The Sudanese economy, like other economies is classified as underdeveloped since it depends on the production of raw materials and primary goods specially agricultural commodities which depend on the primitive means with the existence of a wide traditional sector and small modern one that both depend on imports for provision of agricultural and industrial inputs.

The Sudanese economic problems had been aggravated in the 1980s because of the increase of the Sudan's foreign debts, the depreciation of the national currency against hard currencies and the decline of the agricultural export revenues, specially the main cash crops. The Sudan economy had suffered external blows top of which was the deterioration of commercial exchange conditions, surge of energy price and the influence of the International Monetary Fund's policies which led to soaring inflation which in turn caused a wide gap between the prices and incomes. The IMF's policy had also caused and aggravated a deficit in the trade balance.

Under these situations, the successive governments adopted various policies to contain the crisis. Since its outbreak in 1983, the war in the South has been worsening the severity of the economic crisis. The last democratic government (1986-1989) adopted an economic policy aiming at halting the economic deterioration, rehabilitating the large-scale projects and stopping dealing with the International Monetary Fund. Thereof, the government actually rejected an IMF's plan proposing structural adjustment. Instead, the government presented a four year program which was encountered by many drawbacks, top of them was the political instability arising from the differences among the political parties themselves, the continuation of the south Sudan war and weakness of the national infrastructures. The four year economic program was recommended by an economic conference held in 1986 in which experts and economists had taken part along with political sectors.

President Omer Al Bashir's government came to power amid sharp internal crisis top of which was the economic issue, therefore, the new government adopted several policies to resolve the economic problem through a temporary and decisive handling in the first months of its coming to power in 1989. One of these policies was the pricing of commodities and services, imposition of taxes and customs on the commercial activities, combating inflation and restricting the dealing in the hard currencies. These policies were followed by a three year economic recovery program (1990-1993) which came in accordance with the recommendations of the Economic Salvation Conference organized in October 1989, which decided the objectives of the three year economic program in the following points:

• Revitalizing the Sudanese economy with a focus on agricultural development
• Mobilizing of the domestic and other available energies and opening the door before the national and foreign participation (private investments).
• Adopting economic, financial and institutional restructuring
• Creating a social balance so that the economic reactivation should not be on the account of the low income sector.
• Furthering the Islamization of the governmental and non-governmental banking system, insurance companies and expansion of Zakat (alms)levying.

• Continuation and restriction of deficit funding on development only.
• Introduction of commercial pricing system for subsidized commodities and the adoption of free foreign exchange market policy.
• Privatization of public institutions and that their ownership should go to either national or foreign private sectors.
• Full liberalization of agricultural products and gradual liberalization of prices of imports.
• The increase of revenues and the cutting of the government's expenditure by freezing, employment, encouraging optional retirement, leave without pay and paying due concern to taxes especially direct taxes as well as the expansion of the consumption tax scope.

Another measure was declared in May 1991, involving change and replacement of the national currency with a new one. In October 1991, the government approved a new Sudanese pound's exchange rate policy against the other hard currencies.

The government ratified another policy in October 1991, devaluating the Sudanese pound and two exchange rates were introduced, one was an official rate and the other was an encouraging one.

In February 1992, the Sudanese pound's exchange rate was totally liberated against the US dollar and that the banking system was entrusted with determining the exchange rate for the state's dealings along with liberalizing all prices, lifting subsidy from bread, fuel and sugar, raising the minimum wages and giving the Government's employees a monthly grant ranging between 600-1500 Sudanese pounds.

In May 1992, a 10-year National Comprehensive Strategy (NCS) was passed (1992-2002) comprising economic and social planning at all the productive and services sectors level. The strategy included an economic liberalization measures represented in canceling of all restrictions on foreign exchange dealings, approval of complete prices liberalization of the different economic sectors by turning their ownership to private sector.

The NCS has decided the economic performance goals in the following:
1. Redoubling of the national income.
2. Guaranteeing of equal income distribution.
3. Guaranteeing of national currency stability.
4. Increasing of the volume of the foreign commercial exchange.
5. Increasing the investment volume at rates go in line with targeted national income.
6. Funding the government's expenses in a way that coup with the economic growth goals.
7. Increasing the insurance volume ten folds.
8. Redoubling the banking units cheques 50 folds.
9. Levying zakat (alms) from finaner and expanding sources of insurance and solidarity official funds.
10. Redoubling investment and saving deposits 50 folds.

In July 1992, the government issued a policy regulating the foreign and local currency as follows:

• Cancellation of customs declaration of foreign currencies when entering or leaving the country.
• Encouraging imports through non-supported credits.
• Raising the cost of funding to attract savings with high proceeds for depositors.
• Allowing possession and dealing in hard currencies within the banking system only.
• Allowing the transfer of hard currency within the banking system from one client's account to another.
• Confining the Free Market Company's dealing in hard currencies on passengers and diplomats only.
• The policy approved any amount of the Sudanese currencies can freely go outside the country or come in without restrictions.

