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fRom slaVEs to oil 145

to well over 20 per cent in late 2006. These were concentrated in three

large banks, particularly Omdurman National Bank, forcing the central

bank to support the system by providing liquidity over some months.

The result was to put pressure on the Sudanese currency, which had

previously been appreciating against the US dollar, and the authorities’

efforts to support it brought foreign-exchange reserves down to danger-

ously low levels in 2007. This pattern was also repeated in late 2008 and

early 2009.

The increase in domestic public debt came in the context of a massive,

mostly unserviced external public debt burden, much of which was origi-

nally built up, as outlined above, in failed 1970s development programmes.

These arrears have cut off Sudan’s access to mainstream concessional

lending, although the government has still been able to arrange some

loans from investing countries such as China, India and some Gulf states.

This does nothing, however, to address the long-term problem of a public

debt burden that was estimated at 70 per cent of GDP in 2009. In fact,

the taking on of new commercial loans is yet another factor – together

with rising oil revenue and, crucially, the government’s management of

the crisis in Darfur – that is making multilateral debt forgiveness under

the Heavily Indebted Poor Countries Initiative extremely difficult to

obtain.

The growth of the petroleum sector has had even more marked conse-

quences for patterns of trade and investment. Oil in 2008 accounted for

around 96 per cent of Sudan’s total export revenue – sharply up from

20 per cent ten years previously. The next biggest single export-earner,

sesame, by contrast, provided less than one per cent of total export

revenue. The shift to oil has also affected Sudan’s trading partners: 60

per cent of exports by value now go to China, according to IMF figures,

while 30 per cent go to Japan.

However, import spending has more than kept pace with the sharp

rise in export earnings. Sudan has been forced to buy many more capital

goods for oil-related expansion and infrastructure. Government spending

on imports has also risen, as the authorities have sought to fund both a

The Sudan Handbook, edited by John Ryle, Justin Willis, Suliman Baldo and Jok Madut Jok. © 2011 Rift Valley Institute and contributors series of conflicts and subsequent peace dividends. But an increasingly

(www.riftvalley.net).