Government Financing Government Financing Programs & Commitments to Programs & Commitments to

CPA ImplementationCPA Implementation

Second Sudan ConsortiumSecond Sudan Consortium

Omer Mohamed Abel SalamOmer Mohamed Abel Salam

19 – 20 March - Khartoum19 – 20 March - Khartoum

The Report:The Report:

Presentation: Presentation:

Government of National Unity (GNU) Financing of JAM Projects 2005-2006

GNU Obligation contained in JAM document amounted to 1.64 billion us dollars for retrospect 2005 and 2006.

GNU Financing:

(1) Actual government expenditure on JAM Projects recorded 1.1 billion dollars or 71% of commitments during the period 2005 - 2006 (table No.(1) shows the details)

GNU Financing Cont.

(2) GNU expenditure on JAM -Related Issues amounted to 0.17 billion dollars. (table No.(2) depicts the details).

(3) Total GNU expenditure amounted to 1.3 billion dollars or 82% of total JAM estimates during 2005 - 2006.

Table (1)GNU Expending on JAM projects

JAM Estimates Actual JAM Estimates Actual JAM Estimates Actual

1.Capacity building and Institional development8.0 2.1 21.0 15.3 29.0 17.4 60%2.Governance and rule of law 15.0 0.0 39.0 4.0 54.0 4.0 7%3.Economic policy 23.0 0.2 62.2 65.1 85.2 65.3 77%4.Productive sectors 74.0 75.5 153.0 101.1 227.0 176.6 78%5.Basic social services 167.0 73.3 445.0 150.2 612.0 223.5 37%6.Infrastructure 16.0 152.6 43.0 317.5 59.0 470.0 797%7.Livelihood and social protection 19.0 17.9 51.0 22.3 70.0 40.2 57%8.Information and statistics 5.0 2.6 22.0 9.8 27.0 12.4 46%Sub total 327.0 324.2 836.2 685.3 1163.2 1009.5 87%Three Areas: 101.0 32.0 270.0 53.0 371.0 85.0 23%Total 428.0 356.2 1106.2 738.3 1534.2 1094.5 71%

Performance Projects2005 2006 Total for 2005/2006

million US Dollars

GNU Spending On JAM Projects(Million US$) 2005

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0

CB GR EP PS BSS Infra LSP INFO&STAT Three Areas

2005 JAM Estimates 2005 Actual

Key: 5. BSS: Basic social services

1. CB: Capacity building and Institional development 6. INFRA: Infrastructure

2. GR: Governance and rule of law 7. LPS: Livelihood and social protection

3. EP: Economic policy8. IINOF & STAT: Information and

statistics

4. PS: Productive sectors

GNU Spending On JAM Projects (Million US$) 2006

-50

100150200250300350400450500

CB GR EP PS BSS INFRA LSP INFO&STAT Three Areas

2006 JAM Estimates 2006 Actual

Key: 5. BSS: Basic social services

1. CB: Capacity building and Institional development 6. INFRA: Infrastructure

2. GR: Governance and rule of law 7. LPS: Livelihood and social protection

3. EP: Economic policy8. IINOF& STAT: Information and

statistics

4. PS: Productive sectors

Performance of GNU Spending On JAM Projects2005&2006

0%100%200%300%400%500%600%700%800%900%

Performance

Table (2)GNU Expenditure on JAM/CPA Obligations

JAM/CPA Obligations2005 2006

Total for 2005/2006

JAMEstimates

ActualJAM

EstimatesActual

JAMEstimates

Actual

National fund for reh.of war affected areas 0 1.7 0 0 0 1.7

Joint forces 0 4 0 73 0 77

Commissions/councils/committees 0 0 0 4 0 4

Entitlements for Consitustionees 0 0 0 4.9 0 4.9

Agric Season support 0 0 0 78.5 0 78.5

Total 0 5.7 0 160.4 0 166.1

Towards Fiscal Decentralization and Equitable Resource Mobilization 2005-2006

Development Expenditure as % of GDP 5% 6.9%

Poverty Reduction Expenditure as % of GDP 3.5% 5.0%

Social Expenditure as % of GDP 2.50% 3.0%

Intergovnmental Transfers of Total National Revenue:

