The depth of Sudan’s catastrophic economic reality was emphasized Tuesday when the International Monetary Fund announced that the country’s economic growth has slowed from 7% to 4% this year due primarily to lower revenue from oil exports. Recent oil exploration –largely through Chinese investment– has fundamentally altered the nature of Sudan’s historically agrarian economy. During recent years, oil quickly became far and away the most lucrative and important Sudanese export and spawned a construction boom in Khartoum meant to rival Arab capitals such as Abu Dhabi and Dubai. However, the global economic downturn and subsequent crash in oil prices have put the breaks on Khartoum’s grandiose dreams, such as those demonstrated here:
Falling oil prices and the central bank’s intervention to sustain the local currency’s value caused foreign reserves to drop in March to about $300 million, compared to $2 billion in August of last year. Sudan was only able to make one third of its debt payments for the first quarter of 2009, leading to delays in the scheduled disbursement of funds. Sudan now has more foreign debt than any other country in sub-Saharan Africa.
Adding to Sudan’s financial woes is the crucial question of how the country’s oil reportedly sizable oil reserves will be shared between the North and South regardless of the outcome of the 2011 self-determination referendum for the South. Many of Sudan’s existing oil fields sit along the as-yet-undemarcated North-South border. Mounting mistrust between the northern and southern governments is only exacerbated by suspicions over the current distribution of revenues from these fields by the northern government in Khartoum to the semi-autonomous government of southern Sudan in Juba.
According to the report, “The Sudanese authorities have little option but to significantly tighten macroeconomic policies.” In June, Sudan requested an 18-month IMF monitoring program in order to promote growth and rebuild foreign exchange reserves. The government has asked its creditors to reschedule payments that are due this year on its $34 billion dollar debt.