1. SUDAN Fiscal Trends, Constraints & Prospects Paris, March 9, 2006

2. Sudan-fiscal
Trends
Prospects
Reforms
Challenges

3. Fiscal trends—revenues
Oil revenues have risen rapidly

4. Fiscal trends—revenues
...and non-oil revenues have shown an improving trend

5. Fiscal trends—revenues
Oil fund savings have continued, after the CPA

6. Fiscal trends—expenditures
Expenditures have risen rapidly in recent years

7. Fiscal trends—expenditures
The fuel subsidy is high and does not benefit the poor
Gasoline (benzene) prices have a low subsidy
but Diesel (gasoil)—the main fuel—is heavily subsidized and the subsidy does not necessarily benefit the poor in agriculture or urban areas

8. Fiscal trends—space
...overall, despite increases in revenues, the fiscal space has shrunk because of the CPA and decentralization

9. Fiscal prospects—2006
Fiscal deficit falls: 1.8% of GDP in 2005 to 0.9% in 2006
Oil output up 70% in 2006, but lower quality of new crude means less than proportionate increase in govt. revenues
Non-oil revenues rise on administrative improvements and exemptions removal
Oil fund savings of 1.4% of GDP

10. Fiscal prospects—2006
High expenditure allocation to south (CPA) and northern states (decentralization)
Significant increase in development expenditures at federal and state levels
Fuel subsidy remains high

11. Fiscal prospects— macro-structural reforms
Protect the tax base
Revamp tax incentives (VAT and profit tax holidays)
Oil transparency
Regular and transparent profit transfers from oil companies to the treasury
Capacity in public financial management
Public Expenditure Review
Improve fiscal transparency
GFS reporting and operationalizing the FFAMC

12. Other fiscal reform challenges
Address the fuel subsidy
From a macroeconomic view, the increase in spending at all levels of govt. calls for sound expenditure management systems (GFS):
Coordinate budget formulation and classification; design effective public procurement system
Improve flow of information and reporting
Ensure tracking and auditing