6 1,212.0 SOURCE: AUDITOR GENERAL AND MINISTRY OF FINANCE, DIRECTOR OF ACCOUNTS. * DATA FOR 1982/83 ARE REVISED BUDGET ESTIMATES. /A UNADJUSTED FIGURES REFLECT NORMAL GOVERNMENT PRESENTATION. ADJUSTMENTS INVOLVE EXCLUSION OF CASH AND COMMODITY LOAN COUNTERPART FUNDS FROM REVENUES AND LOAN AMORTIZATION FROM CURRENT EXPENDITURES. TABLE SUD/5A/2 10/06/83 TABLE 5.4 SUDAN: CENTRAL GOVERNMENT EXPENSES (ACTUAL), 1974/75-1982/83 (MILLIONS OF SUDANESE POUNDS) ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 CURRENT EXPENDITURES 70 249 284 332 423 566 645 844 975 1,187 (UNADJUSTED) /A 109 264 303 351 451 566 645 844 975 1,187 ECONOMIC SERVICES 71 31 35 40 40 30 33 37 46 - AGRICULTURE/NAT. RES. 72 6 10 9 6 - - - - - LIVESTOCK 73 2 3 3 3 - - - - - IRRIGATION/HYDRO-POWER 74 7 8 8 9 - - - - - COMMERCE 75 2 2 3 3 - - - - - INDUSTRY &MINING 76 3 1 6 6 - - - - - TRANSPORT & TELECOM 77 9 10 11 12 - - - - - CONSTRUCTION 78 1 1 2 2 - - - - - SOCIAL SERVICES 111 30 34 44 53 45 51 66 83 - EDUCATION 112 8 10 10 7 - - - - - HEALTH 113 6 6 7 9 - - - - - OTHER 114 16 18 27 37 - - - - - REPAYMENT OF LOANS 115 28 38 37 81 32 48 69 79 - INTEREST - FOREIGN 116 8 13 8 38 17 21 51 60 - INTEREST - LOCAL 117 5 5 10 15 14 27 18 19 - (AMORTIZATION - FOREIGN) 118 15 20 19 28 - - - - - ARMED & POLICE FORCES 119 42 46 67 81 76 107 132 205 - OTHER 120 134 151 163 197 384 405 542 563 - GENERAL ADMINISTRATION 105 76 78 76 91 252 196 278 266 - LOCAL GOVERNMENT 121 58 74 88 105 131 209 264 297 - DEVELOPMENT EXPENDITURE /B 80 102 113 155 186 165 221 291 306 443 FOREIGN 168 - - - - - - 174 185 210 LOCAL 169 - - - - - - 116 122 233 AGRICULTURE 81 22 31 42 43 55 47 60 60 113 INDUSTRY 82 36 36 32 39 34 38 32 89 119 TRANSPORT & COMMUNICATION 83 23 28 39 55 26 34 40 44 77 SERVICES 84 20 10 17 16 - - - - - OTHER 85 1 8 25 33 50 103 159 114 133 OTHER C.G. EXPENSES 88 - - - - 75 62 128 206 180 (O/W EQUITY BUDGET) 150 - - - - 75 30 49 32 30 TOTAL EXPENDITURE 142 352 397 488 609 805 928 1,263 1,487 1,810 (UNADJUSTED) 141 366 416 507 637 805 928 1,263 1,487 1,810 SOURCE: AUDITOR GENERAL AND DIRECTOR OF ACCOUNTS, MINISTRY OF FINANCE /A UNADJUSTED FIGURES REFLECT NORMAL GOVERNMENT PRESENTATION. ADJUSTMENTS INVOLVE EXCLUSION OF CASH AND COMMODITY LOAN COUNTERPART FUNDS FROM REVENUES AND LOAN AMORTIZATION (A FINANCING ITEM) FROM EXPENDITURES. /B INCLUDES CENTRAL GOVERNMENT CONTRIBUTIONS TO CAPITAL BUDGETS OF SELF-FINANCED UNITS. TABLE SUD/5A/3 - 155 - Table 5.5 SUDAN: Actual Allocation of Development Reserves, 1975/76-1979/80 (LS millions) 1975/ 1976/ 1977/ 1978/ 1979/ 1980/ 1981/ 1976 1977 1978 1979 1980 1981 1982 Agriculture 1.5 3.0 3.6 3.4 4.2 1.5 4.1 Industry 0.7 2.0 3.9 3.1 2.6 6.6 2.3 Transport 0.8 2.3 4.2 4.9 5.8 2.2 3.2 Services 1.0 3.2 5.0 2.9 2.0 3.1 5.2 Southern Region 3.0 8.2 13.5 15.0 15.0 0.4 0.4 Regional Development & Other Regions - 7.0 9.3 15.5 18.0 0.5 1.1 TOTAL 7.0 25.7 39.5 44.8 47.6 14.3 16.3 Source: Ministry of Finance and Economic Planning Table SUD2: Tab 5.5 9/29/83 TABLE 5.6 SUDAN: Current Expenditure - Functional Classification, 1970/71 - 1979/80 (LS Million) Item 1970/71 1971/72 1972/73 1973/74 1974/75 1975/76 1.976/77 1977/78 1978/79 1979/80 Defense and Security 46.3 47.5 45.7 41.2 41.9 45.5 67.2 80.9 80.2 110.4 General Admin. 3.4 6.2 6.7 8.8 13.7 16.9 22.4 28.5 30.8 32.5 Social Services 25.6 26.8 30.3 23.1 29.6 34.2 43.8 52.8 60.0 66.4 Economic Ser1ices 18.3 20.7 24.3 24.2 31.1 34.8 40.0 39.6 36.8 43.1 Local Governments 17.6 18.6 15.6 37.9 47.6 59.1 72.5 85.5 108.6 168.3 Southern Region -- -- -- 13.3 10.5 1L.4 15.0 19.8 22.6 40.8 Debt Servicing 9.8 14.7 16.1 19.0 27.6 37.5 37.0 81.3 67.1 96.7 Others 25.4 18.8 33.2 22.1 62.0 60.8 53.3 62.7 179.5 162.2 Total 146.4 153.3 171.9 189.6 264.0 303.2 351.2 451.1 585.6 720.4 Source: Ministry of Finance and Economic Planning, Director of Accounts. TABLE 5.8 SUDAN: PUBLIC SECltR INVESfI: PLANNED AME AND ACUIAL ROR 1970-83 BY SECTOR (MLLIONS OF LS) VFIVE YEAR PLAN ~ - Original Amended Actual # of # of Sector 1970-75 1970-75 # 1970-75 # Original AmerKded Agriculture & Irrigatiam 80.7 38 155.8 23 66.3 27 82 42 Industry & Mining 36.4 17 117.8 18 73.1 21 200 62 Transport, Caimmicatiers 29.6 14 228.7 34 61.5 32 207 26 wser 13.8 6 37.2 6 - - - - Services 42.4 20 92.4 14 39.2 16 92 42 MisceUane',ls 13.1 6 34.3 5 9.9 4 75 2B TUYAL 215.0 100 666.2 100 250.0 100 116 37 ,. SIX YEAR PLAN ROLLING PLANS plan Revised Plan 1977/78 1978/79 1979/80 1980/81 1981/82 Agriculture & Irrigation 425 93.5 52.9 88.9 131.5 105.2 Industry & Mining 335 57.2 34.3 60.6 80.0 153.6 Transport, Comm. & Power 320 84.7 47.9 47.6 81.6 81.8 Services 265 26.6 21.8 87.9 43.7 43.9 Miscellaneols 225 45.0 46.0 - 64.0 91.5 TOTAL 1,570 307.0 202.9 285.0 400.8 416.0 N.B. All figures are at carrent prices. SUD/acMTAB-2 - 158 - Table 5.9 SUDAN: Fourth Three-Year Public Investment Program, Local and Foreign Costs (LS million) Estimated 4th TYPIP Expenditure 1983/84 1984/85 1985/86 Total % Sector 1982/83 LOCAL COMPONENT Agriculture 38 69 99 106 274 25 Transport 40 66 61 61 188 17 Manufacturing 12 28 21 18 67 6 Energy & Mining 12 19 15 18 52 5 Water 7 10 20 22 52 5 Services 28 38 40 40 118 11 Regional Development 50 56 74 85 215 20 Contingency Reserve - 4- 42 44 126 11 Total Local At Current Prices * 187 326 372 394 1092 100 At Constant Prices * 144 224 228 217 669 - FOREIGN COMPONENT Agriculture 65 117 174 192 483 37 Transport 75 103 68 79 250 20 Manufacturing 7 29 43 41 113 9 Energy & Mining 24 65 38 39 142 11 Water 10 20 22 20 62 5 Services 17 35 35 39 109 8 Regional Development 19 28 35 70 133 10 Contingency Reserve - - - - - - Total Foreign At Current Prices * 217 397 415 480 1292 100 At Constant prices 166 27 3 255 265 793 TOTAL INVESTMENT Agriculture 103 187 272 298 757 32 Transport 115 168 130 140 438 18 Manufacturing 19 57 64 59 180 8 Energy & Mining 36 84 53 57 194 8 Water 17 30 42 42 114 5 Services 45 73 76 78 227 9 Regional Development 69 84 109 155 348 15 Contingency Reserve - 40 42 44 126 5 Total: At Current Prices * 404 724 787 873 2384 100 At Constant Prices 310 497 483 482 1462 - * 1981/82 TAILE 5.10 Ewe 1 Sudan: Summary of Tax System, 1981/82 (AU amounts in Suianese pounds) Tax Rature of Tax btemptions and lducticon Rates I. Taxes on inrcc and profits Tax is levied an net business profits Only caWanies operating under the (1) Limited public capanies and public sector 1.1 aes n camanies of limited public ampanies, lmited encouragement of Inwest-ent Act, 1980 are companies. 1.11 hinas profits and private companies, trusts and exeWt. Deducticns are allowed for all (Sudanese pouds) (Percent) land rent tax. The Oiais. lad rent tax is ezpediture e lusiwly incurred in the 0 - 1,000 25 I Tax Act (No. basically a levy co net rental inc production of imam iwluding sudc axil 1,001 - 10,000 40 65) of 1971. frao land and imldings. Since the expenes as salaries and wags, 10,001 - 20,000 45 rate schedule for profits ta and deprecitim, rents, comiisiu and 20,001 - 50,000 50 land re-t tax paid by cqm,anies is interest paid on loam. Lasses my be Over - 50,000 60 the sm, the - tawo are carried forird and deducted frao profits effectively cobined. Tax ss _ for a period of five years. (2) Private Limited caompnies and nonresident is based on certified ta.mts ikere companies. available and othedise is atmerily (sianese pDads) (Per cant) assessed. 