Speech delivered by The Minister of Finance and National Economy, Ali Mahmood Abdul Rasool- Minister At National Assembly on Policies and Measures for Rationalization of Government Expenditure and Bo
14 January, 2012
Khartoum, (sudanow.info.sd ) – following is the full text of the statement made by Ali Mahmood Abdul Rasool- Minister of Finance and National Economy, before the Parliament, the statement outlines the policies and economic pathway the country is now following to handle its economic questions. (This is an unofficial translation from Arabic)
In the Name of God, Most Gracious, Most Merciful Mr. Speaker,
Honorable Members of the National Assembly
Greetings to you all
In response to a request by your esteemed Assembly, I will speak to you this time about the policies and measures for redressing the problem of the high prices of some commodities and the salvation programmes of our national economy as well as the general economic indicators in accordance with our declared economic programme.
As you know, the 2011 budget and the accompanying policies and measures were prepared on the assumption that the unity option would win the day. That budget embodied the measure adopted in the past period in order to confront the impact of the financial, monetary and production crisis.
It has now become obvious that, as we are on the threshold of a new fiscal year that followed the referendum, the internal speculations and developments are still moving fast, with the secession of the south becoming more likely than unity, the2011 budget, which was originally based on the unity option, should be reconsidered.
On the external front, it appeared obvious that the impact and repercussions of the international financial crisis is still adversely affecting the entire economic situation, those effect have virtually aggravated as reflected in the sky-rocketing prices of commodities, remarkably wheat the price of which has increased y 40%. In order to redress the situation, a number of measures were taken, including bank facilities for importation, cutting don the fees of the specification, sea ports, health and agricultural quarantine and treatment of wheat as a production input, a matter which has stabilized the price of bread to the consumers.
The hikes in the international sugar prices, also made the price of this commodity soar to highs never reached in the country for 30 years. In view of the gap between the domestic production and consumption, the cost of importation was cut down by cancelling all duties and fees by 815 million Sudanese pounds during the 2009-2010 season. Moreover, importation was encouraged to create competition so that the commodity will reach the consumer at a price equal to the local cost. Taking into consideration the projected start of operation of the White Nile Sugar plant by the end of the current season, we hope that the increase in the local production of sugar will put an end to this crisis.
Speaking about the petroleum derivatives, as you know the prices of those derivatives have been subsidized for long years..jpg)
This has caused a loss in revenues which could have been used in financing important economic activities of benefit to the people. This subsidy has escalated and has covered people who do not deserve it, even the foreign organizations operating in the country. Counting the present deficit in the petroleum derivatives trade in accordance the sale of the crude to the local refineries, compared with the current international price, the deficit becomes 6 billion Sudanese pounds. Thus the price of the diesel will be 9 pounds a gallon and benzene 17 pounds a gallon. This price, of course, is not proportional to the income of the Sudanese citizen. Added to this is the continued subsidy of the electricity in the form of petroleum products. The state, moreover, buys the share of the foreign companies of the Foula the fields' crude in the international prices, thus aggravating the deficit. All this makes it difficult to continue with the current unguided subsidy policy.
This situation calls for taking measures aimed at partial removal of the subsidy, lowering the deficit of the petroleum trade, finding revenues for the provision of the grant to the state employees and pensioners and assisting the social security networks in addition to pushing the productivity forward, particularly in the field of agriculture and livestock breeding.
The current and expected economic situation requires taking steps and arrangements necessary eliminating the factor that threaten the sustainability of the economic, political and security stability and creating an atmosphere conducive to the growth sustainability and bolstering productivity and curbing the negative effects.
Finding solutions to these shortcomings require a number of measures and arrangements in the context of medium-term programmes we are presently finalizing, but in view of the accelerating internal and external developments, it has now become of utmost importance to find immediate solutions.
These measures have addressed the main factors of the economic shortcomings which should tackle under the expected circumstances. This requires additional substantial cuts in the government expenditure and reconsideration of the subsidy of the commodities and services and using the intersecting subsidy mechanism to make sure that the subsidy reaches the sectors of the community which deserve it, in addition to bolstering the financial effort at the federal and state levels which must be fully coordinated. Moreover, similar must be made between the financial and monetary policies, particularly those related to minimizing the demand for importation, control of the cash supply, stabilizing the rates of the national currency and increasing the exports and transfers into the country for backing up the country’s foreign exchange reserves. As you know, a number of financial and monetary policies and measures have been introduced during the past period. These policies have begun to give fruit by improving the overall economic indicators, influx of the foreign investments and provision of financial financing by the regional and international organizations.
