Economist Hassan Satti: The Sudanese economy is experiencing deflation, recession and 100% inflation
07 August, 2012
KHARTOUM,(SUDANOW)—The Government of Sudan has introduced a number of procedures and measures for checking the economic deterioration and budgetary reformation after losing the oil proceeds.
These measures provided for minimizing the bodies of the state and localities, reducing appropriations of holders of the constitutional offices and gradual removal of the fuel subsidies, which had the lion’s share of discussion and analysis. They were aimed at achieving a little recovery of the ailing Sudanese recovery but they were faced with a considerable criticism by economists.
The economist and economic secretary of the Popular Congress Party (PCP), Hassan Satti, said the Sudanese economy is passing through a state of deflation and recession that raised the inflation to 100%. He attributed this situation to the deterioration of the agricultural and industrial sectors.
Satti placed responsibility for this deterioration on the National Congress Party (NCP) and its Government, indicating that the oil exports offered them what he called a “golden opportunity.” He estimated the revenues of the State treasury during 1999-2011 at around 100 billion dollars.
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He estimated the annual proceeds from petroleum alone at 4.5 billion dollars after paying a similar amount to the companies which means that the Sudan’s total annual throughout the 11 years exceeded 8 billion dollars. Add to this the investments and loans offered by the Arab funds and countries which the Government put in projects accompanying the petroleum.
The Government, during this golden era, did not invest the money in the establishment of a single development project and did not support the agricultural and industrial sectors either. “The golden opportunity offered to the NCP Government was not provided to any other government; it was supposed to be invested in development of the resources,” the economist said.
He cited a report of the World Bank, which remarked that the Sudanese economy is suffering from “a curse” of petroleum the proceeds of which were not invested for development. Satti also reckoned a remark by the Economist magazine that the Sudanese economy is experiencing recession.
Economist Satti commended the successive governments since Independence for establishing huge development projects that contributed to the stability of the Sudanese economy.
He blamed the NCP Government for not only maintaining but undermining the development process, noting that the period starting from the May regime, 1969, till 1990 there were efforts and expenditures for rehabilitation rather than development. He said May regime established tremendous development projects in the agricultural and industrial fields, including Al-Rahad scheme and the sugar processing plants.
Viewing the deterioration in the industrial sector, particularly the convertible industries, Satti pointed out that the imports of oils reached 300,000-400,000 tons and sugar about 500,000 tons.He quoted a report on industry as stating that 60% of the industries are out of action and the remaining industries operate at a low productivity rate, while the parliament recently announced a 2 million ton food deficit of cereals.
Those industries achieved high productivity and Sudan was placed among the countries that possess the highest industrial possibilities after South Africa and Nimiety is credited for that, Satti said.
He predicted that next year, 2013, the country will experience famine, with the government taking no note of this. The economist remarked that preparation for the agricultural season began late with numerous shortages of inputs while the cultivated acreage was reduced, especially after removing the fuel subsidies and rise in the rate of exchange in addition to the financing policies of the Bank of Sudan.
Satti criticized the central Bank of Sudan policies towards the commercial banks, pointing out that it deliberately dried up the liquidity in those banks while the Shahamah bonds and the taken measures impaired the ability of the banks for financing the productive sector and focused on financing the local trade activities.
He criticized the recent financial measures as a move to salvage the budget, which he described as “deflated”, rather than improving the economy. Satti indicated that there are several threats that confront the State, the gravest of which are the decline of the civil service and services and the low per capita income. He believes that the State has failed in improving the country’s economy which he has deteriorated, predicting this deterioration would exceed 60% by the end of 2012.
Satti played down the impact of the measures and the exigent plan which was lain down by the State and which was based on expected loans and exports increases.He said the imports invoice redoubles every year as, in 1999 it reached 2,700 million dollars, up to 2,330 million in 2010 and in the 2012 budget it reached 8 billion dollars in contrast to deterioration of the exports and shortage3 of the foreign exchange.
He wondered whether the ingenuity of the government would, after amendment of the general budget of the State for 2012 and the exigent plan, resolve or complicate the problem of the Sudanese economy. The economist said with very low salaries and wages that do not cover 12% of the lowest cost of living as indicated by a report of the High Council for Wages and Salaries when the wage was 2,000 pounds, but under the economic deterioration and soaring prices, 5,000 pounds will be sufficient to meet the demands. The signs of the deterioration are apparent in the skyrocketing prices, the wide-spread unemployment, the rising rate of exchange and other signs.
He said the economic crisis is not purely economic, it is a crisis that is extremely complicated with intertwined chapters and nobody, whoever he is, can resolve it without addressing its actual grassroots, taking necessary steps for an accelerated resolution, considering all opinions and view-points, offering sacrifices and placing the nation above every-thing for reaching a comprehensive political, economic and social solution that does not exclude any problem and anybody. The problem will not be resolved without this, Satti said.
A veteran economist and politician of the Islamic movement, Hassan Satti served for 10 years in the Ministry of Finance during the May regime of Nimeiry. It was the first head of the economic sector in the Salvation (current) government until 1999, the year of the Islamic movement break-up and the famous Memorandum of Ten. He served as a manager of the Islamic Bank of the North of which he was a founder and he was previously manager of Islamic Development Company. Satti described as a golden period for the Sudanese banks the period during which he served in the banks, saying that during that period the banks supported the productive sector of the country with more than 60% of the financing of the banks.
He said during his work in the bank, about 700,000 tons of sorghum was exported to Japan, competing the American maize exports.
Before the 1999 Islamic movement breakup, Satti chaired a committee that put solutions to the food gap that occurred in 1990 when the Western countries refused to help the Sudan and put declaration of famine as a condition for offering assistance. During the first four months of that year, the country managed to overcome the gap, said Satti, adding that this was due to success granted by God and to the good-will.
Satti presently works in his private office. He is enthusiastic about the May revolution and its leader ex-president Jaafer Nimeiry. He said he was a strong opponent of Nimeiry, yet he reads the May literature, describing the May regime as the country’s most distinguished period during which a number of development projects were carried out.
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