0- 1,0 25 1,001- 10,000 40 10,001 - 20,000 50 Over - 20,000 60 1.12 Developint tax. Tlh develop t t tax is sinply a Essptions mEt be mnde specifically by I Denvlopet Tx law awrtax in the hsiness profits and the cabinet. Deductions as under 1.11. Cki total incam 5 perrcnt (Isoed on incm), land rent tax levied on cmpsnies. £ 1976. 1.2 lae on Individuals (1) Pesident irdividuals. (Sudanese pmjnds) (Per cent) 1.21 Personal inre tax. Atmal tax paid by residents on Interest and domestic dividends are 0 - 1,500 exst 1Ino Tax Act, iie earned in Sudan or elseihere emlzlied as are emloyer's contributions 1,501 - 2,0WD 10 ND. 65 of 1971. including wages, salary, lnve and to retirement and medical sdcms. 2,001 - 3,000 20 sidck pay and all other rimmraution 3,001 - 5,0WD 35 received for e.loyent or services 5,001 - 7,000 40 reskred. 7,001 -10,000 50 10,001 -14,000 60 Over 14,000 70 1.22 Incom tax an Tax payable in hard currency on total ITo of Sudanese working abroad in An equivalent in hard currency of: Sudanese woriing ald. in frao eqplyeant, bei Foreign service or UN Internatiaul IS 200 for wrkers profits and rental iJ earned Agencies is et frao tax. IDe of IS 400 for eloyes abded. Person osring an pwplae haing wudkig abroad for less tden IS 600 for professionals secdent to pay tax in US dollars 183 days in a year is also e11t. Any IS 2000 for busi nien an thir imoe in Suamn before inm tax paid in hot country is a .costt. deductible fran tax payable to Sdan lbvernt. TABNE 5.10 Page 2 Sudan: Suymary of Tax System, 1961/82 (AU amits in Sudanese pcauds) Tax Nature of Tax EaeWtion and Daductions Rates 1.23 Business profits ard (2) NRnresidents. laid rent tax. (Sudanese pounds) (Percent) 1m Tax Act, 0 - 1,000 10 No. 65 of 1971 1,001 - 2,000 20 2,001 - 3,000 30 3,001- 5,OOD 40 5,001 - 7,ODO 50 Over 7,000 60 Tax on buainess profits and land rent Sam as 1.11. Resident persons other than coqpanies. 1.24 Develonpat tax. incase as described inder 1.11 (Sudanese Pbunds) (percent) Dvelopment Tax Lw payable by individuals, and 0 - 400 eempt (Imposed al Icme), partnerships. 401- 500 15 1976. 501 - 1,00 20 1,001 - 4,000 30 4,001 - 10,000 40 10,ODO - 30,000 50 Over 30,000 60 Surtax en hbsiness profits and land All inceom taxable under the personal 0 - 1ODO exmptC rent Jom paid by individials. inane tax (1.21) is enpt fron the Over 1000 5 development tax. 1.3 Other 1.31 Capital gains tax. Tax payable by individuals and Elpted are pins of less then IS 75,000 (1) Individuals. The Capital Gains cunVrnies on sale of urban land and frman the sale of a faily residence if a (Sudanese pounds) (Per cent) b,iIdirEs aid agriciltural laid. new residence is purchased within cme year 0 - 5,000 5 The gain is calalated by deductirig of the sale. 5,001 - 10,ODO 10 frao the sale price the purchase 10,001 - 20,000 15 price, costs of imrovments aid 20,001 - 30,000 20 selling costs. Gains on property held Over 30,000 25 less than three years are taxed as business iaa ne. (2) Ccapanies. On total gain: 40 per cent. TABLE 5.10 P'age 3 Sudan: Swrary of Tax System, 1981/82 (All amots in Sudanese pmids) Tsx Nature of Tax Fmixtioes and Dledctics Rates 2. Social Security None. NIe. Noe. Noxie. 3. Payrol t s Nam. None. None. Name. 4. Prprty taze Now. Now. No. Nxe at central government level. 5. Ts nn goods and ss I~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~- 5.1 Sals taxs 0' 5.11 Developmt The dhvelopast tax is an ad velorem All &eatically produced products sudc as 5 percent tax. Develop, mmifacturers' salea tax levied an fruits, vnetables and mat whidch do not t Tax Act, all locally anfactured products. pass thr-ah a muefacturing stae are 1974. Althwuh in principle a sirgle stage eqipe as are handicrafts produced without tax there is an elenmt of caseadig the use of mdinery. as sales by am mifacturer to another are not e,I t. 5.12 Sales tax on Gold Avalorem tax an sale zfacres payable 2 percent of sales price bW purde. 5.13 Sal tax on AdMvlore tax on sale of isported locanlly made furniture is e>rt. 5 percent of sales price imorted hishold hamsuold furniture furniture paable by purchaser. 5.14 Sales tax an Advalore tax an auction sales by Auctimn sals by private agencies are 10 percent of sales price auctions by government agencies. mnt. Covexuset agncies and phulic corporati-n, payable by purd-hser. TABLE 5.10 Page 4 Sudan: Summry of Tax System, 1981/82 (All momts in Sidanese pomuds) Tax Nature of Tax Femptiomn and Deductions Rates 5.2 Selective exisa 5.21 Selective eirAses Specific duties are payable by the Ecise or caticnticn duties nay be Examples of specific duties are: and caxuptien -nifacturer (exise duty) or refunded provided the article is exported (Suans pounds) Aiti an goods. qorter (ccuqticn duty) of a within six nuiths of payment of the tax Cigarettes 2.75 - 14.40 per kilo EiAes sxand bl group of cDdities includirg and provided the article has not been Benzing 68.05 per metric ton Oauicutin Dtties cigarettes, alooholic beerea, altered or transforsad. LiquDr 4.85 per liter of Ordiiwnc, 1924 as sr, and nmt. Ad valorea duties alcohol am ded. are levied an footwear, te-tiles, DIesel oil 2D.00 per metric ton a , et and electrical applimaces. Petroleum products ae Ad valorem rates include: tans on either spcific or ad valorem rates depending an the (Per cent) product. Petroleun gas 40 Shoe 10 Sugar 15 a' Cwent 10 5.22 Stabilizatim fund Special duties are levied on Now. LSd 575.82 to LSd 593.58 per 10,000 cigarettes excises. Fina l cigarettes, tea and coffee the depending on mnde of transport. LIJ (Dues on setting proaeeds of which are eairrked for up prices), the stabilization fund which finances Coffee 4CamAdlo ademt No. 2, cost-of-living sbsidies primilrily Tea l0mas/poond 1978. for wheat. TABLE 5.10 Page 5 Sudan: Sumnry of Tax System, 1981/82 (All amts in Sxuanese pounds) Tax Nature of Tax Exptioos and DIductions Rates 5.3 Selective tax an services 5.31 !ktel ReEdence A specific per night tax is levied cn lSd Fee. Legal hotel a| dations. First Class 0.50 reference not 2 star 0.35 available. I star 0.25 Pesious 0.10- 0.20 (effective 3 r c. 1981) 5.32 Sales tax on Hotel An advalore tax on hDtel cionmdatim, i , tourist lodging and 10 percent of the sales price Pestaurants and club tmwriaa services, restaurant and club services. services. 5.33 Airport tax. Lagal A specific tax is levied an aU 1ue ISd 3.0 per ticket. reference not pessmers departing cn internatinnal available. flightta 5.34 Sales tax on An advalorem tax levied an all Dowstic Air Travel Tickets are eainqt 5 of price of ticket Inaterntioral Air international trael tickets ard frm tax. Travel Tickets and mess bgge tickets. Emomma Boggsg Ticklts. 