Some of these measures, particularly those related to the living circumstances were necessitated by the internal and external pressures and, in order to redress their negative effects we introduced their substitute measures for mitigating or removing their effects. For this purpose we increased the salaries of the state employees and pensioners from the available resources.
In light of the above-mentioned, the following policies and measures have been taken:
A) On rationalization of the public expenditure:
1. Decreasing the salaries of the holders of the constitutional positions at the federal and state levels by 25%
2. Decreasing travels abroad for the holder of the constitutional positions, executives and state employees by 30%, with the travel decision to be taken by the Council of Ministers, in addition to lowering the travel grades and cutting the number of companions and official delegations.
3. Decreasing the budget of the diplomatic missions by 10%
4. Prohibiting the purchase of vehicles for the government except for necessity and in accordance with specific controls.
5. Prohibiting permits for construction of new government buildings and installations and the purchase of new furniture.
6. Cutting the item of payments for purchasing commodities and services for the ministries and other governmental units by 30% during the first quarter of 2011 (the revenue-generating, strategic and productive units are exempted).
7. Reconsideration of the state organizational structure at the federal and state levels.
8. Decreasing the development spending for all public corporations by 20% and the running administrative spending by 20% of the approved appropriations of the general and corporations budgets for 2011
9. Suspension of the organizational structures of the ministries and units, except the new ministries which were established under Republican Decree No. 22 for 2010
10. Suspension of any decision related to construction of structures of new units.
11. Obligating the public corporations to deposit their foreign currencies in the accounts at the Bank of Sudan in a week’s time.
12. Depositing all the duties acquired by the government institutions, whether in free or foreign currencies in the public treasury.
13. Liquidation of the government companies in compliance with the Council of Ministers resolutions by the end of 2011. Getting rid of the government shares in the joint investment companies, by selling them in order to give way to the private sector and provide additional resources for the public treasury.
14. Cancellation of VAT exemption for some commodities.
15. The External Balance:
-Preparation of a list of the banned commodities and raising the customs on luxury commodities
-Rationalization of the government utilization of the foreign currency
-Continuing the flexible management policy of the rate of exchange
-Fighting the practice of tampering with the export, import invoices
-Fighting the practice of withholding the hard currency abroad
-Banning importation of some non-essential commodities
-Utilization of the foreign exchange in importing essential commodities such as wheat and drugs.
B) Resolutions on enhancement of resources:
-Setting the prices of the petroleum derivatives in motion in accordance with the following:
-Adjustment of the price of diesel to be 6.5 pounds a gallon
-Adjustment of the price of benzene to be 8.5 pounds a gallon
-Adjustment of the price of butane to be 13 pounds
Adjustment of the price of jet gas to be 6.5 a gallon
-Imposition of a fee of 20 pounds on a bag of the local sugar
C) Redressing the effects of the resolutions:
1-Increasing the income of the employees a monthly bonus of 100 pound for all government employees and pensioners
2-Proving a school meal, free for the poor pupils and subsidized for other pupils
3-Increasing to 200,000 the number of the sponsored students
4-Paying fees for the poor students in the universities
5-Supporting 500,000 poor families
6-Increasing the appropriations of the free medical treatment and including it in the health security
7-Electrification of the artificially irrigated agricultural projects which use diesel and supporting the productivity of the rain-fed sector and the livestock breeding projects by establishing a fund for agriculture in an amount of 150 million dollar is immediately deposited for provision of the essential agricultural inputs
8-Establishment of a fund within the range of 150 million dollars for supporting the industry
9-We will introduce exceptional measures for encouragement of the investors in the Arab region in conformity with the relevant decision by the President of the Republic
Conclusion:
* We are fully aware that the financial and monetary reform of the national economy is not free of difficulties, problems and dissatisfaction but it is an inevitable measure for correct our movement forward and face up the reality scientifically and seriously as postponement of solutions only aggravates the problems rendering them difficult to be solved in the future.
* The Sudanese businessmen, workers and farmers unions and the states have been consulted on the proposed resolutions and measures.
* The afore-said measures will coincide with implementation of the development commitments stipulated in the peace agreements of the east, Darfur and the three regions (South Kordufan, Blue Nile and Abyei), particularly with regards to the infrastructures , the social services and the productive sectors.
* We would like to emphasize that these resolutions and measures will help us in enhancing the energies of production in the fields of agriculture and industry and, consequently, increasing the supply of commodities and services and minimizing the demand for import, a matter which will help realize the economic, political and social stability, upgrade our defense and security capacities and make the essential commodities and services available for the citizen.
* Let’s pray to Omnipotent God for cooperation at the federal, state, governmental and non-governmental levels for achieving our strategic goals and boosting our political and economic for confronting the external challenges targeting our country and, with God’s help, superiority and glory will be ours.
END
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