GNU 65% 56%

Goss 12.5% 16%

Northern States 22.5% 28%

Maintaining Stable macro – Economic Environment

GDP growth rate 8.1% 10.3%Inflation rate 8.5% 7.2%Current account as percentage of GDP -10.0% -10.9%Petroleum exports as percentage of GDP 15.0% 16.0%Non-petroleum exports as percentage of GDP 2.0% 2.0%FDI as percentage of GDP 9.0% 10.0%Revenues as percentage of GDP 22.0% 20.0%Expenditure as percentage of GDP 20.7% 25.2%Debt as percentage of GDP 113.0% 80.0%Debt as percentage of exports 707.0% 556.0%Debt as percentage of revenues 510.0% 497.0%Money supply growth rate 44.6% 27.40%

Item 2000 2001 2002 2003 2004 2005 2006

Agricultural Sector

CONGrowth

Rate CONGrowth

Rate CONGrowth

Rate CONGrowth

Rate CONGrowth

Rate CONGrowth

Rate CONGrowth

Rate

46.3 0.7 45.6 4.7 46 7.4 45.6 5.2 40.0 3.6 39.6 7.2 38.9 8.3

Industrial Sector21.5 47.1* 22.8 13.1 23.2 8 24.1 10.5 28.5 12.9 28.3 7.6 28.9 12.5

Service Sector 32.2 1.6 31.6 4.2 30.8 4.2 30.3 3.8 31.5 6.6 32.1 9.8 32.2 10.8

Overall GDP Growth Rate 3.8 6.4 6.5 6 7.2 8.1 10.3

Sectoral GDP & Annual Growth Rate

* The high jump in industrial sector growth rate is attributed to petroleum production

Real GDP Growth Rate

0

5

10

15

20

25

30

35

40

45

50

2000 2001 2002 2003 2004 2005 2006YEARS

RA

TE

S

AgriculturalSectorIndustrial SectorService Sector

Overall GDPGrowth Rate

Sectoral GDP 2000 -2006

Agricultural Sector

44%

Service Sector31%

Industrial Sector25%

Resource Gap & Economic Stability 2000-2006

 Item/Year 2000 2001 2002 2003 2004 2005 2006

Inflation rate 8.5% 4.9% 8.3% 7.7% 8.5% 8.5% 7.2%

Current AccountBalance% of GDP -5.9% -11.4% -11.6% -8.7% -4.0% -10.0% -10.9%

Money Supply Growth rate (Broad Money Growth ) 33.0% 25.9% 30.4% 30.3% 30.8% 43.5% 27.4%

% Budget Deficit 0. 7% 1.6% 1.1% 0.5% 1.5% 2.6% 3.3%

Source: Bank of Sudan

Resource Gap & Economic Stability 2000-2006

-20.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

2000 2001 2002 2003 2004 2005 2006

Years

Rat

es

Inf lation rate

Current account balance/GDP

Money Supply Grow th rate(M2)

Budget deficit/GDP

A quick move to resolve foreign debt of more than 27 billion to allow Sudan benefit from global initiatives and have access to concessional development finance.

Monitoring ceiling of non-concessional lending and confining it to CPA, DPA and EPA related obligations.

Finalizing Debt Strategy and improving debt management.

Debt Sustainability

IndicatorsStandard

Thresholds

2003

2004

2005

2006

NPV of debt/ Export. 150 1186

914 707 556

NPV of debt/ Revnue. 250 950 670 510 497

Revenues/GDP 15 14 21 22 20

Export/GDP 30 16 20 21 17.3

Debt Sustainability Indicators 2003-2006

0

200

400

600

800

1000

1200

1400

2003 2004 2005 2006

NPV of Debt/EXP

NPV of Debt/REV

Debt Sustainability Indicators 2003-2006NPV of Debt/Export- NPV of Debt/Revenue

NPV= NET PRESENT VALUE

0

5

10

15

20

25

2003 2004 2005 2006

REV/GDP

EXP/GDP

Debt sustainability Indicators 2003-2006Exp/GDP- Rev/GDP

NPV= NET PRESENT VALUE

Proposed Joint Actions To Scale up JAM Implementation and produce tangible Results

Managing time bound tangible and fast track development results.Investing on information systems and vital statistics.

Easing IDA/WB procedure of approvals along the process of project cycle and coordinate with UN agencies,NGOs ..ect.

Designing of intensive capacity building programmes aimed at enhancing absorptive capacities of both institutions and human at central government ,Goss and states.

