Country Report Sudan September 2008

Outlook for 2008-09

• Political tensions will remain high, 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 deep north-south divisions are likely to continue. Elections due by mid-2009 may be delayed.
• We have increased our forecast for the fiscal deficit, which is now expected to widen from 1.5% of GDP in 2008 to 5% in 2009, as the government finds it politically difficult to cut spending despite lower than expected oil revenue.
• As the OECD economic downturn worsens, we expect global GDP growth to slow to an average of 3.5% in 2008-09. The average price of the benchmark dated Brent Blend will fall from US$110/barrel in 2008 to US$91/b next year.
• With growing evidence of economic pressures, we have revised down our forecast for real GDP growth to 5.3% in 2008, as output falls in ageing fields. It will rise to around 5.8% next year, with a little new oil coming on stream.
• 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 sharply, to an average of SP2.09:US$1 in 2008 and SP2.25:US$1 in 2009.
• The current-account deficit is projected to narrow to 3.2% of GDP this year, owing to high oil prices, before widening to 7.3% of GDP in 2009.

Monthly review

• The Sudanese government has begun to prepare its response in the case of the issuance of an arrest warrant by the ICC against Mr Bashir.
• Hostilities in Darfur intensified in early September, with increased concerns that the government could take obstructive measures against the joint UN-AU peacekeeping mission in Darfur.
• The southern presidential affairs minister has suggested that national elections due by July 2009 are likely to be delayed by at least six months.
• The Ministry of Finance and National Economy has announced temporary reductions in fees for shipments arriving at Port Sudan
• The GOSS cabinet has passed a resolution to standardise the salaries and benefits of senior public servants in Southern Sudan.
• The Abu Dhabi Fund for Development (ADFD) has agreed a US$100m loan to the Sudanese government to support the country's balance-of-payment needs.