Sudan to cut budget, tax more, employ fewer foreigners


Sudan wants to overcome a severe economic crisis by cutting spending and imports, taxing more people and relying less on foreign workers, President Omar Hassan al-Bashir said.

Sudan’s economy was thrown into turmoil after its former civil war foe South Sudan became independent on July 9, taking away much of the country’s oil production — the lifeline for both countries.

Annual inflation stood at 21 percent in September as the loss of oil revenues hit the inflow of foreign currency, making imports of food and consumer articles more expensive, Reuters reports.

In a speech at an economic conference, Bashir said Sudan would have to cut expenditures to make up for a gap in the budget and foreign trade balance due to the secession of South Sudan.

He did not say by how much expenditures would be cut. The central bank said on Wednesday in its monthly economic report that the next budget was facing “big challenges.”
“How do we bridge the gap…without increasing taxes? We need to broaden the tax base to tax those outside the tax system,” Bashir told the conference, attended by members of his ruling National Congress Party.

He said Sudan would have to lower imports to reduce pressure on the Sudanese pound, which has tumbled against the dollar. On the black market the pound is trading as much as 60 percent below the official rate.

The African country also needs to rely less on foreign workers, most of whom come from Egypt, Eritrea or other neighbours. More than 1 million southern Sudanese still live in the north and now need work and residency permits.
“We have unemployment and there are no jobs, and at the same time we have a large number of foreign laborers,” Bashir said. “This creates social and economic problems, and these are the problems we want to solve.”

Sudan’s non-oil exports in the January-September period came to $1.58 billion compared with $1.21 billion for the January-August period in 2010, the central bank said on Wednesday. It did not give figures for January-September 2010.

Exports of gold, the key earner on the export list, reached $977.41 million in January-September this year, up 33 percent compared with January-August 2010, it said.

The central bank did not say how much Khartoum made from oil exports. Last year the whole of Sudan made around $10 billion from oil, which was shared equally between north and south.

Landlocked South Sudan needs to pay Khartoum to use its oil export facilities, but diplomats say it has not paid anything yet since independence as both sides have failed to agree on a fee. Analysts say the fee will be much less than the 50-50 split. Sudan wants to increase oil exploration from its remaining fields, which mainly serve domestic consumption.