1. Government Financing Programs & Commitments to CPA Implementation Second Sudan Consortium Omer Mohamed Abel Salam 19 – 20 March - Khartoum The Report: Presentation:

2. 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)

3. 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.

4. Table (1) GNU Expending on JAM projects million US Dollars

5. Key:5. BSS: Basic social services 1. CB: Capacity building and Institional development6. INFRA: Infrastructure 2. GR: Governance and rule of law7. LPS: Livelihood and social protection 3. EP: Economic policy8. IINOF & STAT: Information and statistics 4. PS: Productive sectors

6. Key:5. BSS: Basic social services 1. CB: Capacity building and Institional development6. INFRA: Infrastructure 2. GR: Governance and rule of law7. LPS: Livelihood and social protection 3. EP: Economic policy8. IINOF& STAT: Information and statistics 4. PS: Productive sectors

8. Table (2) GNU Expenditure on JAM/CPA Obligations JAM/CPA Obligations 20052006 Total for 2005/2006 JAM Estimates Actual JAM Estimates Actual JAM Estimates Actual National fund for reh.of war affected areas01.7000 Joint forces04073077 Commissions/councils/committees000404 Entitlements for Consitustionees0004.90 Agric Season support00078.50 Total05.70160.40166.1

9. Towards Fiscal Decentralization and Equitable Resource Mobilization 2005-2006 Development Expenditure as % of GDP5%6.9% Poverty Reduction Expenditure as % of GDP3.5%5.0% Social Expenditure as % of GDP2.50%3.0% Intergovnmental Transfers of Total National Revenue: GNU65%56% Goss12.5%16% Northern States22.5%28%

10. Maintaining Stable macro – Economic Environment

11. 2006200520042003200220012000Item Growth Rate CON Growth Rate CON Growth Rate CON Growth Rate CON Growth Rate CON Growth Rate CON Growth Rate CON Agricultural Sector 8.338.97.239.63.640.05.245.67.4464.745.60.746.3 12.528.97.628.312.928.510.524.1823.213.122.847.1*21.5 Industrial Sector 10.832.29.832.16.631.53.830.34.230.84.231.61.632.2 Service Sector 10.38.17.266.56.43.8 Overall GDP Growth Rate Sectoral GDP & Annual Growth Rate * The high jump in industrial sector growth rate is attributed to petroleum production

12. Real GDP Growth Rate

13. Sectoral GDP 2000 -2006

14. Resource Gap & Economic Stability 2000-2006 Item/Year2000200120022003200420052006 Inflation rate8.5%4.9%8.3%7.7%8.5% 7.2% Current Account Balance% 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 Deficit0. 7%1.6%1.1%0.5%1.5%2.6%3.3% Source: Bank of Sudan

15. Resource Gap & Economic Stability 2000-2006

16. 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

17. Indicators Standard Thresholds 2003200420052006 NPV of debt/ Export.1501186914707556 NPV of debt/ Revnue.250950670510497 Revenues/GDP1514212220 Export/GDP3016202117.3 Debt Sustainability Indicators 2003-2006

18. NPV of Debt/Export- NPV of Debt/Revenue NPV= NET PRESENT VALUE

19. Debt sustainability Indicators 2003-2006 Exp/GDP- Rev/GDP NPV= NET PRESENT VALUE

20. 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.

21. 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.

22. 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.

23. Macroeconomic Framework 2007-2011 20072008200920102011 Real GDP Growth Rate10%7.6%7.0%7.2%7.1% Current Account-9%-5.2-4.5%-3.9%-3.6% Export as % of GDP13%15.1%14.3%13.9%13.5% Import as % of GDP-17%-15.9%-14.8%-14.1%-13.5% Inflation8%3.0 4.05.0 Money Supply34%35%33%30% Total Expenditure as % of GDP25.3%23.8%21.9%21%19.6% Public Revenue as % of GDP20.1%18.1%16.7%16%15% Budget Deficit as % of GDP5.1%5.7%5.3%5.0%4.5%

24. 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 27101 2.Governance and rule of law43142 3.Economic policy4337 4.Productive sectors158135 5.Basic social services5282807 6.Infrastructure259405 7.Livelihood and social protection107208 8.Information and statistics2217 Sub-total11893852 Three areas3641229 Grand total15535081

25. 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.

26. 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.

27. 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.

28. 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.

29. 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.

30. 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.