Country Report Sudan August 2008

Outlook for 2008-09

• The political situation in Sudan remains uncertain, following the charges of genocide and crimes against humanity laid against the president, Omar al-Bashir, by the chief prosecutor of the International Criminal Court (ICC).
• The Darfur crisis is set to worsen and there are likely to be continued deep north-south tensions. Nevertheless, on balance, the Economist Intelligence Unit expects a continuation of the political status quo in 2008-09.
• The fiscal account is forecast to remain in deficit, at 0.8% of GDP in 2008, widening to 4.4% in 2009, as the government finds it politically difficult to cut spending despite lower than expected oil revenue.
• We have revised down our forecast for the average price of the benchmark dated Brent Blend, to US$110/barrel in 2008 and US$91/b next year.
• With output falling in ageing fields and little new oil due to come on stream, real GDP growth is set to decline to an average of around 5.9% in 2008-09.
• Consumer price inflation is expected to rise to an average of around 18% this year, before moderating slightly in 2009.
• As rising fiscal pressures weigh on the currency, we expect the Sudanese pound to depreciate further, to SP2.06:US$1 in 2008 and SP2.13:US$1 in 2009.
• The current-account deficit is projected to narrow to 3.7% of GDP this year, owing to high oil prices, before widening to 7.7% of GDP in 2009.

Monthly review

• The northern ruling National Congress Party (NCP) and southern Sudan People's Liberation Movement (SPLM) have announced a "Sudan People's Initiative" to resolve the Darfur conflict, in response to the ICC charges.
• The NCP and the SPLM have agreed on an administration for the disputed border region of Abyei and on a National Electoral Commission.
• The Islamic Movement has re-elected as its secretary-general Ali Uthman Mohammed Taha, the second vice-president.
• The chairs of the Southern Sudan public commissions and chambers have requested a budget increase in 2008 from the southern government.
• New data from the Ministry of Finance have shown a continued decline in oil output in 2008, to an average of 441,000 barrels/day in the second quarter.
• GIAD Automotive, a state-owned firm, has abandoned its attempt to float on the Dubai Financial Market because of difficulties in finding a broker.
• The national Dams Implementation Unit and the southern government have agreed to build three new dams in Southern Sudan and rehabilitate another.