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Legacy issues constrain Sudan's economic recovery

Wednesday, January 7, 2015

Significance

Khartoum has benefited from a fixed per-barrel transit fee given falling oil prices, but the Sudanese economy has yet to recover from the shock caused by South Sudan's secession in 2011. According to the IMF's latest review, Sudan at that point lost three quarters of its oil production, one-half of its fiscal revenue and two-thirds of its international payments capacity. While the economy has begun to stabilise, recovery is fragile.

Impacts

  • Khartoum benefits from the delay to transit fee renegotiation, but talks are likely to begin soon.
  • This may provoke renewed confrontations over other issues, such as the border and claims about rebel support.
  • However, a renewed suspension of South Sudanese oil exports would hurt Juba more than Khartoum.
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