6. Tan on international trade 6.1 liport duties 6.11 cuasto duties The customS tariff consists of twor Eautions are limited to very few item There are 27 separate ad valorem rates ranging Cbstocs Ordirr- colUms, the first specifyirng the including nadicines, printed matter, from 5 percent to 625 percent with 40 percent arc, 1939 general duty and the secod the sporting goods and certain agricultural being the standard rate for a large nLzber of as amended. preferential rate for a limited ite,.. Raw materials and industrial goods includirg mny comr goods, bilding mber of products imported fran edlinery and equipment are subject to materials, railways and electricity generating Egypt. It is based on the Brussels custom duties. equipment. Tariff Nmmnclature. mDst duties are ad valorem and are applied to a fair market c.i.f. import price. Specific duties apply to a limited mmer of important onmdities including beer, liquor, toeco, coffee, ten and xatches. 10 percet of CIF valule 6.12 Additiaml Additional tax on CIF valme. Sme as 6.11. tax. Aholiahd Sqptaber 1979; reintroduced in Nov. 1981. TAME 5.10 Page 6 Sudan: 9imry of Tax System, 1981/82 (All awmts in Sidanese ponds) Tax bture of Tax xwatinm and Deductions Rates 6.14 Defeoe tax. Ad valorm duty on c.i.f. valo of EmptiaQ include agricultural equim.nt, 10 percent i-ports. fertilizers, insecticides and seeds; all raw mnterials ept tdose involved in the producticn of siddng rterials and al oho:1 beverages; medicines, sidm miLk, bicycles, dates, printed materia and products lported under incentive agreesots. 6.2 Exprt tes Eport duties are limited to products Esti-m i1l cotton, gronxhts, bst inportant rates irwlude: specifically inclxd in the tariff ses, vegetable oil, sarkade and (Per cant) 6.21 Export duties. but these Irnchis the principal dehydrated onion. Custos Ordin export crops -h as gum, t and Cotton seed 15 ane, 1939 as livestock. AU rates are ad valorem (Gm 20 amwned. and are calculated an f.a.s. vale. Cattle hides pikled 10 '1e cotton export duty ws abolished Sheep & oet skins 14 astartin sith tde 1979/80 crop. 6.22 Ive nt Tere is an ad valorem duty on the Einsption irrl,i cotton yarn, sesame, 5 percent 4s tax an f.o.b. value of all exports. grousduts, vegetable oil, dehydrated I exports. vE- onion. lopunt Tax Act, 1974. 7. Other tars 7.1 Sta duties Stas Taz Axct Staip duties are levied on 193 MA valorem rates are aplied cnly to and 1968 as anded. insctrents of various kinds. transfer of oietrship of firnncial securities. All other rates are specific. 7.2 oaad Tolls Tolls are collected m roads xand Gveruit and diplautic missions road tolls bridges. vehicles are exampt. L11.575 to Ls12.30 per trip deperdiig an the weight of vehicle. bridges Is.0.05 to IS 0.50 per crossing depesdig om the location of bridge. - 165 - Table 5.11 SUDAN: Military Economic Corporation Structure Military Economic Board - In charge of policies and strategic decisions for Military Economic Corporation. Command structure is as follows: President of the Republic Minister of Defense Commander-in-Chief of the Armed Forces General Assembly (The annual shareholders meeting - attended by commanders of the Armed Forces and managers of the corporations/companies - no voting rights). Central Board of Directors (Supported by Secretary to Board and Auditor General) Managing Director Deputy General Manager Administrations for: Finance Planning and Research Technical Evaluation Corporations and Companies 1. Military Industrial Corporation Existing Companies a) Military Printing Press b) Ammunition Factory c) Truck and Landrover Assembly Factory d) Clothing and Webbing Factory e) Spare Parts Factory (for ammunition plant) f) Furniture Factory Companies under Implementation a) Military Footwear b) Military Brick Factory 2. Military Commercial Corporation Existing Companies a) Khartoum Commercial and Shipping Co. b) Kordofan Trading & Engineering Co. c) Storage and Distribution Co. Companies under Implementation a) Food Security Co. (bakeries) b) Modern Eletronics Co. c) Africa Drilling Co. - 166 - 3. Military Agriculture Corporation Existing Companies a) Bagair (fruits, vegetables and fodder) b) Mechanised Farming - Gedaref c) Livestock - Belgravia Dairy 4. Military Transport Corporation Existing Companies a) Crop Protection Co. b) Road Transport Co. (Khartoum Bus Operations) (Intercity Truck Transport) Companies under Organization a) Air Cargo Co. b) River Transport Co. 5. Military Housing and Construction Corp. Existing Companies a) Military Corporation for Asphalt and Drilling (Road Unit) b) Military Construction and Contracting Corp. (Building Unit) 6. Military Services Corporation Existing Companies a) Medical Treatment Unit b) Educational Unit c) Military Company for Pharmaceuticals 7. Military Insurance and Banking Corporation Existing Companies a) Military Investment Co. b) Military Insurance Co. Source: Military Economic Board Table5.11 SUD/CEM/TAB.2 6.0: Notes on Monetary Data The banking system of Sudan consists of the Bank of Sudan, (the central bank and monetary authority), four domestic commercial banks 1/, all of which are nationalized, thirteen mixed ownership and foreign commercial banks 2/, two savings institutions 3/ and three specialized banks.4/. In addition, some foreign banks have agent offices in the Sudan, but these do not accept deposits or hold other accounts within the country. All monetary system data come from the Bank of Sudan. They are presented in this report without modification. The monetary survey covers the banking system. It also includes bonds issued by the Post Office Savings Bank. The reliability of the data is moderat ely good, though there may periodically be some discrepancies in reporting credit outstanding and the foreign exchange assets of commercial banks. The only unique feature in the Sudanese monetary accounts is the existence of two "blocked accounts" (ref. series 35 and 36).5/ These were established in 1979 to take account of the fact that substantial amounts of local currency had been paid by Government to the Bank of Sudan with orders for foreign currency payments that, in fact, did not take place because of the scarcity of foreign exchange. All such amounts associated with arrears accumulated through March 31, 1979 were placed in Blocked Account #1. The local counterpart to any arrears since then have been recorded in Blocked Account #2. The blocked accounts are charged as a liability to the Central Government; an offsetting "long term advance" is recorded as a Central Government asset (ref. series 37). "Other items, net" includes details such as intra-branch accounts of BOS and commercial banks float. 