Backdrop on the Economy
Expansionary policies stage:

This was response to the goals of the three years Economic Salvation program, which was implemented in the years 1990-93. Its main goal was the revival of the stagnant economy to restore internal and external economic balance and to get the economy out of the stagflation tunnel which engulfed the country throughout the Nineteen Eighties.
To achieve this the macro economic policies public expenditure to finance production in the public sector , mainly agriculture, and the banks (through expansionary monetary policy) were encourage to do the same for the private sector.
The implementation of these policies brought in positive results for the GDP growth , which increased speedily from 1992, yet that growth was not accompanied by similar growth in other macro - indicators . Thus this policy faced the (inevitable) time lag between the public expenditure and the realization of the new investments fruits. This time increased inflationary pressure because of the increased money supply and the attendant deterioration in the exchange rate together with the increase in cost of production in a chain reaction reaching its peak in 1996 when inflation reached 196%.
In general it could be said that while the expansionary policies transformed the Sudanese economy from stanation to revival and expansion (as witnessed by GDP figures (prior and after 1992) yet this growth has not ameliorated the negative effects of monetary expansion which could have led to an uncontrollable situation presently there appeared a need for new trend of macro economic policies.
Control of Aggregate Demand Policies

This took place effectively in 1996 in the shape of related monetary and fiscal policies designed to decrease the aggregated demand in the economy through institution of fiscal and monetary policies aiming to:

- Reduce government borrowing from the banking system.
- Reduce the budget deficit as percentage of GDP.
- Promote Exports.
- Develop mechanisms to control foreign exchange movements to gain a pressure of control in the exchange market.
- Lower the growth rate money supply.
- Sustain the GDP development.

Obviously the efficient implementation of such policies required hard effort in light of adverse and exceptional conditions precipitated by increased expenditure on now more war fronts and other security hazards. Added to that was the new expenditure on the federal system and the establishment of new states and the attendant division of resources between the center and the new states and localities. The need for current and development expenditure has increased in view of reducing foreign resources as follows:-
This policy threatened to usher a new stagflation; hence a new policy stage was brought in namely:
Supply side Policies:

These policies concentrated largely on reforming fiscal and tax procedures and targeting them towards increasing production and productivity without jeopardizing , in the process, the monetary discipline drying the economy of liquidity.

Special attention was given to lowering agriculture - related taxes and increasing capacity utilization and productivity of the industrial sector. Export taxes were eliminated to promote foreign trade and increase international competitiveness of the Sudanese exports . These policies gained momentum in 1998 by the beginning of introduction of V.A.T as a climax of tax reform internally and to prepare for globalization externally.
Economic Performance 1998:

The macro economic performance, in 1998, has been characterized by indicators of very clear economic stabilization. This indicated that the economy was now better prepared to enter a new state of adjustment with chances of finding better and more comprehensive solutions to the still pending problems. The problems in question were those related to the social side viz. poverty and lack of utility services ; they caused a lot of concern as they are related to security pressures which played a prominent role in forming the features and running of the economy.
The indicators reflecting the better economic performance could be highlighted by the following macro indicators:
Gross Domestic Product (GDP)

In spite of slight drop ( from 6.1% in 1997 to 6% in 1998) it is clear that the GDP sustaining its positive growth rate the throughout the Nineteen Nineties . It may be observed that the official estimates for the growth of the national economy was in line with the congress on trade and development incorporated in the economic report for the least developed nations which put the average rate of growth of Sudan's GDP for 1990 -96 at 6,1% in contrast to 1% for the Nineteen Eighties.

The growth in 1998 was a result of the continued growth of the both irrigated and traditional rain fed sector together with the strong performance of the animal wealth sector, while the mechanized rain fed sector witnessed a decline.
In contrast the rate growth for the industrial sector debt declined from 10,6% in 1997 to 4.5 in 1998. This is related to the decline of the mining and execrative sectors which has witness a very substantial growth of 19,8% in 1997 but went to 4.1% in 1998. At the same time the building and contracting sector realized a healthy rate growth of 10% in 1998 as against 0.4% in 1997.

