History Since Independence
Current GDP per capita of Sudan grew 46% in the Sixties reaching a peak growth of 170% in the Seventies. But this proved unsustainable and growth consequently scaled back to 34% in the Eighties. Finally, it shrank by 26% in the Nineties.
Until the early 1970s Sudan's agricultural output was mostly dedicated to internal consumption. In 1972 the Sudanese government became more pro-Western, and made plans to export food and cash crops. However, commodity prices declined throughout the 1970s causing economic problems for Sudan. At the same time, debt servicing costs, from the money spent mechanizing agriculture, rose. In 1978 the International Monetary Fund (IMF) negotiated a Structural Adjustment Program with the government. This further promoted the mechanized export agriculture sector. This caused great economic problems for the pastoralists of Sudan.
During the late 1970s and 1980s, the IMF, World Bank, and key donors worked closely to promote reforms to counter the effect of inefficient economic policies and practices. By 1984, a combination of factors, including drought, inflation, and confused application of Islamic law, reduced donor disbursements and capital flight led to a serious foreign-exchange crisis and increased shortages of imported inputs and commodities. More significantly, the 1989 revolution caused many donors in Europe, the U.S., and Canada to suspend official development assistance, but not humanitarian aid.
However, as Sudan became the world’s largest debtor to the World Bank and International Monetary Fund by 1993, its relationship with the international financial institutions soured in the mid-1990s and has yet to be fully rehabilitated. The government fell out of compliance with an IMF standby program and accumulated substantial arrearages on repurchase obligations. A 4-year economic reform plan was announced in 1988 but was not pursued. An economic reform plan was announced in 1989 and began implementing a 3-year economic restructuring program designed to reduce the public sector deficit, end subsidies, privatize state enterprises, and encourage new foreign and domestic investment. In 1993, the IMF suspended Sudan’s voting rights and the World Bank suspended Sudan’s right to make withdrawals under effective and fully disbursed loans and credits. Lome Funds and EU agricultural credits, totaling more than one billion Euros, also were suspended.
As a result of oil export earnings around $500 million in 2000–01, Sudan’s current account entered surplus for the first time since independence. In 1993, currency controls were imposed, making it illegal to possess foreign exchange without approval. In 1999, liberalization of foreign exchange markets ameliorated this constraint somewhat. Exports other than oil are largely stagnant. The small industrial sector remains in the doldrums, spending for the war continues to preempt other social investments, and Sudan’s inadequate and declining infrastructure inhibits economic growth. Since January 2007, a new currency was introduced in parallel to the Sudanese dinar (SDG), the new Sudanese pound (SDG) at the conversion rate of one new pound for one hundred dinars (or one thousand old pounds). Starting July 2007, the Sudanese pound is the only Sudanese currency with legal tender.
Read more about this topic: Economy Of Sudan
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