1/ El Nilein, Bank of Khartoum (which merged in early 1983 with the People's Cooperative Bank), Unity Bank, and Sudan Commercial Bank. 2/ Citibank, Bank of Commerce and Credit Intl., National Bank of Abu Dhabi, Faisal Islamic Bank, Sudan Interna'tional Bank, Bank of Oman, Sudan Islamic Bank, Sudanese Investment Bank, Development Bank, National Bank of Sudan, Tadaman Bank, Middle East Bank and Habib Bank. 3/ Post Office Savings Bank and Sudan Savings Bank. 4/ Agricultural Credit Bank of Sudan, Industrial Bank of Sudan, and Real Estates Bank (housing). The Government announced its intent in November 1981 to establish a Cooperatives Bank as well. 5/ "Series" refers to timeseries variables in the tables in this section of the statistical annex. The series numbers appear to the right of the line titles in the tables. SUO CEM-NOTES 3 10/13/83 PAGE 1 TABLE 6.1 (la) SUDAN: MONETARY SURVEY (OLD BASIS), 1974/75-1981/82 (LS MILLION AS OF JUNE 30) ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 FOREIGN ASSETS (NET) 1 -107.2 -192.6 -191.8 -218.0 -201.3 -279.7 -398.9 -893.5 DOMESTIC ASSETS (NET) 38 399.6 562.2 721.8 887.1 1,098.8 1,408.4 1,985.1 3,223.3 CLAIMS ON CENTRAL GOVERNMENT 2 212.8 300.8 466.0 593.5 913.7 1,131.6 1,400.0 1,590.8 (O/W LONG TERM ADVANCES)/A 37 - - - - 189.3 250.0 266.1 470.5 CLAIMS ON PRIVATE SECTOR, SPECIALIZED BANKS & PUBLIC CORPORATIONS 3 296.6 393.3 432.5 490.8 652.9 814.3 1,118.6 1,560.9 PRIVATE SECTOR 4 155.2 216.5 242.0 295.4 384.2 502.9 675.7 908.3 SPECIALIZED BANKS 5 20.5 22.5 22.5 23.0 23.0 23.0 23.0 28.3 PUBLIC CORPORATIONS 71 120.9 154.3 168.0 172.4 245.7 288.4 419.9 624.3 TOTAL ASSETS 18 402.3 501.5 706.7 866.3 1,365.3 1,666.1 2,119.7 2,258.2 0z MONEY & QUASI-MONEY (M2) 19 292.5 369.6 530.0 669.1 877.0 1,047.4 1,488.9 2,028.1 CURRENCY (MI) 20 119.3 130.1 170.5 222.8 327.8 388.3 516.0 718.3 PRIVATE DEMAND DEPOSITS 21 110.7 132.4 194.8 259.3 348.0 435.2 624.5 732.1 DEPOSIT OF PUB. ENTITIES 22 16.0 37.4 64.2 62.4 56.0 45.0 99.1 203.3 QUASI-MONEY 23 46.5 69.7 100.5 124.6 145.2 179.0 249.3 374.4 DEPOSITS OF GOVT. SECTOR 24 67.7 60.2 52.4 45.3 254.0 412.6 480.5 645.4 CENTRAL GOVT. 25 46.8 40.8 40.3 37.7 243.1 402.1 459.8 617.2 CURRENT ACCOUNTS 86 45.3 39.5 39.3 37.3 53.2 152.1 193.7 146.6 ARREARS 37 - - - - 189.3 250.0 266.1 470.5 BLOCKED ACCOUNT #1 /C 35 - - - - 168.8 168.8 168.8 168.8 BLOCKED ACCOUNT #2 /D 36 - - - - 20.5 81.2 97.3 301.7 COUNTERPART FUND 26 1.5 1.3 1.0 0.4 0.6 - - - LOCAL GOVT.& PROVINCIAL COUNCILS 27 10.5 9.0 8.4 7.6 10.9 10.5 20.8 28.3 SUDAN DEVELOPMENT CORP. 28 10.4 10.4 3.7 - - - - - OTHER ITEMS (NET) 29 42.1 71.7 124.3 151.9 234.3 206.1 150.3 -415.3 TOTAL LIABILITIES (M3) 30 402.3 501.5 706.8 866.3 1,365.3 1,666.1 2,119.7 2,258.2 10/ 13/8 3 PAGE 2 TABLE 6.1 (la) SUDAN: MONETARY SURVEY (OLD BASIS), 1974/75-1981/82 (LS MILLION AS OF JUNE 30) --------------------------------------------------------------------__-------__-------------------------- ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 MEMO: GROSS DOMESTIC PRODUCT 62 1,510.8 1,848.0 2,339.7 2,882.7 3,219.1 4,052.2 5,427.6 7,231.2 M2/GDP (%) 39 19.4 20.0 22.7 23.2 27.2 25.8 27.4 28.0 VELOCITY (GDP/M2) 40 5.2 5.0 4.4 4.3 3.7 3.9 3.6 3.6 SOURCE: BANK OF SUDAN & IMF "RECENT ECONOMIC DEVELOPMENTS" REPORTS, /A ADVANCE TO FINANCE LOCAL CURRENCY COUNTERPART TO BLOCKED ACCOUNT #1. /B KHARTOUM CENTRAL FOUNDRY AND SUDANESE MINING CORP. /C LOCAL CURRENCY COUNTERPART OF ARREARS THROUGH MARCH 31, 1979, /D LOCAL CURRENCY COUNTERPART OF ARREARS AFTER MARCH 31, 1979, TABLE SUD/6A/1 10/13/83 PAGE 1 TABLE 6.1 (lb) SUDAN: MONETARY SURVEY (OLD BASIS), 1974/75-1981/82 (ANNUAL CHANGE - LS MILLION) -------------------------------------------------------------------------__--__-------------------------- ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 -------------------------------------------------------------__--------------__-------------------------- FOREIGN ASSETS (NET) 1 -66.4 -85.4 0.8 -26.2 16.7 -78.4 -119.2 -494.6 DOMESTIC ASSETS (NET) 38 113.2 162.6 159.6 165.3 211.7 309.6 576.7 1,238.2 CLAIMS ON CENTRAL GOVERNMENT 2 58.2 88.0 165.2 127.5 320.2 217.9 268.4 190.8 (O/W LONG TERM ADVANCES)/A 37 - - - - 189.3 60.7 16.1 204.4 CLAIMS ON PRIVATE SECTOR, SPECIALIZED BANKS & PUBLIC CORPORATIONS 3 96.8 96.7 39.2 58.3 162.1 161.4 304.3 442.3 PRIVATE SECTOR 4 44.2 61.3 25.5 53.4 88.8 118.7 172.8 232.6 SPECIALIZED BANKS 5 3.5 2.0 - 0.5 - - - 5.3 PUBLIC CORPORATIONS 71 49.1 33.4 13.7 4.4 73.3 42.7 131.5 204.4 TOTAL ASSETS 18 88.7 99.2 205.2 159.6 499.0 300.8 453.6 138.5 MONEY & QUASI-MONEY (M2) 19 46.9 77.1 160.4 139.1 207.9 170.4 441.5 539 2 CURRENCY (MI) 20 13.5 10.8 40.4 52.3 105.0 60.5 127.7 202.3 PRIVATE DEMAND DEPOSITS 21 22.3 21.7 62.4 64.5 88.7 87.2 189.3 107.6 DEPOSIT OF PUB. ENTITIES 22 5.7 21.4 26.8 -1.8 -6.4 -11.0 54.1 104.2 QUASI-MONEY 23 5.3 23.2 30.8 24.1 20.6 33.8 70.3 125.1 DEPOSITS OF GOVT. SECTOR 24 32.3 -7.5 -7.8 -7.1 208.7 158.6 67.9 164.9 CENTRAL GOVT. 25 23.3 -6.0 -0.5 -2.6 205.4 159.0 57.7 157.4 CURRENT ACCOUNTS 86 23.7 -5.8 -0.2 -2.0 15.9 98.9 41.6 -47.1 ARREARS 37 - - - - 189.3 60.7 16.1 204.4 BLOCKED ACCOUNT #1 /C 35 - - - - 168.8 - - - BLOCKED ACCOUNT #2 /D 36 - - - - 20.5 60.7 16.1 204.4 COUNTERPART FUND 26 -0.4 -0.2 -0.3 -o.6 0.2 -0.6 - - LOCAL GOVT.& PROVINCIAL COUNCILS 27 2.0 -1.5 -0.6 -0.8 3.3 -0.4 10.3 7.5 SUDAN DEVELOPMENT CORP. 28 7.0 - -6.7 -3.7 - - - - OTHER ITEMS (NET) 29 9.5 29.6 52.6 27.6 82.4 -28.2 -55.8 -565.6 TOTAL LIABILITIES (M3) 30 88.7 99.2 205.3 159.5 499.0 300.8 453.6 138.5 ===== == == ===== ===== == == ===== ===== == == ===== ===== == = = = = 10/ 13/83 PAGE 2 TABLE 6.1 (lb) SUDAN: MONETARY SURVEY (OLD BASIS), 1974/75-1981/82 (ANNUAL CHANGE - LS MILLION) -----------------------------------------------------------------__----------__-------------------------- ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 MEMO: GROSS DOMESTIC PRODUCT 62 264.6 337.2 491.7 543.0 336.4 833.1 1,375.4 1,803.6 M2/GDP (%) 39 -0.3 0.6 2.7 0.5 4.0 -1.4 1.6 0.6 VELOCITY (GDP/M2) 40 0.1 -0.2 -0.6 -0.1 -0.6 0.2 -0.3 - ----------------------------------------------------------------------__-----__-------------------------- SOURCE: BANK OF SUDAN & IMF "RECENT ECONOMIC DEVELOPMENTS" REPORTS. /A ADVANCE TO FINANCE LOCAL CURRENCY COUNTERPART TO BLOCKED ACCOUNT #1. /B KHARTOUM CENTRAL FOUNDRY AND SUDANESE MINING CORP. /C LOCAL CURRENCY COUNTERPART OF ARREARS THROUGH MARCH 31, 1979. /D LOCAL CURRENCY COUNTERPART OF ARREARS AFTER MARCH 31, 1979, TABLE SUD/6A/ I Table 6.1 (2) SUDAN: Monetary Survey (New Basis), 1980-83 (in millions of Sudanese pounds) 1980 1981 1982 1983 June Dec. June Dec. June Dec. May Foreign Assets (net) -394.4 -389.5 -451.3 -1,044.5 -1,420.9 -2,114.6 -2,324.8 Devaluation offsetsl/ -- -- -- 558.6 558.6 1,038.8 1,114.7 1981 devaluation -- -- -- 558.6 558.6 558.6 558.6 1982 devaluation -- -- -- -- -- 480.2 556.1 Rescheduling adjustment2/ -- -- -- -- 305.8 485.1 566.3 Domestic assets 1,955.1 2,278.7 2,518.6 2,907.4 3,151.7 3,443.7 3,714.0 Claims on Government 1,140.8 1,286.1 1,400.0 1,565.7 1,590.8 1,543.8 1,546.9 Claims on public entities 288.4 376.7 419.9 535.0 624.3 726.9 883.1 Claims on private sector 525.9 615.9 698.7 806.7 936.6 1,173.1 1,284.0 Total Assets - total liabilities 1,605.7 1,889.2 2,067.3 2,421.5 2,595.2 2,852.5 3,070.1 1 Money and quasi-money 1,047.4 1,261.4 1,445.1 1,655.9 1,899.9 2,308.3 2,582.7 Currency 388.3 508.2 516.2 629.8 718.3 820.4 909.5 U Private sector demand demands 435.2 532.4 624.5 649.6 732.1 882.7 1,010.7 Public entities deposits 45.0 29.3 55.4 86.2 75.1 147.3 94.0 Private sector savings and time deposits 179.0 191.5 249.1 290.3 374.4 457.9 565.8 Government deposits (current) 162.6 227.7 214.5 95.5 178.3 77.9 55.4 Central Government 152.1 210.2 193.7 73.2 150.0 50.9 23.4 Regional and local governments 10.5 17.5 20.8 22.3 28.3 27.0 32.0 Central government blocked accounts3/ 250.0 271.9 266.0 279.1 318.5 358.3 333.9 Gross blocked accounts 250.0 271.9 266.0 431.2 470.6 669.9 Less devaluation offsets 1981 -- -- -- -152.1 -152.1 -152.1 -152.1 Less devaluation offsets 1982 -- -- -- -- -- -159.5 -186.8 Other items (net) 145.7 128.1 141.7 319.0 198.5 108.0 98.1 Source: IMF staff estimates. N.B. This table reflects an effort to account more accurately for, inter alia, the impact of recent devaluation on assets of the banking system. 