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Figuring Out Budget Figures

Figuring Out Budget Figures

Photo credit: aljazeera.net

By: Alsir Sidahmed

 

Though the protests witnessed by a number of cities across the country were sparked initially by the economic difficulties and raising of subsidies on bread that developed quickly into a political agenda, but the new budget that came into effect last week did not providing a clear way out.

 

The budget provided only a framework and its figures and policies could be changed or undermined as happened several times in the past, but looking at some of the budget figures gives an indication and shows clearly how the economic conditions led to political questions and how the new budget is not providing much of solution given the question marks it left hanging up in the air.

 

The first salient figure and policy is the continuation of the flour subsidy. That subsidy has risen from SDG100 a sack earlier last year, then jumped to SDG250, to SDG350 and now SDG680 is in the offing to ensure that consumers can buy bread at affordable price.

 

This is an example pointing to one of the budget’s big troubles that is compounded by the deficit that is forecast to amount to 3.3 percent of the whole GDP, down from 3.7 percent last year, but it is not clear how the budget is going to succeed in making such reduction in deficit.

 

Another question mark relates to the inflation figure, which has been rising to the extent it is becoming a fueling factor of the social and political unrest, in addition to its dire impact on the economic policies themselves. The budget said it is targeting reducing the inflation rate by 27 percent to 63.2 percent. That is a huge undertaking without stipulating clearly how that is going to happen and the mechanisms to be used to achieve that goal.

 

Alongside the budget, the Bank of Sudan issued its directives for the new fiscal year so as to have monetary policies that go hand in hand with the economic ones. High among these is allowing for real estate finance that has been prohibited under previous policies though finance for government entities will continue to be curtailed. This new policy could easily be seen as a tool to attract some liquidity back to the banking system, but more important is how to avoid the typical efforts taken by some influential centers of power to circumvent such policies. These centres of power became the target of popular wrath as vehicles of corruption that lead to failure of many policies intended to remedy the economic mishap.

 

The lack of resources and big deficit in the budget raises the issue of how the existing resources are used. The security sector with all its components as well as sovereign institutions absorb close to 50 percent of the public spending, leaving productive sectors and services like education and health to compete on the remaining portion.

 

There is hardly any significant foreign component in the budget and the economic liberalization program undertaken by the government is probably the only of its kind in the world carried out without having a hard currency cushion ready either provided through agreements with international institutions or friendly countries.  The result speaks for itself in terms of vicious circle of crises where one leads to another and so on.

 

It is this environment that brings in politics. Though in general terms economy has to be based on some form of political environment, but in the case of Sudan both politics and economy go hand in hand and reflect that affinity in the issue of the budget. And that could easily be seen in two figures related to public spending and lack of foreign support.

 

Because of the political failure to reach out for a peaceful settlement with rebel groups, the government is forced to spend heavily on security and related services, bodies and institutions. Also because of certain policies Sudan was sanctioned, put on the terrorist list; in a nutshell became a pariah state. These are measures that led to isolating the country from the world economy and more seriously it was denied access to easy funding or even benefitting from initiatives to help highly indebted countries.

 

The need for change has reached even within the corridors of the National Congress Party (NCP) and the question is whether the message sent by the protestors and echoed by some NCP members is received and will be acted upon.

 

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SS/AS    

 

 

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