Sudan, reeling from an economic crisis brought on by the secession of oil-producing South Sudan, projected a budget gap on Monday of 10 billion Sudanese pounds ($1.5 billion) for 2013.
The Arab-African country has struggled to control soaring prices and fund its budget since South Sudan broke away last year, taking with it the country’s main source of state revenues and dollars.
The crisis pushed the government to scale back its costly fuel subsidies program in June, sparking a string of small anti-government demonstrations.
The protests subsided under a withering security crackdown but inflation has remained high, hitting 45 percent in October.
In a statement announcing the approval of the 2013 budget, Sudan’s cabinet said the government aimed to push inflation down to 20 percent next year, maintain economic growth, keep the deficit under control and boost exports.
The new budget does not include hikes in taxes or wages and the government did not plan to fully eliminate fuel subsidies next year, Finance Minister Ali Mahmoud told reporters after the budget was approved.
“If we increased wages, this would require lifting subsidies on commodities and fuel," he said, adding the 2013 deficit would equal 3.4 percent of gross domestic product (GDP).
Some analysts question the accuracy of official forecasts as too optimistic, and say Sudan will struggle to stabilize its economy without collecting oil fees from landlocked South Sudan.
South Sudan must export crude through Sudan, but shut down its entire 350,000 barrel-per-day output in January after they fell out over how much it should pay to do this.
The two sides signed deals in September that opened the way to resuming oil flows, but production has yet to resume. A top South Sudanese official said on Sunday exports might begin again by the end of the year.
In addition to stoking public anger, analysts say Sudan’s economic crisis has exacerbated divisions in the government and squeezed the patronage system they say President Omar Hassan al-Bashir has relied on.
Last month the country’s former spy chief and a dozen others were arrested after what officials said was a plot to “incite chaos” and target leaders.
Looming trade deficit
Sudan’s revenues are expected to reach 25.2 billion pounds in 2013, and spending will hit 35 billion pounds, leaving a roughly 10 billion pound deficit, the cabinet statement said.
That would amount to roughly $1.5 billion at the current black market rate of 6.5 pounds to the dollar. The official rate is around 4.4 pounds to the dollar.
The projected deficit is close to the expected deficit for 2012, when revenues would reach 19.1 billion pounds and spending 28.7 billion pounds, the statement said.
It said GDP grew at 1.36 percent in 2012, and that the trade deficit was $3.2 billion after exports reached $3.8 billion and imports hit $7 billion.
Sudan is trying to make more of the goods it imports, like sugar, wheat and medicines. It also wants to export more goods like gum Arabic, cotton, livestock and gold.
The cabinet said it expected exports to rise to $4.5 billion and imports to reach $7.2 billion in 2013, leaving a trade deficit of $2.7 billion
Sudan’s production was expected to rise from 115,000 barrels per day to 150,000 bpd, state news agency SUNA quoted Mahmoud as saying earlier on Monday. Sudan had planned to boost output to 180,000 bpd this year but failed to reach the target.
Gold exports reached between 47 and 48 tons by November and were expected to rise above 50 tons annually, bringing in more than $2 billion a year, the finance minister added.