1/ Counterpart of devaluation adjustments made to foreign assets (net) on account of November 1981 and November 1982 devaluation. 2/ Counterpart of rescheduled liabilities to commercial banks assumed by Bank of Sudan in June 1982. 5/ Block accounts corresponding to arrears since April 1979. 06/27/83 PAGE 1 TABLE 6.2 (a) SUDAN: FACTORS AFFECTING MONETARY EXPANSION, 1974/75-1982/83 (MILLIONS OF POUNDS) ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 MONEY AND QUASI-MONEY 19 292.5 369.6 530.0 669.1 877.0 1,047.4 1,488.9 2,028.1 CONTRACTIONARY IMPACT OF EXTERNAL SECTOR 107 -107.2 -192.6 -191.8 -218.0 -221.8 -360.9 -496.2 -1,195.2 FOREIGN ASSETS (NET) 1 -107.2 -192.6 -191.8 -218.0 -201.3 -279.7 -398.9 -893.5 DOMESTIC COUNTERPART OF GOVT EXTERNAL ARREARS /A 36 - - - - 20.5 81.2 97.3 301.7 NET DOMESTIC ASSETS 38 399.6 562.2 721.8 887.1 1,098.8 1,408.4 1,985.1 3,223.3 CLAIMS ON GOVT. (NET) 108 145.1 240.6 413.6 548.2 680.2 800.2 1,016.8 1,247.1 CLAIMS ON PUBLIC ENTITIES 71 120.9 154.3 168.0 172.4 245.7 288.4 419.9 624.3 CLAIMS ON PRIVATE SECTOR AND SPECIALIZED BANKS 110 175.7 239.0 264.5 318.4 407.2 525.9 698.7 936.9 OTHER ITEMS (NET) 111 -42.1 -71.7 -124.3 -151.9 -234.3 -206.1 -150.3 415.3 ADJUSTMENTS 80 - - - - - - - - SOURCE: BANK OF SUDAN, IMF AND BANK STAFF ESTIMATES A/ INCLUDES ONLY ARREARS AFTER MARCH 1978 (BLOCKED ACCT. #2) TABLE SUD/6A/2 07/07/83 PAGE 1 TABLE 6.2 (b) SUDAN: FACTORS AFFECTING MONETARY EXPANSION, 1974/75-1981/82 (GROWTH RATES - ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 MONEY AND QUASI-MONEY 19 19.1 26.4 43.4 26.2 31.1 19.4 42.2 36.2 CONTRACTIONARY IMPACT OF EXTERNAL SECTOR 107 162.7 79.7 -0.4 13.7 1.7 62.7 37.5 140.9 FOREIGN ASSETS (NET) 1 162.7 79.7 -0.4 13.7 -7.7 38.9 42.6 124.0 DOMESTIC COUNTERPART OF GOVT EXTERNAL ARREARS /A 36 - - - - - 296.1 19.8 210.1 NET DOMESTIC ASSETS 38 39.5 40.7 28.4 22.9 23.9 28.2 40.9 62.4 CLAIMS ON GOVT. (NET) 108 21.7 65.8 71.9 32.5 24.1 17.6 27.1 22.6 CLAIMS ON PUBLIC ENTITIES 71 68.4 27.6 8.9 2.6 42.5 17.4 45.6 48.7 CLAIMS ON PRIVATE SECTOR AND SPECIALIZED BANKS 110 37.3 36.0 10.7 20.4 27.9 29.2 32.9 34.1 OTHER ITEMS (NET) 111 29.1 70.3 73.4 22.2 54.2 -12.0 -27.1 - ADJUSTMENTS 80 - - - - - - - … ___-----------------______-- - --_ -…-- - ----------------------- SOURCE: BANK OF SUDAN, IMF AND BANK STAFF ESTIMATES A/ INCLUDES ONLY ARREARS AFTER MARCH 1978 (BLOCKED ACCT. #2) DERIVED FROM TABLE SUD/6A/2 10/04/83 TABLE 6.3 SUDAN: COMMERCIAL BANK CREDIT OUTSTANDING TO PRIVATE SECTOR BY USE (CREDIT OUTSTANDING-LS MILLIONS) ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 COMMERCIAL CREDITS 41 143.5 199.4 218.5 250.9 312.1 395.0 541.8 712.8 944.0 CROP CULTIVATION 42 - 0.5 0.3 0.7 1.5 - 0.7 4.1 3.0 COTTON 43 - - - - -0.4 2.9 1.5 OTHER 44 - - - - - 1.1 1.2 1.5 EXPORTS 45 51.8 86.0 83.8 79.0 91.6 109.4 145.2 224.1 284.4 COTTON 46 4.2 8.6 7.1 4.4 5.7 3.6 6.0 9.5 18.6 COTTON SEED 47 - 0.2 1.4 1.2 - - 3.7 3.0 1.5 GUM ARABIC 48 - 17.0 16.1 15.6 13.0 7.1 4.8 4.8 2.5 SESAME 49 - 16.6 12.4 7.0 9.8 27.8 35.7 33.2 37.8 GROUNDNUTS 50 - 19.8 15.4 12.6 11.2 7.3 20.0 52.5 66.4 OTHER 51 47.6 23.8 31.4 38.2 51.9 63.6 75.0 121.1 157.6 IMPORTS 52 14.4 16.5 18.0 33.8 39.8 57.1 79.0 132.8 224.1 PURCHASES 53 14.4 12.7 15.6 31.6 36.4 57.1 70.4 108.9 184.1 CREDIT SALES 54 - 3.8 2.4 2.2 3.4 - 8.6 23.9 40.0 MISCELLANEOUS 55 77.3 96.4 116.4 137.4 179.1 228.5 316.9 351.8 432.5 INDUSTRIAL ENTERPRISES 56 - 62.3 80.6 96.0 122.6 150.8 221.7 244.4 275.4 PRIVATE AND PROFESSIONAL 57 - 1.5 2.2 4.8 8.9 - 3.8 3.5 6.6 OTHER 58 77.3 32.6 33.6 36.6 47.6 77.7 91.4 103.9 150.6 MEDIUM AND LONG-TERM ADVANCES 59 11.7 17.1 23.5 44.5 72.1 107.9 133.9 195.8 327.1 CAPITAL INVESTMENT 60 - 5.0 8.7 33.0 59.6 95.8 119.3 151.0 197.0 OTHtR 61 11.7 12.1 14.8 11.5 12.5 12.2 14.7 44.8 130.1 TOTAL 4 155.2 216.5 242.0 295.4 384.2 502.9 675.7 908.6 1,271.2 SOURCE: BANK OF SUDAN, IMF AND BANK STAFF ESTIMATES /1 DATA PRIOR TO 1973 ARE FOR YEARS ENDING DEC.31. TABLE SUD/6A/3 10/04/83 TABLE 6.4 SUDAN: CREDIT OUTSTANDING TO PUBLIC ENTITIES, 1974/75-1982/83 (MILLIONS OF SUDANESE POUNDS AS OF JUNE 30) --------------------------------------------------------------------__-------__----------------------------------- ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 -------------------------------------------------------------__--------------__----------------------------------- AGRICULTURAL ENTITIES 65 94.8 119.8 140.4 136.6 184.5 215.2 315.3 495.5 770.5 SUDAN GEZIRA BOARD 9 42.2 54.5 50.9 41.2 57.1 63.1 105.9 124.6 166.8 PUBLIC AG PROD. CORP.3 RAHADA 8 14.8 19.1 60.8 79.2 111.0 134.7 129.7 132.0 134.8 AGRICULTURAL REFORM CORP. 66 31.0 33.5 18.5 7.2 7.1 7.1 7.1 7.2 7.2 EL SUKI SCHEME 67 5.8 9.1 5.5 5.5 5.5 5.3 10.7 18.2 25.3 MECHANIZED FARMING CORP. 10 0.3 0.7 1.0 1.0 1.3 2.6 3.6 4.5 6.3 ANIMAL PRODUCTION CORP. 11 0.7 0.7 0.8 - - - - - - PUBLIC CORP. FOR IRRIG. & EARTH MOVING 14 - 2.2 2.9 2.5 2.5 2.4 3.0 3.0 3.0 OTHER AGRICULTURE 63 - - - - - - 55.3 131.0 199.8 COTTON PUBLIC CORP. 124 - - - - - - - 75.0 227.3 INDUSTRIAL ENTITIES 68 4.0 7.3 7.0 13.5 21.9 28.6 46.6 72.9 97.9 SUGAR AND DISTILLING CORP. 13 4.0 7.3 7.0 13.2 21.6 28.2 46.1 72.4 97.3 FOOD INDUSTRIES CORPORATION 15 - - - 0.3 0.3 0.4 0.4 0.4 0.4 OTHER 12 - - - - - - 0.1 0.1 0.2 PUBLIC UTILITIES 69 22.0 27.2 20.6 22.3 39.0 44.4 48.9 48.9 55.4 SUDAN RAILWAYS 6 16.0 19.0 20.6 22.3 37.1 42.0 44.9 44.9 44.8 PEWC 7 6.0 8.2 - - 0.5 1.0 2.6 2.6 9.2 SUDAN AIRWAYS 17 - - - - 1.4 1.4 1.4 1.4 1.4 OTHER 70 0.1 - - - 0.3 0.2 9.1 7.0 4.0 EXHIB. AND'FAIRS CORP. 16 - - - - 0.1 0.1 0.1 - - SUGAR TRADING CORP. 81 0.1 - - - 0.2 0.1 9.1 7.0 4.0 TOTAL 71 120.9 154.3 168.0 172.4 245.7 288.4 419.9 624.3 927.8 =s==X=== ======== =sX===== = =========== a=w===,-====,=m== ,==,===a= ,,,,,, SOURCE: BANK OF SUDAN A/ PAPC WAS DISSOLVED JUNE 30, 1980, BUT FINAL ALLOCATION OF DEBTS HAS NOT YET BEEN MADE TAB SUD/6A/4 Table 6.5 SUDAN: Commercial Banks' Interest Rates, 1978, 1981 and 1983(a) (percent) February February November January 1978 1981 1983 Lending rates Discount of bills of exchange 13.0 15.0 17.0 20.0 Advances against bills of exchange 13.5 15.5 17.5 20.0 Advances to industrial) 12.0 14.0 17.0 borrowers ) 10.0-14.5 Overdrafts and other ) advances (range) ) 12.0-16.5 14.0-18.5 17.0-20.5 Deposit rates Non-governmental customerrs Demand deposits - - - - Notice deposits 15 days) 1.0 1.0 3.0 6.0 Fixed deposits 3 months 6.0 8.5 10.5 13.5 6 months 7.0 9.0 11.0 14.0 9 months 8.0 9.5 11.5 14.5 12 months 8.5 10.0 12.0 15.0 Savings deposits 8.0 8.0 10.0 13.0 Pension & Provident funds provident funds 4.0 8.0 10.0 13.0 Foreign currency deposits Linked to rates in International - int'l. markets (b) rates Governmental customers Fixed deposits (range) 3.0-4.0 Savings deposits 4.0 (a) The structure of interest rates was unchanged between Februawry 1978 and February 1981 and between November 1981 and January 1983. (b) Since June 1980 Source: Bank of Sudan Table Su/01 sud-int.rate 06/27/83 TABLE 6.6 SUDAN: GROSS RESERVES AND NET FOREIGN ASSETS, 1974/75-1981/82 (MILLIONS OF US DOLLARS OUTSTANDING ON JUNE 30) --------------------------------------------------------------------___-------__------------------------ ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 MONETARY AUTHORITIES 112 -263.0 -531.0 -589.0 -604.0 -602.0 -751.0 -1,168.2 -1,206.1 CONVERTIBLE FOREIGN EXCHG. 