Sudan, the largest country on the African continent, gained its independence from Egypt and the United Kingdom in 1956. A cultural and religious division has existed for many years between the northern, Islamic states and the predominantly Christian states in the south. The northern Sudanese primarily live in large urban centers, while those in the south primarily subsist on a rural economy. Sudan has considerable hydrocarbon resources and a large agricultural sector, though the country is considered one of the poorest in the world.
Stable prices resulting from International Monetary Fund (IMF)-approved macroeconomic policies have led to a slowdown in Sudan’s currency depreciation and an improved fiscal balance. In 2005, Sudan’s real gross domestic product (GDP) grew 6.4 percent and is expected to grow 5.7 percent in 2006. Sudan’s oil exports have increased sharply since the completion of a major oil-export pipeline in 1999. Currently, 70 percent of Sudan’s total export revenues come from oil exports. Despite high oil revenues, the country ran a current account deficit of $907 million in 2005. In an effort to bolster its trade potential, Sudan applied for World Trade Organization (WTO) membership, with the conclusion of negotiations expected in 2008. As early as June 2006, Sudan is expected to convert its managed-float Sudanese dinar currency into free-floating Sudanese pounds. The cost of converting over to the new currency is estimated at $100 million.
In December 2004, a peace declaration was signed between the Sudanese government and the Sudan People’s Liberation Army (SPLA) in the south. Prior to the signing, several important issues were agreed upon by the two parties, which included the sharing of oil revenues (50:50), the application of Islamic religious law (will not be applied in the South), and self-determination for the southern Sudan (a referendum on secession will be held after a six-year transitional period). In January 2005, the two parties formally signed the Comprehensive Peace Agreement (CPA). Also in January 2005, the SPLA leader requested that the United Nations (U.N.) Security Council would deploy peacekeepers to monitor the tenuous peace in Sudan.
Additional growth in Sudan’s hydrocarbon and other industrial sectors will likely occur with a refurbished infrastructure, which has seen little improvement since the beginning of the country’s civil conflicts in 1955. The Sudanese government has budgeted future revenues for infrastructure refurbishments and a multi-donor trust fund (MDTF) – administered by the World Bank – was created to support development projects. Investments from the MDTF will be divided between the Government of Southern Sudan (GOSS) and the national government in Khartoum. In November 2005, the MDTF gave the first disbursement of $20 million to the GOSS for the rebuilding of health and education services.
