Sudan asks Arabs for deposits, needs $4B

Sudan asks Arabs for deposits, needs $4B

Sudan asks Arab states for bank deposits - central bank governor; Sees cuts of 25 in government expenditure this year

September 17, 2011 3:33 by Reuters

North Sudan’s central bank governor asked Arab countries on Thursday to deposit funds in the African country’s central bank and commercial banks following its recent split into two countries, he said.

“I have requested the governors to deposit some reserves in the central bank and also in Sudanese commercial banks,” Mohamed Kheir al-Zubeir told Reuters in an interview after a meeting of Arab central bankers in Qatar’s capital.

Zubeir said he did not ask for a precise amount, but said: “We of course need about $4 billion for this year.”

The North has lost 75 percent of the country’s oil production of 500,000 barrels per day after South Sudan gained independence in July, thanks to a 2005 peace deal that ended decades of civil war.

Sudan has been hit by an economic crisis with inflation more than doubling since November, a U.S. trade embargo and a scarcity of
dollars driving up the cost of imports and hurting ordinary Sudanese already struggling after years of conflict.

The Sudanese pound hit a new low against the dollar on Thursday amid a scarcity of hard currency, while annual inflation in the African country accelerated to 21.1 percent in August due to a jump in food prices.

“We are now having a three-year emergency programme, which will basically address this problem. Within three years I think we can adjust our economy again. We are going to make fiscal monetary policies, and also diversification of production particularly in the agro and industrial sector for import substitution and export promotion,” Zubeir said.

“On the fiscal side there will be a drastic cut in government expenditures, more than 25 percent for this year.”

“There will be a change in the priorities of development…”

Zubeir said economic cooperation with the south would help compensate some lost revenues.

“We still have revenues coming from the south with regard to the infrastructure use of the petroleum pipeline, the port and also the refinery facilities which are all in the north. We are going to rent it to the south so that it can export petroleum. This will compensate partially,” he said.

North Sudan’s finance minister said last week the country would need up to $1.5 billion of aid a year, but added that budget difficulties could be controlled and the deficit kept under 3 percent of GDP. (Reporting by Martina Fuchs; Writing by Martin Dokoupil and Firouz Sedarat; editing by Ron Askew)