113 42.0 33.0 25.0 22.0 31.0 61.0 70.4 53.5 NET BILATERAL CLAIMS 114 -34.0 -38.0 -36.0 -41.0 -37.0 -58.0 -86.6 -102.9 NET IMF POSITION 115 -116.0 -152.0 -134.0 -92.0 -145.0 -235.0 -523.8 -350.3 BOS ST EXTERNAL LIABILITIES 116 -66.0 -271.0 -340.0 -391.0 -384.0 -456.0 -540.6 -709.2 KUWAIT LOAN LIABILITIES 117 -89.0 -103.0 -104.0 -102.0 -67.0 -63.0 -87.6 -97.2 COMMERCIAL BANKS 118 -44.0 -22.0 38.0 58.0 99.0 191.0 370.2 223.2 ASSETS 119 8.0 26.0 55.0 81.0 120.0 265.0 546.2 334.9 X LIABILITIES 120 -52.0 -48.0 -17.0 -23.0 -21.0 -74.0 -176.0 -111.7 NET FOREIGN ASSETS 121 -307.0 -553.0 -551.0 -546.0 -503.0 -560.0 -798.0 -982.9 ======= ==== ========= == = == = ====== ====……= == , MEMO: INTL RESERVES (ul.d) 77 36.4 23.6 23.1 28.4 67.4 48.7 17.0 20.5 SOURCE: BANK OF SUDAN DERIVED FROM TABLE SUD/6A/6 06/27/83 TABLE 6.7 SUDAN: RESERVES, BORROWING AND LIQUIDITY POSITION OF COMMERCIAL BANKS, 1974/75-1981/82 (MILLIONS OF SUDANESE POUNDS) ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 CASH RESERVES /A 72 22.5 32.4 89.5 163.2 234.6 231.0 260.3 422.6 BORROWING FROM BANK OF SUDAN 73 20.5 17.9 15.2 28.6 36.3 54.8 78.1 80.1 NET RESERVES 74 2.0 14.5 74.3 134.6 198.3 176.2 182.2 342.5 NET FOREIGN ASSETS 78 -15.5 -13.8 13.2 23.2 39.7 95.7 185.1 202.9 TOTAL DEPOSIT LIABILITIES 75 150.0 197.5 285.8 384.2 487.3 604.2 873.5 1,119.2 CASH RATIO (X) 76 15.0 16.4 31.3 42.5 48.1 38.2 29.8 37.8 SOURCE: BANK OF SUDAN A/ INCLUDES CASH HOLDINGS AND DEPOSITS WITH BANK OF SUDAN. IN ADDITION THE BANKS HOLD TREASURY BILLS AGAINST WHICH THEY CAN BORROW FROM THE BANK OF SUDAN. DERIVED FROM TABLE SUD/6A/7 Table 6.8 jStlDAN: Exchange Rate History Page 1 of 2 Date Major Changes 7/1/76 Official exchange rate maintained at LS 0.36/$ rate which had prevailed since before independence in 1955. Exchange tax/subsidy scheme introduced which yielded effective rate of LS 0.40/$ for non-cotton exports and imports. Workers remittances enjoyed incentive rate of LS 0.57/$. 6/8/78 Official rate changed to LS 0.40/$. Exchange tax/subsidy increased yielding effective rate of LS 0.50 on all non-cotton exports and on imports. 3/27/79 Rate for workers remittances raised to LS 0.67/$. 7/13/79 Tax/subsidy scheme extended to cotton placing rate for all merchandise trade at LS 0.50/$. ° 9/16/79 Tax/subsidy scheme, worker remittance rate and nil-value import system abolished and official rate set at LS 0.50/$. Parallel rate of LS 0.80/$ established for selected imports and exports. 9/21/80 All exports except cotton and all imports except pharmaceuticals and "government imports" (petroleum, sugar, wheat/wheat flour, milk and cotton production inputs) moved from official to parallel market. 6/8/81 Cotton exports and imported inputs moved to parallel rate LS 0.80/$; all exports now at parallel rate. 7/15/81 Street market legalized and exchange dealers licensed. Free market rate of about LS 1.05/$. 11/9/81 Official and parallel rates unified at LS 0.90/$. Three fourths of non-cotton export proceeds, all cotton proceeds and Government imports" valued at unified rate; remainder at free rate (about LS 1.10/$). page 2 of 2 Table 6.8 SUDAN: Exchange Rate Hirtory7 6/30/82 Maximum buying/selling rates of LS 1.13/$ and LS 1.15/$ set by decree for "free" market, which shrinks sharply. Black market begins to emerge at previous free rate of about LS 1.40/$. 8/25/82 Maximum rates on free market rate removed. 11/15/82 Official rate changed to LS 1.30/$. Free market rate stablizes at about LS 1.75/$ by end of month. 2/27/83 Four commercial banks (later extended to 11) licensed to deal at free market rate. 3/6/83 Free market rate through commercial banks applied to 25 percent of export proceeds. 5/18/83 Licenses of foreign exchange dealers revoked, as were those of five commercial banks who raised rate from that unofficially sanctioned by government to free market rate (about LS 2.05/$). Table6.8 SUD/CEM/NOTES 3 7.0 Notes on Agricultural Data The basic data for crops on the public irrigated schemes is collected either by the scheme management or by staff from the Ministry of Agriculture. The latter also collect data on production from other areas and publish periodic statistical bulletins in Arabic. This information is later published in English by the Department of Agricultural Statistics in the Ministry of Agriculture. Primary data on production and export of cotton lint is generated by the Cotton Public Corporation, which publishes the Sudan Cotton Bulletin. Data on other agricultural exports comes from customs invoices (ref. Note 3.0). Useful data on agricultural product prices is regularly collected by the Internal Trade and Prices Section of the Department of Statistics and is published in Internal Trade Statistics and Price Indices. The quality of data on the agricultural sector varies considerably depending on the product and, to a lesser extent, the year. Data on crops such as cotton, groundnuts, sorghum and wheat that are grown in the public irrigated subsector have generally been fairly reliable, though there have been problems in the last few years because sample harvesting of selected areas has been reduced. Data on Southern Region agricultural production is currently based almost entirely on estimates, though a proper system for collecting such data at the field level is now being developed. The national accounts data deriving from the data on agricultural output appears to be fairly good except for livestock and horticulture (ref. Note 2.0). 10/05/83 PAGE 1 TABLE 7.1 SUDAN: AGRICULTURAL PRODUCTION, 1974/75-1982/83 (VOLM1IE:'000 KT; AREA:'000 FEDDANS; YIELDS.KG/FD & KANTOR/FD) …------------- ------ - -------- - -- - -------- ------------ -----------__ -------- -- -__ ---- - --- ------------ --- --- -- --- - ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 …------------------…-----------------------------------------__--------------__---------------_________________ COTTON TOTAL PRODUCTION SEED COTTON VOLUME 5 659.0 332.0 468.0 566.0 406.0 336.2 306.1 460.7 574.2 AREA 6 1,282.0 1,062.0 1,035.0 1,187.0 1,072.0 1,085.0 972.0 868.5 953.3 YIELD 7 3.6 2.2 3.2 3.3 2.7 2.2 2.2 3.7 4.2 LONG STAPLE SEED COTTON VOLUME 8 529.0 227.0 327.0 299.0 184.0 186.0 167.7 256.7 247.1 AREA 9 856.0 589.0 659.0 548.0 482.0 618.0 586.0 514.3 463.2 YIELD 10 4.3 2.7 3.5 3.8 2.7 2.1 2.0 3.5 3.7 MEDIUM STAPLE SEED COTTON VOLUME 23 114.0 85.0 119.0 245.0 205.0 130.2 116.4 193.3 310.1 AREA 24 285.0 305.0 231.0 471.0 461.0 320.0 255.0 275.9 400.1 YIELD 25 2.8 2.0 3.6 3.6 3.1 2.8 3.2 4.9 5.4 0 SHORT STAPLE SEED COTTON VOLUME 41 16.0 20.0 22.0 22.0 17.0 20.0 22.0 10.7 17.0 AREA 42 141.0 168.0 145.0 168.0 129.0 147.0 131.0 78.3 90.0 YIELD 43 0.8 0.8 1.1 0.9 0.9 1.0 1.2 1.0 1.3 TOTAL COTTON LINT (THS MT) 224 224.7 111.0 161.3 200.5 143.1 117.7 109.0 164.0 207.3 LONG STAPLE 225 179.9 77.2 111.2 101.7 62.6 63.2 57.0 87.3 84.0 MEDIUM/SNORT STAPLE 230 44.8 33.8 50.2 