The service sector has increased to 3.1% in 1998 after a series of negative results. The reason being the increase in inflation rate and the attendant positive result for the exchange rate.
Inflation

This decline (in inflation rate) was a result of adhering to fiscal and monetary policies that aimed at stabilizing the prices, controlling liquidity, nationalizing government expenditure and reducing the budget deficit> this process was helped by the growth of the economy and the widening base of commodity supply.
Inflation rate is expected to continue its decrease in this year (1999)
The Money Supply:
This was the most targeted area of the fiscal and monetary policies in 1997/98 because of its serious effect on the economic balance and its effects on inflation and price levels. Thus the success in control of the money supply led directly to lower inflation.
Exchange Rate:
As a result of the policies designed to narrow the gap between the official exchange rate declared through the commercial banks and the free market, and ultimately aiming to unify both prices, the gap started to narrow gradually to almost vanish by December. This is a good result after two years of implementing a mixture of new market driven mechanisms and official interventions to blunt the effect market (e.g prohibiting within the parallel (i.e. free) market and the official market (e.g. prohibiting banks FROM financing purchase of foreign currencies or purchase of export proceeds).

This improvement of exchange rate indicates, together with other macro indicators, ushering a stable stage which , if continued, would foster a new atmosphere for the gradual flow of private investment (including Sudanese capital abroad) to the country.
Foreign Trade
NO significant change occurred in the export proceeds of the country in 1998> it stood at USD 591.6% Million compared to USD 594.2 Million in 1997> Imports , on the other hand are expected to go up to USD 1832.4 Million by the end of 1998 causing a deficit of USD 1240 Million in 1997 > The deficit increase is due to investments in Petroleum project equipment imports which comprise 59% of the total import bill.
The 1998 Budget:
Both the revenue and expenditure sides of the 1998 budget performed well. But not as good as 1997. The tax reform measures undertaken was not reflected in this year's budget, but is expected to show in 1999. This included custom and excise tariffs, lowering income and business profit taxes in the agricultural sector and waiving of export taxes.

The percentage of central revenues to GDP rose from 7.3% to 7.9 in 1997 but it is still low by government estimates.
In the expenditure side the percentage rose from 8% to 0.6 % in 1998.The budget deficit , however, decreased from 0.72% in 1998 to 0.73% in 1997 > Central government borrowing, consequently fell from 0.5% to 0.4% in 1998 because of the continued policy of controlling the aggregate demand.
Economic Policies in Support of the Social Side
Insuffcient expenditure on social development in a major problem for the economy since the beginning of the could not master enough resources to support the incomes of the vulnerable sections of the population mainly the fixed income groups who bore the brunt of inflation and price increases and sharing up the basic services to an acceptable standard.

Expenditure on the war ( in the South), security and state machinery takes up to the best of the Government revenue .Restoring to non-real resources - i.e borrowing from the banking system - would have exacerbated further the situation . Thus the services sector had to contend with meager resources , and the Government had to concentrate whatever it had on health, education and clean water. By giving grants to the new states ( which inherited those services) meager resources also increased the chances for privatization of public services.

With better resources coming to the budget the central Government increased its support for social services. It also concentrated subsides for the low income and poor families and subsidies for electricity, medical care outside the country, the life saving medicines and free treatment for casualties.

Government services, has grown substantially. It share related to GDP increased to 16.5% ( in real terms) in 1998 from a negative of 15.6% in 1997 . This is a significant development when compared to the development in other services and the and the family sector which was only 0.5% in 1998.

The increasingly better performance of the services sectors a function of better economic situation on the one hand and reducing the pressures on Government revenues from increased expenditure, war, drying of foreign humanitarian ad. Until such conditions prevail economic policies will continue to be directed more to productive and wealth - generating sections than the service needing secotrs .It will continue to support education , Health - generating sections that the service needing sectors while the private sector will have wider chances to diversity its commercially base of services and catch up with the modernization process going on regionally and internationally.