Revenues, Transparency and Pro-poor Spending Sudan Consortium Meeting In Paris 9-10 March 2006 March 2006 - PowerPoint PPT Presentation

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Revenues, Transparency and Pro-poor Spending Sudan Consortium Meeting In Paris 9-10 March 2006 March 2006

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Creating more jobs to reduce unemployment rates from 19% to 12% in 2006. ... Upgrading human and institutional capacity, especially at the state levels. ... – PowerPoint PPT presentation

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Title: Revenues, Transparency and Pro-poor Spending Sudan Consortium Meeting In Paris 9-10 March 2006 March 2006


1
Revenues, Transparency and Pro-poor
SpendingSudan Consortium Meeting In Paris 9-10
March 2006March 2006
Republic of the Sudan
2
Section One Economic Performance up to 2005
  • 1. Economic Growth
  • An average GDP Growth rate of 7 was achieved
    during the period 2000-2005
  • Output structure is lead by agriculture but with
    lower growth rates of average 4 a year.
  • Average output growth was lead by petroleum
    (115), construction (7.4), electricity (5.6),
    and manufacturing (9.8).
  • GDP growth rate is expected to couch about 10 in
    year 2006.

3
  • 2. Fiscal Policy
  • Prudent fiscal policy consistent with the IMF
    staff monitored Program since 1997 continued.
  • A Cash Management Unit (CMU) has been established
    since 2003, and strengthened with skills.
  • A cash plan is drawn for every fiscal year
  • A large and Medium tax payer unit has been
    established and is now fully operational .
  • Tax exemptions has been confined to the
    legislations.
  • The Cabinet is in the process of issuing a decree
    to abolish the renewal of expired previous tax
    exemptions.
  • Increased non oil sector revenues in 2004
    2005.
  • A High level Policy Formulation and Monitoring
    Committee for tightening foreign borrowing
    policy was established is now operational.

4
  • Public sector expenditure structure has improved
    with wages and salaries percentage contribution
    to total expenditure decreased from 38.3 in 1996
    to 21 in 2005.
  • Resources for development were increased from
    4.4 of GDP in 2003 to 6.3 in 2005 and 8 of GDP
    expected in 2006.
  • Central Government spending on social services
    delivery increased from 0.8 of GDP in 2001 to
    2.6 in 2005 and 3 is expected to 2006.
  • Augmenting poverty reduction funding to 5 of
    GDP in 2006.
  • Increasing transfers to the States from 3.7 of
    total expenditure in 1996 to 6.3 in 2004 , 34
    in 2005 and 38 budgeted in 2006.
  • Creating more jobs to reduce unemployment rates
    from 19 to 12 in 2006.
  • Reduction of epidemic and contagious diseases in
    2006 vide,
  • - Malaria to 60.
  • - HIV/AIDS control 80.
  • - TB to less than 1.
  • - Balharesia to less than 10

5
  • Improving nutritional status, maternal child
    health care
  • Increasing vaccination coverage.
  • Increasing potable water supply coverage.
  • Increasing access to primary health care to 80.
  • Increasing health insurance coverage to 35.
  • Increasing the rate of enrollment in primary
    education to 80.
  • Targeting 2.5 million families through financing
    productive means within a tune of SD 4.5 billion.
  • Augmenting the special fund for poverty and
    pauparism through additional fund raising.

6
  • 3. Foreign Sector
  • A 3-year programme of import/ tariff reform has
    been formulated and commenced implementation.
  • The country has submitted the final documents for
    accession to WTO including the offer on goods and
    services and a legal plan of action.
  • International reserves have been increased to 4.8
    months of imports by the end of 2005.
  • Current account deficit recorded 10 largely
    financed by the FDI flows.

7
  • 4. Financial Sector
  • Medium-term Financial Programmes (1999-2002 and
    2002-2005) implementation results viz
  • Strict enforcement of the Bazel rules and
    requirements.
  • The introduction of innovative Islamic financial
    instruments.
  • The establishment of Monetary Operation Unit
    (MOU) in the Central Bank with a full mandate to
    manage monetary policy.
  • Raising commercial banks capital adequacy ratios
    above the threshold of Bazle minimum requirement.
  • Reducing non-performing loans (NPL) to 9 target.