Focusing on fast track and concrete development results.

Respecting government institution mandates and governance structure and national capacities to reduce cost of operations and associated costs while improving fiduciary ,accountability and transparency.

Pursuing Rome /Paris declarations ,OECD-DAC and other relevant international fora reference to ownership , alignment and harmonization.

Reducing donors missions ,streamlining of conditionalities and simplifying and harmonizing of evaluation/reviews and other requirements (World Bank and UN affiliates).

Delegating more financial powers to Sudan-based or regional-based managers, missions and officers.

Providing donor support in areas of planning , monitoring and evaluation ,analytical and implementation capacity building aimed at greater leadership role and ownership of development results.

Ensuring flexibility in donor financing of some important domestic cost to facilitate easy and timely implementation of JAM projects.

Carrying out media campaign coverage and publicity on CPA/JAM involving all relevant government and non- government actors.

Macroeconomic Framework 2007-2011

2007 2008 2009 2010 2011

Real GDP Growth Rate 10% 7.6% 7.0% 7.2% 7.1%

Current Account -9% -5.2 -4.5% -3.9% -3.6%

Export as % of GDP 13% 15.1% 14.3% 13.9% 13.5%

Import as % of GDP -17% -15.9%

-14.8%

-14.1%

-13.5%

Inflation 8% 3.0 3.0 4.0 5.0

Money Supply 34% 35% 33% 30% 30%

Total Expenditure as % of GDP 25.3% 23.8% 21.9% 21% 19.6%

Public Revenue as % of GDP 20.1% 18.1% 16.7% 16% 15%

Budget Deficit as % of GDP 5.1% 5.7% 5.3% 5.0% 4.5%

GNU Financing of JAM During The Period 2007-2011

Cluster

Cost Estimate

for 2007

in million dollars)

Cost Estimate for Phase 11

(2008-2011

in million dollars)

1.Capacity building and

Institutional development

27 101

2.Governance and rule of law 43 142

3.Economic policy 43 37

4.Productive sectors 158 135

5.Basic social services 528 2807

6.Infrastructure 259 405

7.Livelihood and social protection

107 208

8.Information and statistics 22 17

Sub-total 1189 3852

Three areas 364 1229

Grand total 1553 5081

The 2007 Budget

Budget References

The provisions of National Interim Constitution.

The comprehensive peace agreement (CPA) JAM Matrix.

The mid-term budget Framework (2007-2009).

Interim Poverty Reduction Paper and MDGs.

Main Objectives and Policies of 2007 Budget

• Maintaining sound economic management and prudent macro economic policies targeting inflation rate of one digit, low budget deficit of 5% (non cash basis), improved BOP and high economic growth rate.

• Economic Growth 10%.

• Pursuing progress in achieving Millennium Development Goals.

• Attaining poverty reduction and more equitable resource allocation and transfers to states.

• Abrogation of withholding public revenues and remitting all proceeds to National accounts.

Cont. Main Objectives of 2007 Budget

• Redressing the roles &functions of specialized banks ABS, Farmer bank, Animal Resource Bank to provide financing for traditional agriculture and rural activities..

• Encouraging bank liquidity flows to rural activities and operationlization microfinance enterprise projects.

• Avail employment opportunities to higher education graduate in public administration (mainly education, health, agriculture and veterinary sectors).

• Supporting thousands of higher education students through student support fund.

Cont. Main Objectives of 2007 Budget

• Finalizing PRSP by end of 2007.

• Mobilizing more resources and directing policy instruments and incentives to traditional agriculture.

• Ensuring equitable intergovernmental fiscal transfers.

• Achieving Pro-poor expenditure of more than 5% of GDP.

• Allocating more resources to basic social services delivery.

• Restoring peace and National Unity.

• Meeting substantial financial obligation arising out of the implementation of the CPA , DPA and EPA.

• Addressing infrastructural bottlenecks and basic social services.

• Addressing unemployment problems.

• Building strategic food reserve.

• Honoring critical external debt service.

• Addressing security problems and the rule of law.

• Safeguarding FDI & foreign exchange flows.

• Addressing external debt overhang.

• Boosting non – oil exports.

• Increasing Fiscal efforts through:

• Rationalizing exemptions and current expenditure.

• Removal of oil subsidies.

• Enhancing tax coverage and tax collection.

• Ensuring fiscal stability, transparency and accountability.