New Budget by Khartoum Regime Promises Catastrophe and Endless Suffering for the People of Sudan
Eric Reeves | December 28, 2017
Khartoum regime’s catastrophic new budget proposal—without any review by economists—will light the fuse for massive civil unrest in #Sudan, and not just in Khartoum. Terribly punishing effects on lower-income Sudanese are aptly described by Sudanese economist Prof. Sidgi Kaballo:
Analyst: Sudan’s draft 2018 budget “tragic and catastrophic” | Radio Dabanga | December 28, 2017 | KHARTOUM
Sudan’s draft general budget for 2018 represents “as a siege on citizens’ livelihood as a result of rising prices, high inflation rate, increasing cash mass, and demand for goods and commodities for the privileged segment,” says respected Sudanese economist Professor Sidgi Kaballo.
The budget allocates SDG 23.8 billion to the national security and defence sector out of a total budget of about SDG 173.1 billion, compared to just SDG5.3 billion to the education sector, and SDG 2.9 billion to the health sector. SDG 11.5 billion has been allocated to the Ministry of Defence, SDG 4.6 billion to the security services, and SDG 4.1 billion for the Rapid Support Forces. “This budget is tragic and catastrophic,” Prof Kaballo said in a statement to Radio Dabanga. “The public bear the brunt as prices will increase by 155 per cent and more.” Prof Kaballo: “The way in which the budget was drawn out and its timing show the government’s great deal of disregard for its organs, as it was released on December 24 to take effect from January 1. This means it has to be discussed and approved by the Legislative Council within one week.”
Direct and indirect taxes
He said the new budget in terms of features is similar to the previous ones, relying on direct and indirect taxes and borrowing from the public to cover its deficit. He said there is a significant increase in spending compared to the previous year, where spending would amount to 2.4 per cent of GDP, four percent higher than the previous year. He described the increase in spending on the executive as unsatisfactory. The spending on defence and security and intelligence took precedence to include disbursements for defence, security and intelligence service institutions. He also pointed out that the spending on the Ministry of the Interior and the services it provides such as security, records, and licenses constitute four per cent of the budget while the spending on the Rapid Support Forces is equal to 16 per cent of the budget.
“Predicted GDP increase unrealistic”
Regarding the increase in the national GDP predicted by the government, he said that it is unrealistic because the agricultural and industrial production have not improved and there is a trend of increased electricity costs to agricultural and industrial production. As for the government’s production of gold, Prof Kaballo said there is a smuggling problem hindering its contribution to the economy as three quarters of the gold produced is smuggled abroad. He explained that the government’s plans to reduce the cash mass by 18 per cent is also unrealistic because it increased by 40 per cent the previous year. He added that the government’s plan to reduce inflation from 34 per cent to 19 per cent cannot be achieved because the cash mass increases naturally as a result of investment, while the increase is the result of borrowing from the banking system and the public, as stated in the plans. For the public, this means more currency and fewer goods which leads to a rise in the price of goods.
Prof Kaballo also pointed out that the increase in the cash mass will be in the hands of the wealthy group that consumes luxury goods and services. Regarding the government’s imposition of taxes on people in marginal occupations, he said that it is not feasible because “the incomes of these groups, such as tea sellers, food and beverage vendors, cart owners, and shoe-polishing are listed below the minimum wage level and that any tax on them represents a value-added tax. He called upon the government to impose tax on those who earn high incomes and do not pay tax. “The government’s plan to support vulnerable groups must be concrete and include education and health services, which are basic services recommended in support of agreements reached with the International Monetary Fund,” Prof Kaballo concludes.
Sudan’s National Chamber of Importers has cleared itself of any possible price increases and confirmed that any increase will be paid by the public. It described the government’s intention to approve the budget as shocking. The head of the Chamber, Malik Jaafar, said in a press conference that prices will increase by 155 per cent, and any commodity will increase by 36 per cent. He added that a kilo of lentils will increase by 225 per cent and a kilo of rice by 169 per cent. He stressed that the importers will not be affected by the recent increases, however the consumer will be directly affected.