8
  • Streamlining broad money targeting with GDP
    growth and inflation rates.
  • Reserving oil excess proceeds in Oil Revenue
    Stabilization Account (ORSA)and using oil revenue
    adjuster in 2006.
  • Exchange rate, maintained as managed float has
    been substantially relaxed.
  • All laws, regulation and arrangements related to
    restructuring of the Central Bank, the new
    currency deign all related preparatory work
    done , the appointment of board of directors has
    been implemented.

9
Section Two The 2006 Budget Budget References
  • The budget for the year 2006 is prepared within
    the context of the following references
  • The comprehensive peace agreement (CPA) with
    specific emphasis on the wealth sharing Agreement
    modalities.
  • JAM Matrix.
  • The provisions of the Transitional Constitution.
  • The mid-term economic program (2004-2008).

10
The 2006 Budget Features and classification
  • Resources are categorized into
  • a. national revenues.
  • b. financing.
  • c. oil revenue stabilization account.
  • The classification of exp. into three sections.
  • - section (1) National expenditures.
  • - section (2) Southern Sudan transfers.
  • - section (3) Northern states
    transfers.
  • Each section is classified into
  • - Recurrent expenditures.
  • - Development expenditure.
  • Thus ensuring more transparency and
    accountability

11
Main Objectives of 2006 Budget
  • Maintaining sound economic management and prudent
    macro policies targeting low inflation rate of
    one digit, a low budget deficit of 1 (on cash
    basis) and improved BOP and positive economic
    growth rates .
  • Pursuing progress in achieving Millennium
    Development Goals.
  • Attaining Poverty reduction and more equitable
    resource allocation and transfers to states.

12
Challenges Confronting the 2006 Budget
  • Restoring peace and National Unity.
  • Meeting the substantial financial obligation
    arising out of the implementation of the CPA.
  • Addressing infrastructure bottlenecks and basic
    social services.
  • Tackling unemployment problems.
  • Building strategic food reserve.
  • Honoring critical external debt servicing.
  • Addressing security problems and the rule of
    law..
  • Upgrading weak infrastructure particularly in the
    rural areas.
  • Solicit financing current account deficit.
  • Safeguarding FDI flows foreign exchange accrued
    to petroleum exports which constitute around 50
    of capital formation.

13
Con. Challenges Confronting the 2006 Budget
  • Increasing Fiscal efforts through
  • Rationalizing exemptions.
  • Gradual removal of oil subsidies.
  • Enhancing tax coverage and tax collection.
  • Ensuring monetary stability.

14
Resources Allocations by chapter in 2006 budget
item 2006 budget est. SD Billion 2005 budget est. SD Billion Change
Total Resources 2055.2 1441.0 43
Gross National Revenue 1709.4 1275.0 34
a-Tax Revenues Direct Tax Indirect Tax VAT 676.0 105.0 334.5 236.5 467.4 95.0 278.6 93.8 45 11 20 152
b-Non-Tax Revenues -Departmental fees -National Revenues 1033.4 25 1008.4 807.6 18.6 789.0 28 34 28
Loans Grants 167.8 95.0 77
Domestic Resources 178.0 71.0 151
15
2006 National Budget
item 2006 budget est. SD Billion 2005 budget est. SD Billion Change
Current Expenditure 1578.4 1139.6 39
Section one National Gov. Expenditures - Chapter one Wages Salaries - Chapter Two Recurrent 922.8 418.4 504.4 679.6 301.0 378.6 36 39 104
Section Two GoSS Expenditures - Transfers of GoSS shares - Transfers to oil Productive Southern States 319.4 306.9 12.5 274.2 263.7 10.5 16 16 19
Section Three Northern States Expenditures - Recurrent Transfers. - Development Transfers. 336.2 62.6 273.6 185.8 55.5 130.3 81 13 110
Development Expenditure 506.8 311.4 63
Total Expenditure 2085.2 1451.0 44
16
  • Section Three Pro-poor Spending
  • Updating the IPRSP finalizing the PRSP by
    July 2006.
  • Incorporating the PRSP targets in 2007 budget.
  • Ensuring equitable resources allocation through
    decentralization policies .
  • Facilitate financing of pro-poor programs and
    activities.
  • The pro-poor expenditure in 2006 represent about
    SDD 333.0 billion (16 from total exp. and 5 of
    GDP Compared to 13.7 of total exp. 3.5 of GDP
    in 2005)
  • Enabling concentration of basic social services
    as by constitution these services are the domain
    of the States.

