Country Report Sudan June 2008

Outlook for 2008-09

• The Sudanese political situation is expected to become increasingly volatile, with north-south tensions rising.
• The Darfur crisis is set to deepen, as government forces and janjaweed militias enter into proxy confrontation with forces backed by neighbouring Chad.
• Although high oil prices will boost revenue, the government will find it difficult to cut spending over the outlook period. As a result, the fiscal account will remain in deficit, at an average of 2.3% of GDP in 2008-09.
• The authorities will seek to balance the goals of restraining inflation and encouraging credit to the private sector, through the slow repayment of domestic arrears.
• The price of the benchmark dated Brent Blend is forecast to rise to US$120/barrel in 2008, before falling to US$110/b next year.
• With little new oil due to come on stream, real GDP growth is forecast to fall to an average of around 7.5% over the outlook period.
• Consumer price inflation is expected to rise to an average of around 14.5% this year, before moderating slightly in 2009.
• The current-account deficit is projected to narrow to around 1.8% of GDP this year, before widening to 4.8% of GDP in 2009.

Monthly review

• Northern and southern leaders have signed a "road map" agreement in an effort to resolve the crisis over the disputed border region of Abyei.
• The chief prosecutor of the International Criminal Court has declared his intention of filing charges against Sudanese officials.
• The SPLM has held its national convention, consolidating support behind the first vice-president, Salva Kiir, and the vision of a "New Sudan".
• International oil prices have continued to rise sharply, benefiting the fiscal accounts of the central and southern governments.
• The IMF has issued a report recommending that the Sudanese government should use additional available oil revenue to reduce domestic arrears.
• The Sudanese authorities have appealed for international debt relief.
• The IMF has published data estimating that Sudan's real GDP growth fell marginally to a still strong 10.2% in 2007.
• The Abu Dhabi Fund for Development has announced a project to develop more than 70,000 acres of agricultural land in northern Sudan.