98.8 80.6 54.4 52.0 77.5 124.3 TOTAL LINT - BALES (THS) 229 1,177.4 581.6 845.4 1,050.4 749.9 616.5 571.3 859.4 1,086.4 GROUNDNUTS TOTAL GROUNDNUT PRODUCTION VOLUME 57 928.0 796.0 738.0 1,027.0 813.0 852.0 741.4 719.7 501.4 AREA 58 1,792.0 2,321.0 1,880.0 2,661.0 2,326.0 2,352.0 2,215.0 2,346.0 1,617.6 YIELD 59 517.9 343.0 392.6 385.9 349.5 362.2 334.7 306.8 310.0 GROUNDNUTS, IRRIGATED VOLUME 51 456.0 411.0 255.0 426.0 246.0 405.0 193.4 278.7 186.4 AREA 52 384.0 553.0 346.0 380.0 311.0 408.0 285.0 411.0 232.6 YIELD 53 1,187.5 743.2 737.0 1,121.1 791.0 992.6 678.6 678.1 801.4 10/05/83 PAGE 2 TABLE 7.1 SUDAN: AGRICULTURAL PRODUCTION, 1974/75-1982/83 (VOLUM1E:'000; AREA:'000 FEDDANS; YIELD: .'G/FD & KANTOR/FD) ---------------------------------------------------------------___------------__---------------------------------- ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 GROUNDNUTS, RAINFED VOLUME 54 472.0 385.0 483.0 601.0 567.0 447.0 548.0 441.0 315.0 AREA 55 1,408.0 1,768.0 1,534.0 2,281.0 2,015.0 1,944.0 1,930.0 1,935.0 1,385.0 YIELD 56 335.2 217.8 314.9 263.5 281.4 229.9 283.9 227.9 227.4 SORGHUM TOTAL SORGHUM PRODUCTION VOLUME 72 1,681.0 1,991.0 1,800.0 2,017.0 2,386.0 1,669.0 2,103.1 3,345.0 1,906.0 AREA 73 5,577.0 6,311.0 6,287.0 6,662.0 7,202.0 6,349.0 6,967.0 9,207.0 8,491.0 YIELD 74 301.4 315.5 286.3 302.8 331.3 262.9 301.9 363.3 224.5 SORGHUM, IRRIGATED VOLUME 66 171.0 288.0 212.0 268.0 259.0 168.0 141.5 279.0 211.0 AREA 67 402.0 628.0 471.0 539.0 591.0 443.0 503.0 606.0 530.0 YIELD 68 425.4 458.6 450.1 497.2 438.2 379.2 281.4 460.4 398.1 SORGHUM, MECHANIZED RAINFED VOLUME 185 1,112.0 1,099.0 908.0 927.0 1,115.0 933.0 1,257.6 2,179.0 1,182.0 m AREA 186 3,584.0 3,062.0 3,012.0 3,063.0 3,297.0 3,216.0 3,434.0 5,533.0 5,198.0 - YIELD 187 310.3 358.9 301.5 302.6 338.2 290.1 366.2 393.8 227.4 SORGHUM, TRADITIONAL RAINFED VOLUME 188 398.0 604.0 680.0 822.0 1,012.0 568.0 704.0 887.0 513.0 AREA 189 1,591.0 2,621.0 2,804.0 3,060.0 3,314.0 2,690.0 3,030.0 3,068.0 2,763.0 YIELD 190 250.2 230.4 242.5 268.6 305.4 211.2 232.3 289.1 185.7 SESAME TOTAL SESAME PRODUCTION VOLUME 60 234.0 218.0 247.0 245.0 214.0 209.0 211.0 242.0 140.0 AREA 61 2,178.0 2,126.0 2,288.0 2,349.0 2,057.0 1,989.0 2,011.0 1,971.0 1,230.0 YIELD 62 107.4 102.5 108.0 104.3 104.0 105.1 104.9 122.8 113.8 SESAME, MECHANIZED RAINFED VOLUME 179 58.0 54.0 85.0 79.0 36.0 57.0 59.0 70.0 42.0 AREA 180 466.0 457.0 576.0 582.0 313.0 496.0 490.0 444.0 330.0 YIELD 181 124.4 118.2 147.6 135.7 115.0 114.9 120.4 157.7 127.3 10/05/83 PAGE 3 TABLE 7.1 SUDAN: AGRICULTURAL PRODUCTION, 1974/75-1982/83 (VOLUME;'000 MT; AREA:'000 FEDDANS: YIELD: KG/FlD & XANTOP/FD) --------------------------------------------------------------__ -------------__ ------------------_______ ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 …----------- ----- - ---------------- - - --------------- ----------__ ----------- ---__ ------- -- ------------------ ---- -- MILLET MILLET VOLUME 75 402.0 370.0 472.0 487.0 550.0 309.0 491.0 573.0 282.0 AREA 76 2,584.0 2,701.0 2,773.0 2,948.0 3,079.0 2,320.0 2,598.0 2,618.0 2,678.0 YIELD 77 155.6 137.0 170.2 165.2 178.6 133.2 189.0 218.9 105.3 WHEAT WHEAT VOLUME 63 269.0 255.0 294.0 317.0 168.0 233.0 130.0 163.0 185.0 AREA 64 591.0 690.0 639.0 602.0 566.0 457.0 437.0 354.0 236.0 YIELD 65 455.2 369.6 460.1 526.6 296.8 509.8 297.5 460.4 783.9 RICE Co RICE VOLUME 191 7.0 7.0 11.0 13.0 8.0 8.0 12.0 12.0 12.0 AREA 192 15.0 17.0 23.0 28.0 20.0 30.0 25.0 25.0 25.0 YIELD 193 466.7 411.8 478.3 464.3 400.0 266.7 480.0 480.0 480.0 SUGAR SUGARCANE VOLUME 313 1,565.0 1,341.0 1,635.0 1,623.0 1,340.0 1,613.0 2,691.0 2,675.0 - AREA 314 - - - - - - - - YIELD 315 - - - - - - - - WHITE SUGAR - VOLUME 316 133.0 114.0 139.0 138.0 119.5 139.1 237.2 239.3 - TOTAL CULTIVATED AREA 194 14,019.0 15,228.0 14,925.0 16,437.0 16,322.0 14,582.0 15,225.0 17,389.5 15,230.9 IRRIGATED 195 2,470.0 2,701.0 2,340.0 2,501.0 2,388.0 2,257.0 2,086.0 2,180.3 1,881.3 MECHANIZED RAINFED 196 4,113.0 3,600.0 3,617.0 3,712.0 3,653.0 3,731.0 3,929.0 5,982.9 5,533.6 TRADITIONAL RAINFED 197 7,436.0 8,927.0 8,968.0 10,224.0 10,281.0 8,594.0 9,210.0 9,226.3 7,816.0 …------------------------------------------------------------__--------------__---------------------------------- SOURCE: MINISTRY OF AGRICULTURE AND BANK STAFF ESTIMATES TABLE SUD/7A/1 Table 7.2 SUDAN: Livestock, Poultry, and Fish Production, 1978/79-1981/82 (in thousands of tons unless otherwise stated) 1978/79 1979/80 1980/81 1981/821/ Livestock meat Cattle 259 264 280 288 Lamb 72 81 83 86 Goat 22 32 33 34 Camel 30 26 27 27 Hides and Skins (thousands of pieces) I Cattle 1,557 1,652 1,753 2,758 Lamb 3,961 4,053 4,167 4,305 co Goat 2,241 2,295 2,389 2,437 Camel 101 104 108 109 Poultry, dairy and fish Eggs 26 32 36 41 Poultry meat 15 16 17 19 Milk and by-products 22 25 26 27 Fish 32 29 27 30 Source: Ministry of Agriculture and Irrigation (estimates). 1/ Preliminary. 07/25/8 3 TABLE 7.3 SUDAN: PHYSICAL BALANCE, COTTON, 1974/75-1982/83 ('000 MT) ---------------------------------------------------------------------__------__----------------------------------- ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 SEED COTTON: LS PRODUCTION 8 529.0 227.0 327.0 299.0 184.0 186.0 167.7 256.7 247.1 MSS PRODUCTION 44 118.0 89.0 132.0 260.0 212.0 143.2 136.8 201.9 332.6 LS LINT: PRODUCTION 225 179.9 77.2 111.2 101.7 62.6 63.2 57.0 87.3 84.0 DOMESTIC CONSUMPTION 227 2.0 8.0 3.0 4.0 5.0 6.0 9.0 4.0 5.0 CHANGE IN STOCKS A/ 228 102.2 -5.4 -43.5 -6.3 5.4 -40.1 3.7 18.1 16.3 EXPORTS A/ 226 84.1 183.2 112.7 114.5 92.2 97.6 53.5 29.9 67.0 MSS LINT: PRODUCTION 230 44.8 33.8 50.2 98.8 80.6 54.4 52.0 76.7 123.3 DOMESTIC CONSUMPTION 232 12.0 8.0 10.0 6.0 5.0 12.0 15.0 7.0 9.0 CHANGE IN STOCKS A/ 233 8.6 -2.3 -12.4 12.0 16.7 -11.3 7.2 17.3 16.7 EXPORTS A/ 231 22.8 35.2 38.2 28.1 76.1 86.9 35.2 19.7 53.0 COTTON SEED: X LS PRODUCTION 234 306.8 131.7 189.7 173.4 106.7 107.9 97.3 148.9 143.3 MSS PRODUCTION 235 66.1 49.8 73.9 145.6 118.7 80.2 76.6 113.1 186.3 TOTAL SEED PRODUCTION 236 372.9 181.5 263.6 319.0 225.4 188.1 173.9 262.0 329.6 EXPORTS 237 5.0 - - - - - - - - SEED (1OKG/FD) 238 12.2 9.8 10.1 11.2 10.3 10.7 9.7 8.6 9.5 WASTE (5%) 239 18.6 9.1 13.2 16.0 11.3 9.4 8.7 13.1 16.5 AV FOR CRUSHING 240 341.7 156.8 226.6 236.2 156.2 143.1 130.6 198.3 303.6 COTTON SEED OIL: PRODUCTION (16%) 241 54.7 25.1 36.3 37.8 25.0 22.9 20.9 31.7 48.6 DOMESTIC CONSUMPTION 243 44.0 25.1 36.3 37.8 25.0 22.9 20.9 31.7 48.6 EXPORTS 242 10.7 - - - - - - - - COTTON SEED CAKE: PRODUCTION (78%) 244 266.5 122.3 176.7 184.2 121.8 111.6 101.9 154.7 236.8 DOMESTIC CONSUMPTION 246 232.1 -8.1 82.4 164.3 59.5 89.1 100.8 154.7 236.8 EXPORTS 245 34.4 130.3 94.3 19.9 62.3 22.5 1.0 - - -------------------------------------------------------------------------__--__----------------------------------- SOURCE: MINISTRY OF AGRICULTURE AND BANK STAFF ESTIMATES N.B.: DATA IN THIS TABLE ARE BASED ON PROJECTED PRODUCTION AND EXPORTS, OTHER VALUES ARE DERIVED USING HISTORICALLY VALID COEFFICIENTS. A/ EXPORTS AND CHANGES IN STOCK RESULTING FROM A GIVEN CROP YEAR APPEAR IN THE FOLLOWING YEAR IN THIS TABLE. TABLE SUD/7A/3 07/25/83 TABLE 7.4 SUDAN: PHYSICAL BALANCE, SESAME, 