17
  • Con. Pro-poor Spending
  • Directing the banking sector to increase pro-poor
    funding through assigning 10 loanable funds of
    the commercial Banks for pro poor activities.
  • Confining the financing of Saving and Development
    Bank to solely for pro-poor activates.
  • Utilizing Zakat resources to instigate social
    development programs as poverty social safety
    nets.
  • Avail employment opportunities to 20000 higher
    education graduate in public administration
    (mainly education, health, agriculture and
    veterinary sectors).
  • Supporting 120 thousands higher education
    students through the student support fund.

18
  • Section Four Transparency issues
  • Process of Budget Preparation
  • Consultation with civil society organization,
    Academicians, Research institutions, Private
    sector, Gov. units, States and the GoSS.
  • Initial Consultation with the International
    Monetary Fund in Budget Framework and estimated
    figures.
  • Consultations at the cabinet of Ministers
    level (Ministerial Committees).
  • Discussion and consultation in the Parliament
    Sub-committees .
  • Allocation of Revenues between the Centre ,
    States and Southern Government in conformity of
    the CPA modalities.

19
  • Con. Transparency issues
  • Distribution of Central Government Revenue
    shares.
  • Regular reporting to the Cabinet and Parliament.
  • Annual reporting from the Auditor General to the
    Cabinet and Parliament of budget Execution
    (monitoring).
  • Budget reform through the introduction of GFS
    with technical assistance from IMF.
  • Ensuring regular auditing of all petroleum
    enterprises.
  • Avail the information on the revenue sharing
    through the media.
  • Reconciliation of revenue figures with the
    Government of the South (net transfers US 768.0
    Million)..
  • The on-going work on Public Expenditure Review
    (PER).

20
Section Five Future vision ( 2006 2010)
  • 1. GNU Commitments
  • Implementing the CPA and honors the obligations
    arising out of JAM.
  • Resolving the situation in Darfur and in the
    East.
  • Maintain macroeconomic stability.
  • Sharpening structural reforms through inter alia,
    removing supply bottlenecks and improving
    transparency in fiscal and oil sector operations.
  • Creating the conditions for successful
    decentralization, address regional disparities
    especially in services delivery and poverty
    reduction.

21
Con. Future vision
  • 2. Challenges
  • The huge and rising debt burden ( US 26.7
    billion) preventing Sudan from concessional loan
    and impeding development process.
  • Reformation of business environment conducive to
    empowering the private sector including removal
    of monopolies.
  • Upgrading human and institutional capacity,
    especially at the state levels.
  • Mobilization of massive resources to address the
    widespread poverty, low income levels,
    unemployment and other required resources to
    meet the high expectations of peace dividends.
  • Issues arising from Post-conflict era.
  • Meager inflow of foreign resources.
  • Wide spread of Unemployment.

22
Con. Future vision
  • 3. Financial Gap in 2006 Budget
  • During the preparation of 2006 budget, a host of
    important development programs were been
    postponed to minimize the huge fiscal gap.

23
  • 4. Requirements from the International Community
  • Provide grants to foster development and
    eliminate our dependence on nonconcessional
    loans.
  • A quick move to resolve Sudans foreign debt to
    allow Sudan to benefit from global initiatives
    and have access to concessional development
    loans.
  • Provide strong component of technical assistance
    from development partners.
  • Support the development programs to help
    realizing the MDGs.

