Incentives to banks supporting commodities of three-year economic programme
13 December, 2012
KHARTOUM, (Sudanow)—The policies of the central Bank of Sudan for 2013 are aimed at implementation of the goals and directives of the three-year economic programme (2012-2014) by encouraging the banks and other financial institutions for appropriating financing resources and establishing funds for financing the eight commodities and at directing the banks to purchase crops for export.
The central Bank continues offering incentives to banks that cooperate in financing the productive sectors (agriculture and industry), offering medium-term funding, funding for mining of gold and other minerals and socially-related funding. The incentives will also be offered to banks which participate in the open market operations in addition to financing under t5he sharing and other formulae except the profit-making formula.
This also includes the banks which provide funds for export and inputs and which establish funds to finance all strategic commodities indicated in the three-year programme. Banks are permitted to establish investment funds with foreign banks for executing development projects of economic and social viability.
The central bank also offers incentives to the banks in the form of 5% of the legal monetary reserve for the banks which finance the production and export of the three-year economic programme in case of keeping monetary credits with the central bank in the form of legal monetary reserve at 18% of the total deposits in local currency and 18% in foreign currency, this includes the current deposits and margins, except the investment and saving deposits.
The central bank directed that it should be observed that upon offering the finance, the total of this finance to be given at any time in the rural areas by any branch of those banks should not be less than 70% of the total deposits in those areas and appropriation of 70% of the investment deposits for a medium-term financing (more than a year).
Concern should be accorded to financing the inputs of the agricultural and industrial production for increasing the exports and replacing the imports; these sectors should be given priority in offering the necessary funding on time. The exports proceeds may be employed for financing the production of gold and other minerals.
The central bank calls, in its financing policies of 2013, upon the banks to benefit from the available financing windows of the private sector from the regional and international financing institutions.
In thisconte4xt, the central Bank directed all the banks to open as of January 1st, 2013, external financing lines to finance the production of non-petroleum exports, provided that the banking procedures are simplified.
The banks are permitted to open branches without asking the central Bank and are directed to facilitate current, saving and investment accounts, expand automatic teller machine services (ATM) and commodities and services sale points. They should also improve the pay systems, provide banking services and mobilize greater national savings for provision of funds necessary for the economic activity. Emphasis is to be made on financing the production and manufacture of the export commodities indicated in the programme through the mobile and internet. The banks should also be encouraged to grant good profits to the owners of the bank deposits.
The banks should apply a profit margin of 15% (an annual indicator) in case of financing under the profit-making formula for financing operations in local and foreign currencies, provided that the first installment of the profit-making should be got back at a rate of 10% for financing the three-year economic programme commodities and 40% for financing other commodities and activities.
Development of a programme for new financing formulae must be continued, such as the sharing formula, provided that indicators of the sharing rate are to be set in accordance with the principles of the banks financing and it will be left to each bank fix the profit rate of speculation in case of the limited speculation and prohibition of the absolute speculation. It is preferable to apply new Islamic formulae, which are: Salem (delayed repayment), contracting, share-farming and share-manufacturing. Including
The central Bank grants top priority to preferential productive projects to be financed from the micro-financing resources, which are the projects for the graduates, women, youths and vocational and technical training graduates. Windows have been established in the center (Khartoum) and the states for those groups in addition to facilitating delivery of the micro-financing services through electronic transfers, mobile branches and mobile telephones.
The central Bank encourages the banks and micro-financing institutions to reach the targeted groups through the expanded comprehensive insurance document, salaries and pensions as a guarantee for repayment of the financing.
Being committed to the policy of incentives, Bank of Sudan Governor Mohamed Khair al-Zubair pledged to grant incentive to the banks which contributed to financing these commodities by SDG 50 million and which contributed to the fund for the purchase of oil seeds, manufacturing edible oils and production and export of cotton.
He discussed at a meeting with the banks operating in the Sudan the establishment of a fund for financing the production and export of the oil seeds with a capital of SDG 200 pounds under the supervision and follow-up of the Bank of Sudan. It is the second fund formed for the same purpose under the supervision of the Industrial Development Bank.
The Ministry of Finance4 and National Economy, the Bank of Sudan and all other organizations concerned the economy prepared the emergency three-year economic programme for 201202014 to dope with the challenges and the consequences of the secession of South Sudan.
The programme is aimed at achieving economic stability, filling the gap in the basic commodities and services to the people, activating and enhancing the financial effort, upgrading production and productivity, increasing revenues and replacing imports. The objectives of the programme also include control of the cash supply, follow-up of the liquidity flow, keeping the rate of exchange within the range of SDG 3.25 a US dollar during 2012 (the flexible and controlled rate of exchange; and by the end of the programme will be fixed by the supply and demand factors without intervention by the authorities). The programme also provides for controlling the inflation within 15% by the end of 2012.
The programme further provides for full reorganization of the units of the State, rationalization of the running expenditure, increasing revenues and cutting down the government expenditure by 20% annually and liquidation of the government companies in addition to reactivation of the micro-financing and socially-related financing by 12% of the Fund and placing emphasis on bringing down the unemployment to less than 20%.
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