Agricultural Economics Working Paper Series
الحقوق الفكرية (c) 2021 Agricultural Economics Working Paper Series
Oil and Agriculture in the Post - Separation Sudan
The Comprehensive Peace Agreement (CPA), which was signed by the governmentof Sudan and the Sudanese People’s Liberation Movement (SPLM) ended more than20 years of civil war.According to the CPA,the Sudan’s government has 50% of theoil exploited from the wells existing in the south in addition to the oil produced fromthe northern wells. The latter representsabout 30% of the total oil productioninSudan.InJanuary 2011,the people in southern Sudan have voted for separationfrom the Sudan andin July 2011 the Republic of South Sudan was officiallyannounced as Africa’sneweststate.Now the CPA period is over and the southpossesses its entire production of oil,butneedto use the export infrastructure thatexists in the northtoexportit. For that the south need to pay fees and customsforwhich theexact amountsneedto be further negotiated. Sudan would lose a hugepart of its revenue from oil, which constituteda growing sharein its trade,government revenue and GDPduring the last decade.This papertriesto investigatetheconsequences of separation on the Sudan’s economy.A regional generalequilibrium model with Africa database of the Global Trade Analysis Project (GTAP)isapplied.Results show that the entire economy would be hitwhen a20% cut in oiloutputis simulated. The study introduces the non-oil exportsofthe agriculturalsector as an alternative to oil and recommends enhancing the efficiency inagriculture and promoting agricultural exportsto gradually bring the economy backon track.
The Controversy of Exchange R ate Devaluation in Sudan : An Economy -wide General Equilibrium Assessment
Theinternational Monitory Fund (IMF) has been working with Sudan since 1997 toimplement macroeconomic reforms including a managed float of the exchange rate(EXR). The IMF seesthe EXR flexibility as key to safeguard and rebuild foreignexchange reserves and essential to meet the international reserve targetin Sudan.However, the authorities in Sudan are concerned that greater exchange rate flexibilitycould contribute to inflationary pressures. In addition, areview of literature focusingon the exchange rate policies in Sudan reflects huge ambiguity about its outcome.This calls for additional empirical investigations that provide economy wideassessments of the various possible scenarios that could be adopted in the Sudanesecontext. Accordingly, the current paper applies an economy-wide impact assessmenttool to investigate the possible effects of devaluating the overvalued (according to theIMF, 2009) Sudanese pound. Namely, it uses aComputable General Equilibrium (CGE)model together with its detaileddatabase of Sudan to simulate the Sudanese pound todepreciate according to three different scenarios by 5%, 10%,and 15%. Results of thepaper recommend that the additional flexibility in the Sudanese EXR regimesuggested by the IMF should be carefully considered if that would lead the value of theSudanese currency to be devalued. This imply that the authorities in Sudan shouldclosely monitor and control the EXR to avoid its depreciation in the short run, whileencouraging both public and private investments to help creating additional jobs thatincreases domestic income and reduces the negative consequences of inflation
Agricultural Efficiency Gains and Trade L iberalization in Sudan
The traditional agriculture in Sudan occupies 60% of the total cultivated land and employs 65%of the agricultural population.Nevertheless, itis characterized by itslow crop productivity,which is mainlydriven by low technical efficiency, whiledrought andcivilconflictsthreatenmost of its areas countrywide.Therefore,it hascontributed only an average of 16% to the totalagricultural GDP during the last decade. This paper addresses from an empirical point of view thesectoral and macroeconomicimplicationsof agricultural efficiency improvement in Sudan andassesses the efficiency gains under the assumption of trade liberalization. Efficiencyimprovement experiments are implemented by augmenting the efficiency parameters of labor,capital, and land in a Computable General Equilibrium (CGE) framework. The CGE model of thestudy relies on the newly produced Sudanese Social Accounting Matrix (SAM), which providesdata on 10 agricultural sectors, 10 industrial sectors and 13 service sectors. Results show thatimproving the agriculturalefficiency would lead to improvements in GDP, welfare level, andtrade balance.In addition it would also improve the output and competitiveness of the Sudaneseagricultural exports and increase their strength to face the challenges of liberalization.