24
Annexes
25
Basic Indicators
Item/Year 2000 2001 2002 2003 2004 2005 2006 Projection
Population in Million 31.1 31.9 32.7 33.6 34.4 35.3 36.2
Real GDP Growth Rate 8.3 6.1 6.5 6.0 7.2 8.0 10.0
Per-capita in US 422 410 450 507 583 704 886
Exchange Rate 257.2 258 264 261 257 244 225
General Price Inflation 8.5 4.9 8.3 7.7 8.5 8.5 8.0
Money Supply Growth Rate 33.0 25.9 30.4 30.3 30.8 36.0 30.0
26
General Price Inflation
27
Exchange Rate
28
Real GDP Growth Rate
29
GDP Contribution Annual Growth Rate

Item 2000 2001 2002 2003 2004 2005
Contribution Agricultural Sector 46.3 45.6 46 45.6 44.5 42.9
Industrial Sector 21.5 22.8 23.2 24.1 25.4 27.4
Service Sector 32.2 31.6 30.8 30.3 30.1 29.7
Total 100 100 100 100 100 100 100
Growth Rate            
Agricultural Sector 0.7 4.7 7.4 5.2 4.5 3.9
Industrial Sector 47.1 13.1 8 10.5 12.9 16
Service Sector 1.6 4.2 4.2 3.8 6.6 5.9
Overall Real GDP 8.3 6.4 6.5 6 7.2 7.5
30
Average GDP Contraption 2000 -2005
31
Money Supply

Billion S.D Projection
Item/Year 2000 2001 2002 2003 2004 2005  2006
Money Supply 343 432 563 734 960.4 1306 1698
New Injection 85 89 131 171 226.4 346 392
Growth Rate 33 25.9 30.3 30.4 30.8 36.0 30.0
Source Bank of Sudan
32
Inflation Money Supply Growth Rates

33
Balance Of Payment
Estimates  
  2000 2001 2002 2003 3004 2005 2006
Current Account Balance -160 -1074 -2469 -610 -3395 -9986 -8063
Trade Balance 440 -326 -317 -74 191 -2581 -87
Export (FOB) 1807 1699 1835 2462 3777 4824 7889
Petroleum 1351 1377 1397 1968 3100 4187 7246
Non Petroleum 456 322 438 494 677 637 643
Imports FOB 1366 2024 2152 2536 3586 7405 7976
Service Account (net) -601 -748 -2152 -536 -3586 -7405 -7976
Capital and Financial Account 303 490 824 1390 1332 2853 3454
Errors Omissions -454 -80 1130 -1707 1282 5341 2126
Over all Balance 82 -90 199 423 730 1002 1428
               
Source Bank of Sudan
34
Trade Balance (million US)
35
Oil non-Oil Exports (million US)
36
Fiscal Sector
Billion S.D estimated
Item 2000 2001 2002 2003 2004 2005 2006
Total Revenue 334 365.2 472.2 715.0 1023.9 1127.0 1788.3
Oil 144 149.7 200.6 399 498.9 547.7 908.4
non oil 190 215.5 271.6 316.0 525.0 579.3 879.9
Current Expenditure 300 342.6 377.1 551 791.8 1072 1483.8
Development Expenditure 52.2 76 140.8 185 312 312.1 920.8
Total Expenditure (L) 345.1 413 509.6 696.1 1036.5 1333 2286.3
Domestic Finance 11.1 48.1 37.7 10 30 207.5 208
Total Foreign (loan) 7.1 5.3 8.3 40 49.9 51.5 88.9
Total Expenditure (LF) 352.2 418.3 517.9 736.1 1103.8 1384.5 2404.6
Overall Deficit 18.2- 53.1- 45.7- 21.1- 79.9- 257.5- 616.3-
37
Current Expend. Total Revenue
38
Oil Non-Oil Revenue
39
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