Friday, October 31, 2008

Sudan says financial crisis fallout will impact oil revenue

Sudan Tribune / October 26, 2008 (KHARTOUM) – The Sudanese government acknowledged today that the global financial crisis will have a negative impact on the economy and the 2009 budget.

The spokesperson of the Sudanese cabinet Omer Salih told the official news agency (SUNA) that the credit turmoil and its possible repercussions were subject of discussion in the session held on Saturday.

Salih said that the governor of Sudan’s Central bank and the finance minister submitted a report which concluded that the country is not immune from the crisis.

“The report stated that Sudan is not directly affected due to the sanctions imposed years ago which served as a big economic protector” the Sudanese official said.

“However the report affirmed that the economy will be impacted by the crisis because of the decline in oil prices which affects the real revenue of the state” he added.

Oil exports represent 65% of revenue for Sudan and helped fuel its unprecedented economic growth despite US economic sanctions.

However the global financial crisis has led investors to believe that oil demand will be severely curtailed in developed nations and possibly China and India. Crude oil is down more than 56 percent from its all-time peak of $147.27 reached July 11.

Last week the Al-Sudani newspaper quoting sources at the finance ministry said that Khartoum established a committee to evaluate the economic situation and come up with recommendations to prevent a possible crisis.

The committee is contemplating an “exceptional budget” for 2009 that will likely cut down on expenditure and focuses on new revenue opportunities besides petroleum industry.

Furthermore the government will scrutinize adherence to the budget for the remaining months of 2008.

The cabinet spokesperson also suggested that Sudan’s trade partners will be hit by the economic slowdown.

The state finance and economy minister Dr. Lual Deng called on the government to develop non-petroleum industries such as agriculture and customs. He further said that conservation efforts should focus on electricity, water and fuel consumption particularly in the government offices.

Adding to Sudan’s woes is a weakening Euro against the dollar. Last year Sudan central bank converted all its dollar reserves into Euro in order to circumvent both current and future sanctions imposed by the US.

Moreover the central bank issued recommendations to commercial banks, government departments and private businesses to move their transactions abroad and balances to currencies other than U.S. dollars.