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SUDAN Fiscal Trends, Constraints & Prospects Paris, March 9, 2006. Sudan-fiscal. Trends Prospects Reforms Challenges. Fiscal trends—revenues. Oil revenues have risen rapidly. Fiscal trends—revenues. ...and non-oil revenues have shown an improving trend. Fiscal trends—revenues.
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SUDANFiscal Trends, Constraints & Prospects Paris, March 9, 2006
Sudan-fiscal • Trends • Prospects • Reforms • Challenges
Fiscal trends—revenues • Oil revenues have risen rapidly
Fiscal trends—revenues • ...and non-oil revenues have shown an improving trend
Fiscal trends—revenues • Oil fund savings have continued, after the CPA
Fiscal trends—expenditures • Expenditures have risen rapidly in recent years
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
Fiscal trends—space • ...overall, despite increases in revenues, the fiscal space has shrunk because of the CPA and decentralization
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
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
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
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