The Sudan Handbook

fRom slaVEs to oil 143

Sudan following the Referendum raises the possibility that renewed civil

war could disrupt operations, that existing concessions might be called

into question, and that – without access to the pipeline through the north

to Port Sudan – the south might be unable to export its oil.

Balancing the Books

The government in Khartoum is officially committed to fiscal reform, and

has implemented a series of IMF programmes since 1997 that helped to

bring down triple-digit inflation. It has made efforts to improve revenue

collection through a series of tax reforms. The finance ministry has also

sought to impose improved discipline on line ministries, and to intro-

duce a Treasury Single Account. In addition, there has been an ongoing

attempt to reduce the size of the state, with a series of privatizations

of state-owned firms. Nevertheless, the government is increasingly

dependent on volatile oil earnings, which made up over 65 per cent of

total revenue in 2008. Despite the fact that oil has dramatically boosted

government revenue in recent years, rising demand for spending – driven

in particular by the search for a ‘peace dividend’ and commitments to

decentralization following the CPA in 2005 – has resulted in an ongoing

struggle to balance the budget. This became very clear in 2009, when oil

prices fell sharply.

The problems affecting the national government are even more marked

in the case of the government of Southern Sudan, which, given the lack of

a tax base and collection capacity, has almost no revenue apart from the

oil transfers from the north. This is supplemented by international aid,

but this failed to come through as quickly as expected following the CPA,

as the multi-donor trust fund set up under the World Bank was slow to

begin operations. At the same time, spending has surged ahead, as the

newly formed GoSS seeks to establish its control. Over half of spending

goes on the public-sector wage bill, with much of that allocated to salaries

for the Sudan People’s Liberation Army. By contrast, infrastructure devel-

opment has been disappointing, owing both to a lack of implementation

The Sudan Handbook, edited by John Ryle, Justin Willis, Suliman Baldo and Jok Madut Jok. © 2011 Rift Valley Institute and contributors capacity and to some well-publicized corruption scandals.

(www.riftvalley.net).