A Macroeconomic Framework: Storyline and the Poverty Strategy

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A Macroeconomic FrameworkStoryline and the
Poverty Strategy

• Sudan JAM
• The Economic Policy Cluster (Int. team, World
  Bank)
• Civil Society Consultations
• Khartoum, Dec. 1, 2004
• Yei, Dec., 2004

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A Macroeconomic Framework for the Poverty
Strategy

• The Emerging Storyline
• Toward a National Poverty Strategy
• Initial conditions
• Meeting the Poverty MDG by 2015

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A Macroeconomic Framework for the Poverty
Strategy

• Five critical challenges
• - Restructuring the budget
• - Avoiding the oil curse
• - enhancing aid effectiveness
• - Resolving the debt crisis
• - Constituting a two-tier monetary and
  financial system

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A Macroeconomic Framework for the Poverty Strategy

• The Emerging Storyline

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The Emerging Storyline

• Two overarching objectives
• measurably reduce the risks of future civil wars
• make a meaningful impact on poverty in the
  context of an overall efforts toward the MDG
  goals
• In the immediate post-conflict period (first six
  months or year), considerable efforts and
  resources must be directed toward more practical
  livelihood issues
• In the medium to longer-run, however, the growth
  agenda will undoubtedly dominate the program

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The Emerging Storyline

• As a post-conflict economy following the longest
  civil war in Africa, the Sudanese economy is
  poised to realize substantial catch-up growth
• Annual per capita growth of 5 to 7 is possible
  for the next ten to twelve years
• However, achieving and sustaining high rates of
  pro-poor growth would require much more than
  catch-up effects or oil-based enclave growth
• Sudan has achieved very high growth rates since
  the mid 1990s but it has net been pro-poor

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The Emerging Storyline

• Growth must happen in a context of a National
  Poverty Eradication Strategy (PES), with the
  dual overarching objectives of
• peace consolidation
• Achieving the MDGs, especially the poverty target
  by 2015
• Implementing the PES in the context of the peace
  agreement require that the economic policy
  framework should explicitly account for
• Address inequalities beyond the traditional
  north-south divide
• the two systems-one country model

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The Emerging Storyline

• The PES must be supported by better management of
  resources, including oil and aid resources
• Avoid the resource cursesuch as the Dutch
  Disease effect and the potentially corrosive
  effects on governance of oil dependency
• The PES would require timely and sufficient aid,
  including to deal to with Sudans external debt
  and good policy environment

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The Emerging Storyline

• Improved economic and political governance is of
  paramount importance for sustaining growth and
  for transparent and accountable management of
  resources
• broad-based political governance and genuine
  democratic transitions
• decentralization of power and resources
• enhanced technical capacity of state institutions

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A Macroeconomic Framework for the Poverty Strategy

• Toward a National Poverty Eradication Strategy
  (PES)

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The National Poverty Eradication Strategy (PES)

• Understanding the genesis of the development
  tragedy
• - Why has Sudan been so conflictive and so poor?
  (Figure I.1)

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Figure I.1 The Genesis of the Tragedy
Why are most Nations Poor?
Why Are some Nations Conflictive

• Poverty
• Economic exclusion,
• horizontal inequities
• Lack of Social cohesion
• Non-participatory
• politics
• marginalization
• Adverse External
• intervention
• Bad neighborhood
• History ..etc

• Failures in
• Human capital
• Infrastructure
• Stable Macro
• Economic integration
• Micro efficiency

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Toward a National Poverty Strategy (contd.)

• Escaping the Poverty-Conflict Trap two
  overarching development goals (Figure I.2)
• Achieve peace and reduce the hazards of future
  conflicts
• Achieve a lasting impact on poverty and make
  progress on other MDGs
• In turn, the achievement of those two objectives
  is likely to make unity attractive and preserve
  the integrity of the country (or at least ensure
  a peaceful divorce)

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Toward a National Poverty Strategy (contd.)

• A joint concept note on the National Poverty
  Eradication Strategy between GOS SPLM, a major
  first step
• Main tenets of the Strategy
• High and sustained pro-poor growth
• Stable macro-economic environment

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Toward a National Poverty Strategy (contd.)

• Transparency and accountability in managing
  resources
• Avoiding the oil curse
• Enhancing aid effectiveness
• Explicit focus on the South and other
  marginalized regions
• Implications of the peace agreement for
  development policy
• Reallocation of resources from the center to the
  regions
• Realignment of economic and political power from
  the central government to the states