afrol News, 5 June - Sudan's newly found economic growth leg, pushed by higher oil prices and production, has brought both opportunities and challenges for the war troubled African state, International Monetary Fund (IMF) has observed.

Top of the challenges, as acknowledged by the Sudanese government in their letter of intent to IMF is 'failure to implement numerous peace arrangements, disarmament, and fiscal decentralization.'

The government further admits: "We recognize that there have been some policy shortcomings, in particular related to public financial management".

Having seen a great performance in the economy in the past year, netting a growth rate of 10 percent, well above the inflation at a low 8 percent, Sudan could still not put controls on its public expenditure, therefore having to succumb to heavy domestic arrears of about 2.8 percent of GDP.

"… delays in implementing key structural measures related to public spending controls and to the establishment of a centralized domestic debt unit contributed to the emergence of new domestic arrears in 2007 of some SDG 2.6 billion. As a result, the fiscal deficit on a commitment basis was 5.4 percent of GDP," observed IMF.

The body has however warned that even with the positive outlook in 2008 of increased oil revenues to the Sudanese government, there were urgent measures to be taken to ensure macroeconomic stability and balance of payments.

IMF further observed that while economic outlook could be positive, there were other worrying factors, such as the peace and security situation as well as the drop in non-oil revenues, especially those factored in by the recent floods that hit the region, thereby impacting on agriculture produce.

"Sudan's economic outlook is favorable, but will hinge on the authorities' ability to correct past slippages, reestablish fiscal credibility, and restore the safety and soundness of the financial system. This will not be an easy task given the heavy commitments imposed by various peace agreements and an uncertain regional environment," said IMF adding that the rise in world food prices further poses a particular challenge to containing inflation, to which it says the country requires cautious monetary and fiscal policy implementation.

IMF views Sudan's progress under the current 18-month SMP as having generally been good, notwithstanding important challenges. Sudan, like several other countries in the region, suffered some of the worst floods in decades - resulting in significant damage to agricultural land, infrastructure and households.

Amongst key remedies recommended for the country are the revival of private sector activities in especially awakening non-oil revenues and reboosting investment confidence, while at the same time embarking on financial management reforms for restoring fiscal credibility.

Sudan is one of Africa's oil producing potentials, but with peace and stability a long gone factor in the country, investment flows have been rather cautious and not to full capacity. Yesterdays call-off by the United States on Sudan's normalization process could be one of the saddest draw-backs in the country's peace process, or unless, as expressed by the Sudanese government, all factions in the national political stake could re-find a new commitment to the much needed national stability and peace.

By staff writer

© afrol News

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