Review of Sudanese External Debt and Impacts on Poverty Rates in Sudan

Abstract

The turbulent economic crisis prevailing in today's Sudan was not born yesterday. It represents the bitter fruit of forty years of economic mismanagement, political uncertainties and entrenched corruption. Part of it, is borrowing from international financial institutions for presumed developmental projects, failures in utilization capacity and production schemes and debts accumulation with heavy arrears. Currently, it is estimated that external debts of Sudan has exceeded US$42 Billions by the end of 2011. Thus, due to evidence of continuous mismanagement, International Financial Institutions refrain from extending hands. When oil came into production many expected that to help develop the other productive sectors and integrating the Sudanese economy with the world. That did not happen, however, and debts volume continued to bloat due to interest rates and arrears. The situation worsened by the secession of Sudan's southern part which contains %75 of the country's reserves. The value of the domestic currency collapsed, inflation rates accelerated and added to the dominating recession generating unprecedented stagflation. That added to the unemployment and poverty rates in the country. This research aims to study relationship between the external debt and economic indicators, exchange rate and GDP in addition to population of Sudan during the period of (1980-2003). The analyzed data of External Debt were collected from External Debt Unit-Bank of Sudan. Annual Record and the GDP and exchange rate data were collected from the General Research and Statistics administration Bank of Sudan. The Population Data collected from the Central Bureau of Statistics by using transfer function models. The research is constituted of an introduction about External Debt and the way of data collection was exposed as a total value of external debt and number of population. A statistical description of the variables of the study came to some important points as the increase of the total external debt share per capita, and increasing exchange rate of dollar against national currency. Moreover, there were continuous decreases per capita share in GDP. Conclusions are that there are strong correlation between GDP and exchange rate; population and per capita share of external debt. There were recommendations that more in depth statistical studies to be conducted on budget planning and debt servicing to void the commercial credits witch always not used in developing projects. Additionally, loans should be used to invest in the infrastructure and social projects in the health, education and infrastructures. Conclusively, with the country continuing economic downfall, there are no solutions under the present political regime. The question is how that will add to poverty and eventual starvation leading to mass human tragedy and could it possible to put the country under economic trusteeship.