VZCZCXRO7420
OO RUEHROV RUEHTRO
DE RUEHKH #1353/01 3380829
ZNR UUUUU ZZH
O 040829Z DEC 09
FM AMEMBASSY KHARTOUM
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4826
INFO RUCNIAD/IGAD COLLECTIVE
RUEHGG/UN SECURITY COUNCIL COLLECTIVE
RHMFISS/CJTF HOA

UNCLAS SECTION 01 OF 02 KHARTOUM 001353 
 
NSC FOR MGAVIN, LETIM 
DEPT PLS PASS USAID FOR AFR/SUDAN 
ADDIS ABABA ALSO FOR USAU 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV ECON EFIN KDEM KPKO SU
SUBJECT: NATIONAL ASSEMBLY APPROVES 2010 BUDGET WITHOUT SPLM; 
CORRUPTION ENDEMIC IN GOS 
 
¶1. (SBU) Summary: On November 16, the National Assembly approved the 
national budget for 2010.  Due to a continuing boycott of the 
National Assembly by the Sudanese People's Liberation Movement 
(SPLM) and other opposition parties, the National Congress Party 
(NCP)and its allies unilaterally approved the budget.  Allocation 
for the 2010 election and referenda on southern independence is 
significantly less than anticipated.  A lack of funding for the 
unity fund may indicate a lack of continued interest in making unity 
attractive.  Sudan's Auditor General earlier issued a report finding 
financial embezzlement endemic in the Government of Sudan (GOS). 
End summary. 
 
¶2. (SBU) On November 16, Sudan's Minister of Finance and National 
Economy Dr. Awad Ahmed Al-Jaz presented the FY 2010 budget (January 
1-December 31, 2010).  Despite criticism from the National 
Democratic Alliance (NDA) and the absence of SPLM members at the 
session, the NCP approved the budget using its mechanical majority 
vote.  The budget details 23.7 billion Sudanese Pounds (SDG) in 
revenue, 32 billion SDG in expenses, and 8.3 billion SDG as a gross 
deficit.  (Note: The current exchange rate on November 24 was 1 USD 
= 2.38 SDG. Total budget amounts denote approximately 10 billion USD 
in revenue, 13.4 billion USD in expenses, and a deficit of 3.5 
billion USD.  End note.) Al-Jaz stated that the FY 2010 budget was 
based on the following economic indicators: 
 
-- The budget aims to achieve a growth rate of 6 percent and an 
annual inflation rate of 9 percent. 
-- Exports will increase revenues to 13.2 billion SDG, and imports 
will increase expenditures by 8.7 billion SDG. 
-- Sudan will become self-sufficient in the production of sorghum, 
meat, rice, cement, edible oil, animal fodder and sugar. 
-- Local wheat mills will produce 50 percent of Sudan's required 
yearly supply of wheat. 
-- Rehabilitation on the following rail lines will be completed: 
Babanousa - Wau; Khartoum-Port Sudan; 
Babanousa - Nyala; and Babanousa - Ed Daein. 
-- Sudan will increase electricity production by 905 megawatts, and 
construct 1704 km of transmission lines. 
 
¶3. (U) Al-Jaz summarized the FY 2010 budget (in billions of SDG) as 
follows: 
 
-- Taxes     9.6 
-- Grants     1.0 
-- Oil revenues   10.5 
-- Other revenues   1.5 
-- Total Revenues   22.7 
 
-- Current expenditures  21.4 
-- Development expenditures 10.6 
-- Total Expenditures  32.1 
 
--------------------------------------------- ----- 
SECURITY SPENDING FAR EXCEEDS HEALTH AND EDUCATION 
--------------------------------------------- ----- 
 
¶4. (U) Al-Jaz's report noted that the budget figures were prepared 
according to the new Government Finance Statistics (GFS) code, which 
mandates transparency and efficiency in allocation of resources as 
required by the Comprehensive Peace Agreement (CPA).  The FY 2010 
budget allocated 6.5 billion SDG for defense and security forces, 
491 million SDG for health, and 541 million SDG for education. 
According to the budget, the National Intelligence and Security 
Services (NISS) was allocated 1.15 billion SDG. 
 
 
------------------------------------ 
LESS FOR UNITY, ELECTIONS, REFERENDA 
------------------------------------ 
 
¶5. (SBU) The FY 2010 budget allocated only 6 million SDG for the 
Unity Support Fund, vice FY 2009 allocation of 366 million SDG.  The 
budget also provides 790 million SDG for the election and referendum 
commissions, 12.2% less than FY 2009.  Specifically the budget 
allocates the following: 
 
-- National Elections Commission  1.4 million SDG 
-- Southern Referendum Commission  720 thousand SDG 
-- Abyei Referendum Commission  479 thousand SDG 
 
--------------------------------------- 
AUDITOR GENERAL: CORRUPTION RIFE IN GOS 
--------------------------------------- 
 
¶6. (SBU) Fresh on the heels of Al-Jaz's FY 2010 budget, Sudan's 
 
KHARTOUM 00001353  002 OF 002 
 
 
Auditor General submitted his financial review disclosing widespread 
financial embezzlement in the GOS in FY 2008.  According to the 
report, the total amount embezzled during FY 2008 from various 
government institutions totaled 5.4 billion SDG, compared to 3 
billion SDG embezzled in FY 2007.  The report attributed the 
increase in corruption to the lack of internal supervision, as only 
6 percent of the money embezzled funds were repaid. Government 
companies raked in 1.7 billion SDG in embezzled funds, while 
government bureaus and officials themselves took an additional 3.7 
million SDG.  As the Auditor General conducted audits on only 181 
out of 237 government offices, the report accused the federal and 
state levels of not adopting proper financial arrangements to smooth 
the auditing process.  However, the report also attributed Sudan's 
endemic corruption to off-budget expenditures at the national level, 
and low overall expenditures on development projects. 
 
¶7. (SBU) Comment: According to preliminary UN estimates, the 
Southern Sudan Referendum alone will cost over 50 million USD.  The 
current GOS allocation in the 2010 budget is drastically 
insufficient.  While newspaper reports claim that the Assembly may 
have to pass a supplemental allocation, donors will have difficulty 
planning without a better fix on the eventual GOS contribution.  The 
allocation of resources in the FY 2010 budget suggests that the GOS 
will continue robust funding of its security apparatus at the 
expense of the education and health sectors.  The appalling lack of 
funding for the Unity fund suggests the GOS may not see the value of 
making unity attractive at this late stage in the implementation of 
the CPA. 
 
¶8. (SBU) Comment, continued:  Each year Sudan's Auditor General 
submits his annual GOS financial performance report that, implicitly 
criticizes the University of Southern California-educated Al-Jaz. 
Despite this, GOS takes little interest in ending impunity for the 
facilitators of Sudan's inexcusable corruption.  END COMMENT. 
 
WHITEHEAD