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Sudan: why so gloomy?

Sudan's economy looks to be in somewhat better shape than for years. That in itself is remarkable for such a disaster-prone country. But even supporters of the contentious regime are far from optimistic about Sudan's future prospects.

THE REGIME OF GENERAL Omar Hassan al Bashir is bullish about the future. After years of economic stagnation and decline, Sudan is finally on the mend, it claims. According to the Ministry of Finance, the GDP grew 11.3% in 1991. The IMF does not quite agree, but the Fund's estimate of 9.3% is close enough to the official version.

In February of this year the government introduced drastic market reforms. The measures included abolition of fixed exchange rates for the Sudanese pound, withdrawal of all subsidies on petrol and basic food items, and an end to most forms of government intervention in the economy. These were the major points in the Three Year Salvation Programme (TYSP), described by one Sudanese journalist as "a clear economic and social philosophy...based upon the spiritual belief of the majority of society: Islam."

Then why is almost everyone in Khartoum outside the regime (and some inside it), so gloomy? Quite simply, the country is at the brink of bankruptcy, starved of hard currency, bled by the civil war in the south, and cold-shouldered by its former friends and allies.

Sudanese and foreign sources in Khartoum agree that the war in the south is crippling Sudan. Estimates of its cost range between one and two million dollars a day. World Bank officials say that the cost of weaponry, mostly from China and North Korea, is being covered by Iran, but most other expenses are shouldered by the government.

The regime's major preoccupation is ensuring a steady supply of fuel to the army and the general populace. Until April Libya was providing Sudan with 100,000 tonnes of oil a month on soft terms. But Tripoli, strapped for cash itself and facing a United Nations embargo, wanted to be repaid. In debt somewhere between $500m and $800m, Khartoum could not pay. Sudanese officials had hoped to cut a similar deal with Iran, but Tehran declined.

Now Sudan buys oil on the spot market in Rotterdam, with a monthly bill of around $20m. Oil company sources say Sudan has a 45-day stockpile, but warn that if oil prices firm up Sudan could be in for serious trouble.

The Sudanese government continues to hope for a breakthrough in the effort to start a domestic oil industry, but progress has been painfully slow. Sudan has proven reserves of 250m barrels, mostly in the south. In June, a consortium of businessmen close to the National Islamic Front leader, Hassan al Turabi, bought Chevron Oil Company's remaining oil concessions. Despite acute logistical bottlenecks, the consortium hopes to have production going before the end of the year.

The agricultural sector is largely responsible for Sudan's impressive growth rates, but even there the picture is not so clear. The government is predicting a 1992 wheat harvest of around one million tonnes, about four times the level of production in 1989. Last year's harvest of 850,000 tons allowed the government to suspend wheat imports for the first time in decades.

The sorghum crop has been equally encouraging. Much of the increase, however, has occurred because of the government's lack of sufficient hard currency reserves to buy fertilizers and pesticides for cotton. Their response has been to expand the area planted with wheat and sorghum, and then to tout its success at achieving food self-sufficiency.

Some of the excess sorghum is being sent as relief aid to Somalia, while at the same time the government is pressing, apparently with little success, to persuade the European Community, to waive import duties. European diplomats, already incensed that Sudan is sending frozen meat to Iraq, are bewildered at what one called this "brazen effrontery." How can such a request be made when Western relief organisations continue to mount a massive effort in the southern part of the country, they ask?

The Sudanese pound took a predictable bashing when it was floated in February. It was devalued six-fold upon flotation, and has continued to diminish in value ever since. This freefall so alarmed the government that it recently cracked down on unlicensed money changers, who offer a rate of about S|pounds~20 more than the official "floated" rate of about S|pounds~120 to the dollar.

For all its blemishes, the Bashir regime is not without genuine talent. Many Sudanese speak highly of individual cabinet ministers, particularly the finance minister, Abdul Rahim Hamdi, and the agricultural minister, Ahmed Ali Geneif.

Hamdi, who worked for several years in London with Al Baraka Islamic Bank (first as chief economist then as vice chairman), is widely credited with successfully convincing Bashir that Sudan had to institute the reforms being pressed by the IMF. Geneif, an agricultural researcher by training, has championed sound agricultural policies while protecting his ministry from the purges which have decimated ranks elsewhere in the government.

Meanwhile, the lot of the average Sudanese continues to worsen. Inflation is conservatively estimated at 150%, rapidly eroding the average monthly salary in Khartoum of about $40. The price of bread has jumped 500% since February.

The return of 200,000-300,000 Sudanese nationals from the Gulf has further complicated the situation. Remittances from abroad were a mere $106m in 1991/92, compared to $445m in 1987/88.

Conditions in Khartoum continue to deteriorate, spurred on by the arrival over the last few years of one million people fleeing drought, famine and anarchy in the western state of Darfur and another 800,000 running from the civil war in the south. The government claims to be providing 700,000 families with monthly stipends of S|pounds~600, hardly enough to survive on. The difference is made up by foreign and local relief organisations.

Before the Iraqi invasion of Kuwait, Sudan could have turned to Saudi Arabia and the other Gulf states for assistance. But everything went sour when Khartoum came down on the side of Baghdad, and the situation has not improved since. Relations with Saudi Arabia, says one senior Western diplomat, are "zero - the worst they've ever been."

The Sudanese are unhappy with the Saudis for a variety of reasons, the latest being the cancellation of an Organisation of the Islamic Conference (OIC) meeting in Khartoum scheduled for December. The Saudis are being blamed for this unexpected decision by the OIC secretariat. Iran provides some assistance, but hardly enough to make much difference, Sudanese complain.

Overshadowing everything in Sudan is a ruthless security apparatus which has frightened the populace into submission. When subsidies were removed on food and petrol in February, many in Khartoum expected riots and demonstrations.

By and large, nothing happened. As one Western-educated Sudanese professional said: "What saves this government is that the people are accustomed to so little. They just want to eat."

If the Bashir government can feed its people, come to some sort of peaceful agreement with the southern rebels, and break out of its diplomatic isolation, there may be hope yet for Sudan. If it fails the right conditions for Sudan's deliverance may never crop up again.


GDP: S|pounds~116,351m; $1,278m GDP per capita: $49 Population: 26m GDP growth: 1990 -- 1.5% Inflation: 1990 100%; 1991 200%

* Political stability in Khartoum should be the least of Sudan's problems in 1993. The National Islamic Front, which provides the backbone of the regime, has managed to insert its members into many key positions in the administration. The Umma party of Sadiq al Mahdi and the Democratic Unionists of Mohammed al Mirghani are widely seen as discredited. The rebellion in the south, led by the divided Sudanese People's Liberation Army, will simmer on inconclusively, adding to the drain on government financial resources. Besides the threat of popular discontent, one impending problem for the regime of General Omar Hassan al Bashir could be the quarrel between the radicals and conservatives among his supporters, especially as regards rebuilding links with alienated foreign allies.

* The Sudanese economy will remain traumatised by the twin effects of drought and civil war. The regiment has been prepared to take hard decisions avoided by previous governments, such as removing subsidies on consumer goods and floating the Sudanese pound. But these measures have fuelled inflation and made life more difficult for the majority of the population.
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Title Annotation:Outlook 1993
Publication:The Middle East
Date:Jan 1, 1993
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