VZCZCXRO5849
PP RUEHROV
DE RUEHKH #0544 0951128
ZNR UUUUU ZZH
P 051128Z APR 07
FM AMEMBASSY KHARTOUM
TO RUEHC/SECSTATE WASHDC PRIORITY 6749
INFO RUCNIAD/IGAD COLLECTIVE

UNCLAS KHARTOUM 000544 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR AF/SPG 
PLEASE PASS TO USAID FOR AFR 
 
E.O. 12958: N/A 
TAGS: EAID ECON EPET PGOV PREL SU
SUBJECT: SUDAN: AN ECONOMIST SHARES HIS PESSIMISTIC OUTLOOK 
 
REF: A) KHARTOUM 0194 B) KHARTOUM 0211 C) KHARTOUM 0248 
 
 ¶1.  (SBU) The economic advisor to the Khartoum stock 
exchange expressed pessimism on the outlook for the Sudanese 
economy for the near term.  He predicts "turmoil" because of 
the pressures on the budget. He described how the ruling NCP 
is skimming off money in preparation for elections, and 
alleged that some government officials are moving money and 
family out of the country.  End Summary. 
 
Government Deficit a Growing Problem 
------------------------------------ 
 
¶2. (SBU) On April 3, Econoff met with the Economic Advisor to 
the Khartoum Stock Exchange, Professor Ali Abdullah Ali to 
discuss the general economic outlook.  Dr. Ali, who is a 
supporter of the opposition DUP was critical of the 
governments current economic policies. Dr. Ali opened by 
noting that economists are often pessimistic, but he is 
especially so at the moment.  He complained that the 
government is running up a growing deficit and attributed 
this to 'unmanageable expenditures,' much of it related to 
funding the security forces.  He said that the government had 
tried to borrow USD2 billion from China to help cover the 
deficit, but the Chinese had only offered a loan tied to the 
purchase of Chinese goods.  Ali said that the Governor of the 
Central Bank and the President of Petrodar (a major petroleum 
operator) are currently in Malaysia seeking a loan. 
 
¶3. (SBU) Elaborating on the options available to the 
government, Ali said that without overseas loans, the 
government can borrow locally, (at rates of around 20 
percent) or raise taxes.  Increasing taxes on sugar and 
bread, or cutting the subsidy on gasoline, diesel or cooking 
oil would lead to discontent. He predicted that this could 
lead to "turmoil."  The ruling National Congress Party (NCP) 
is preparing for elections, in part by skimming government 
salaries. Ali alleged that one member of the NCP, the 
President of the telecommunications company Sudatel, receives 
a nominal salary of USD50,000 per month, USD40,000 of which 
is then transferred to the NCP, possibly to be used in the 
upcoming elections. 
 
Economic Benefits are Not Being Shared 
-------------------------------------- 
 
¶4.  (SBU) Professor Ali said that while the economy is 
growing rapidly, the benefits of growth are inequitably 
distributed. Members of the NCP and their families have 
received a disproportionate advantage and their visible 
wealth is apparent to the larger community and is a source of 
frustration.  Ali claimed that some members of the elite are 
getting nervous and cited the case of the governor of 
Khartoum State, who Ali said has now moved his family to 
Malaysia. 
 
¶5. (SBU) Turning to Darfur, Ali said that a solution is 
urgently needed to allow the economy to stabilize.  The 
government wants a solution, yet at the same time, the 
government resists foreign pressure to bring the crisis to a 
close. Ali attributed this to Sudanese stubbornness and a 
suspicion of foreign influence by the NCP leadership. 
HUME