1974/75-1982/83 ('000 MT) …------------------------------------------------------------------__--------__------------______________________ ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 …----------------------------…-------------------------------__--------------__-------___________________________ SESAME PRODUCTION 60 234.0 218.0 247.0 245.0 214.0 209.0 211.0 242.0 140.0 DIRECT FOOD (2KG/CAP.) 212 30.4 31.6 32.8 34.2 35.4 36.8 38.4 39.6 40.7 SEED (3KG/FD) 213 6.5 6.4 6.9 7.0 6.2 6.0 6.0 5.9 3.7 WASTE (5%) 214 11.7 10.9 12.4 12.3 10.7 10.5 10.6 12.1 7.0 EXPORTS AS SEED 211 92.7 60.4 108.6 93.4 37.3 40.1 45.1 63.6 60.0 AV FOR CRUSHING 215 92.7 108.7 86.4 98.1 124.5 115.7 110.9 120.8 50.8 SESAME OIL PRODUCTION (48%) 216 44.5 52.2 41.5 47.1 59.7 55.5 53.2 58.0 24.4 X DOM CONSUMPTION 218 42.8 51.7 41.4 44.5 58.1 53.2 53.2 57.3 24.4 00 EXPORTS 217 1.7 0.5 0.1 2.6 1.6 2.3 0.0 0.7 - SESAME CAKE PRODUCTION 219 46.3 54.4 43.2 49.0 62.2 57.9 55.4 60.4 25.4 DOM PRODUCTION 221 41.0 5.3 6.5 44.3 34.1 45.5 38.2 36.0 25.4 EXPORTS 220 5.3 49.1 36.7 4.7 28.1 12.4 17.2 24.4 - -------------------------------------------------------------------------__--__------------------------------_____ SOURCE: MINISTRY OF AGRICULTURE AND BANK STAFF ESTIMATES. N.B.: DATA IN THIS TABLE ARE BASED ON PROJECTED PRODUCTION AND EXPORTS; OTHER VALUES ARE DERIVED USING HISTORICALLY VALID COEFFICIENTS. TABLE SUD/7A/4 07/ 25/83 TABLE 7.5 SUDAN: PHYSICAL BALANCE, GROUNDNUTS, 1974/75-1982/83 ('000 MT) -------------------------------------------------------------------__--------__----------------------------------- ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 -------------------------------------------------------------__--------------__----------------------------------- GROUNDNUTS PRODUCTION 57 928.0 796.0 738.0 1,027.0 813.0 852.0 741.4 719.7 501.4 EXPORTS IN SHELL 222 3.0 3.0 25.0 17.0 15.0 13.0 20.0 20.0 10.0 DOMESTIC SUPPLY IN SHELL 223 925.0 793.0 713.0 1,010.0 798.0 839.0 721.4 699.7 491.4 DOMESTIC SUPPLY, SHELLED (60%)198 555.0 475.8 427.8 606.0 478.8 503.4 432.8 419.8 294.8 DIRECT FOOD (2.5KG/CAP) 201 38.0 39.5 41.0 42.8 44.3 46.0 48.0 49.4 50.9 SEED (25KG/FD) 202 44.8 58.0 47.0 66.5 58.2 58.8 55.4 58.7 40.4 WASTE (6%) 203 33.4 28.7 26.6 37.0 29.3 30.7 26.7 25.9 18.1 EXPORTS, SHELLED 200 146.7 279.3 224.0 135.1 40.0 19.4 69.9 118.2 4.7 AV FOR CRUSHING 204 292.1 70.3 89.3 324.7 307.1 348.6 232.8 167.6 180.7 X GROUNDNUT OIL PRODUCTION (45%) A/ 205 131.4 31.7 40.2 146.1 138.2 156.8 104.8 75.4 81.3 DOMESTIC CONSUMPTION 207 124.4 26.3 24.7 129.3 98.5 137.5 79.4 56.3 76.3 EXPORTS 206 7.0 5.3 15.5 16.8 39.7 19.4 25.4 19.1 5.0 GROUNDNUT CAKE PRODUCTION (50%) A/ 208 146.0 35.2 44.6 162.3 153.6 174.3 116.4 83.8 90.3 DOMESTIC CONSUMPTION B/ 210 129.7 -9.5 -34.0 108.0 58.0 54.1 -11.3 3.1 - EXPORTS 209 16.3 44.7 78.7 54.4 95.6 120.2 127.7 80.7 148.8 SOURCE: MINISTRY OF AGRICULTURE AND BANK STAFF ESTIMATES. N.B.: DATA IN THIS TABLE ARE BASED ON PROJECTED PRODUCTION AND EXPORTS; OTHER VALUES ARE DERIVED USING HISTORICALLY VALID COEFFICIENTS. A/ INDICATES FACTOR USED TO ESTIMATE ITEM BASED ON RELEVANT AVAILABLE DATA. A 5% WASTE FACTOR HAS BEEN BUILT INTO CRUSHING PRODUCTION PRODUCTION ESTIMATE. B/ NEGATIVE DOMESTIC CONSUMPTION REFLECTS CHANGES IN STOCK. TABLE SUD/7A/5 07/ 25/8 3 TABLE 7.6 SUDAN: DOMESTIC USE OF EDIBLE OIL AND OIL CAKE, 1974/75-1982/83 ('000 MT) ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 EDIBLE OIL COTTON SEED OIL 243 44.0 25.1 36.3 37.8 25.0 22.9 20.9 31.7 48.6 SESAME OIL 218 42.8 51.7 41.4 44.5 58.1 53.2 53.2 57.3 24.4 GROUNDNUT OIL 207 124.4 26.3 24.7 129.3 98.5 137.5 79.4 56.3 76.3 IMPORTS, TALLOW & OIL 248 2.0 2.2 5.0 2.9 2.3 5.8 8.2 25.0 30.0 TOTAL OIL USE 247 213.1 105.3 107.4 214.5 183.9 219.4 161.7 170.4 179.2 USE PER CAPITA 250 14.0 6.7 6.5 12.5 10.4 11.9 8.4 8.6 8.8 OIL CAKE COTTON SEED CAKE 246 232.1 -8.1 82.4 164.3 59.5 89.1 100.8 154.7 236.8 SEAME CAKE 221 41.0 5.3 6.5 44.3 34.1 45.5 38.2 36.0 25.4 GROUNDNUT CAKE 210 129.7 -9.5 -34.0 108.0 58.0 54.1 -11.3 3.1 - TOTAL CAKE USE 249 402.8 -12.3 54.9 316.6 151.6 188.6 127.8 193.8 262.2 USE PER CAPITA 251 26.5 -0.8 3.3 18.5 8.6 10.3 6.7 9.8 10.0 SOURCE: MINISTRY OF AGRICULTURE AND BANK STAFF ESTIMATES. N.B. NEGATIVE USE DATA INDICATE CHANGES IN STOCK. DATA IN THIS TABLE ARE BASED ON PROJECTED PRODUCTION AND EXPORTS; OTHER VALUES ARE DERIVED USING HISTORICALLY VALID COEFFICIENTS TABLE SUD/7A/6 10/05/83 TABLE 7.7 SUDAN: CEREALS: SUPPLY AND UTILIZATION, 1974/75-1982/83 (1000 NT) ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 WHEAT GROSS SUPPLY 63 269.0 255.0 294.0 317.0 168.0 233.0 130.0 163.0 185.0 SEED (50 KG/FD) 261 29.6 34.5 32.0 30.1 28.3 22.9 21.9 17.0 11.8 WASTE (5X) 260 13.5 12.8 14.7 15.9 8.4 11.7 6.5 7.1 9.3 NET DON SUPPLY 262 226.0 207.8 247.4 271.1 131.3 198.5 101.6 138.9 164.0 IMPORT, GRAIN 263 141.1 134.3 164.7 123.6 83.7 171.1 59.9 230.0 350.0 IMPORT, FLOUR 264 - 15.4 - 22.0 24.5 194.5 99.0 105.8 100.0 TOTAL IMPORT, GRAIN EQ. 266 141.1 152.5 164.7 149.6 112.6 400.6 176.7 354.8 468.0 TOTAL SUPPLY - CONSUMPTION 267 367.1 360.2 412.1 420.6 243.9 599.1 278.4 493.7 632.0 CONSUMPTION PER CAPITA 268 24.2 22.8 25.1 24.6 13.8 32.6 14.5 24.0 31.0 MILLET GROSS SUPPLY 75 402.0 370.0 472.0 487.0 550.0 309.0 491.0 573.0 282.0 SEED (2.5 KG/FD) 271 6.5 6.8 6.9 7.4 7.7 5.8 6.5 6.5 6.7 WASTE (5%) 270 20.1 18.5 23.6 24.4 27.5 15.5 24.6 28.7 14.1 EXPORTS 273 0.4 2.0 5.7 1.8 1.6 2.8 1.6 - 2.0 NET DON SUPPLY - CONSUMPTION 274 375.0 342.7 435.8 453.5 513.2 285.0 458.4 537.8 259.2 CONSUMPTION PER CAPITA 284 - - - - - - - - 12.7 SORGHUM GROSS SUPPLY 72 1,681.0 1,991.0 1,800.0 2,017.0 2,386.0 1,669.0 2,103.1 3,345.0 1,906.0 SEED (2.5 KG/FD) 276 13.9 15.8 15.7 16.7 18.0 15.9 17.4 22.8 21.2 WASTE (5%) 275 84.1 99.6 90.0 100.9 119.3 83.5 105.2 165.1 95.3 EXPORTS 278 74.8 39.1 108.6 58.2 55.5 340.8 320.4 259.8 290.0 NET DOM SUPPLY - CONSUMPTION 279 1,508.2 1,836.6 1,585.7 1,841.3 2,193.2 1,228.9 1,660.2 2,897.2 1,499.5 CONSUMPTION PER CAPITA 280 99.2 116.2 96.7 107.7 123.9 66.8 86.5 144.4 81.8 OTHER CEREAL PRODUCTS, NET 281 - - - - - - - - 90.0 TOTAL GROSS CEREALS CONSUMPTION 282 2,250.3 2,539.5 2,433.5 2,715.4 2,950.3 2,112.9 2,396.9 3,928.7 2,480.7 GROSS CONSUMPTION PER CAPITA 283 148.0 160.7 148.4 158.8 166.7 114.8 124.8 195.5 130.0 SOURCE: MINISTRY OF AGRICULTURE AND BANK STAFF ESTIMATES. N.B.: DATA IN THIS TABLE ARE BASED ON PROJECTED PRODUCTION AND EXPORTS; OTHER VALUES ARE DERIVED USING HISTORICALLY VALID COEFFICIENTS. TABLE SUD/7A/7 07/25/8 3 PAGE 1 TABLE 7.8 SUDAN: COTTON PRODUCTION, 1974/75-1982/83 (VOLUNE:'000 MT; AREA:'000 FEDDANS; YIELD:KANTAR/FD) ITEM 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 LONG-STAPLE COTTON TOTAL PRODUCTION VOLUME 8 529.0 227.0 327.0 299.0 184.0 186.0 167.7 256.7 247.1 AREA 9 856.0 589.0 659.0 548.0 482.0 618.0 586.0 514.3 463.2 YIELD 10 4.3 2.7 3.5 3.8 2.7 2.1 2.0 3.5 3.7 GEZIRA VOLUME 11 386.4 147.0 245.3 270.9 169.4 145.0 128.0 206.7 211.0 AREA 12 588.0 381.0 477.0 474.0 409.0 447.0 425.0 379.9 369.0 YIELD 13 4.6 2.7 3.6 4.0 2.9 2.3 2.1 3.8 4.0 BLUE NILE VOLUME 14 - - - - - 15.0 15.4 13.6 5.7 AREA 15 - - - - - 60.0 60.0 51.3 18.2 YIELD 16 - - - - - 1.8 1.8 1.9 2.2 WHITE NILE VOLUME 17 40.0 23