1. The production of the Sudanese crude oil has commercially started at Abu Jabra field, Al-Mujlad, Western Sudan along with a refinery producing 600 barrels a day. this amount meets 10% of the domestic actual needs.
2. The International Monetary Fund (IMF) has welcomed the government economic measures and stressed readiness to provide technical assistance to Sudan at local level. The 1992 - 1993 budget, the first budget after the elapse of the three year program, has come in compliance with the National Comprehensive Strategy's directives as the economic growth rate was starting to increase positively till it reached 13.1% by the end of a three year program. From the economic view and regarding it as a foundation, the 1993-94 budget opted for realizing a self-reliance policy.

The Bank of Sudan issued the financing policy for 1996 on December 31, 1995 to start on January 1, 1996, and to be valid up to the end of December 1996. The financing policy for 1996 was intending to serve the objectives of the state's economic plan which aimed at achieving a self-reliance and boosting production and productivity rates to reduce the high inflation and stabilize the exchange rate and prices.
Accordingly, the policy targeted attaining a gross rate of 7% and reducing inflation to 30% by the end of 1996.

They including realizing the National Comprehensive Strategy's objectives, achieving the macro-economic goals at the different levels including sectors development, reduction of inflation, stabilization of exchange rate, development and mobilization of resources, realization of fair income distribution, helping banks to adjust its situation in accordance with requirements of banking laws for 1991, boosting Islamization of banking system and handling of banking unpaid debts.
The financing policy has given priorities to agricultural sector, imports, transport and storage, housing estates sector, medicine imports and raw materials for drug manufacturing, selling and purchasing shares registered to Khartoum Stock Exchange. According to the financing policy, clients are forbidden to receive funding, to deal in purchasing hard currencies or buying shares from the Khartoum Stock Exchange or funding hard currencies exchange offices.
For the regulation of bank liquidity, the financing policy has fixed the bank's Monetary reserve to not less than 25% out of the over all deposits (current and saving deposits) and that the banks are decided to preserve an internal liquidity of not less than 10% out of the total current and saving deposit. Moreover, the Central Bank has given licenses to exchange companies to deal in selling and buying hard currencies and obliged these companies to keep the selling and buying vouchers documented by the stamp duty administration at the taxation chamber.
Regarding the importation policy, craftsmen requirements, electricity generators, children food were annexed to the imports list.

The 1996 budget was based on certain principles and political constitutional changes expected to happen in 1996. Before elaborating the contents of the budget, we have to review indications of the whole economic performance for 1995 when the economic growth rate reached 4.9% compared to the high growth in 1994 which was estimated at 9.2%. The average growth rate of 1994 and 1995 reached 7.1%. The agricultural sector has grown by 6.4% during 1995, less than the average growth scored in previous years because of the decline in crop production. The animal resources sector has scored high growth reaching 9.2% while the industrial sector was still suffering from low productivity of processing industries which registered a negative growth reaching 2.3%. The service sector registered a growth of about 8.4%, a matter which increased the rate of the economy's over all growth.
Concerning inflation, it registered successive till it reached 54% in July 1995, less that the targeted aim of the budget projected at 55%. In the second half of 1995, the inflation has climbed by 60.7% in September 1995, and 71% in October 1995.
Concerning the liquidity, the money supply has increased by 22.7% in June - December compared to the transitional budget's estimation reaching 23.5%, a matter which denotes the stability of the money supply and its performance.
The exports volume has reached 550 million US dollars by the end of 1995 compared to 1,139 million dollars worth of imports. Due to the decrease of the foreign capital flow and foreign assistance, the capital account is expected to experience a deficit estimated at 3.4 million US dollars.
It is worth mentioning that all equipment for Al-Obeid refinery were imported and that 30% of Al-Mujlad-Heglig road was executed and Al-Mujlad-Babanousa-Al-Obied railway route was rehabilitated and work was continued at Al-Ingaz Al-Gharbi, Al-Shamal and Al-Tahadi highways.
Concerning health services, Al-Kalakla hospital and the medical specialization building have been established while old hospitals were rehabilitated. The efforts were running to promote the relations with regional and international finance organizations as well as bilateral cooperation.

The self revenues projection of 1996 budget has reached 77 billion Sudanese Dinars registering an increase of 34 billion Sudanese dinars over allocations of the transitional period of the same year. The self revenues constituted 12.5% of the GDP for 1996, compared to an average of 8.5% for the previous five years.
The public expenses reached SD 95.2 billion with a growth rate reaching 71.2% including (the current expenses + development + states) while the rate of the public expenditure of the GDP has reached 15.4% and that the deficit was expected to reach SD 6.2 billion (1% of the GDP).

On September 5th, 1993, President Omer Hassan Ahmed El Bashir declared the establishment of a new shareholding company to pioneer Sudan's first attempt at having a free zone. The new company which came to be known as the Sudanese Free Zones & Markets Company (SFZ), has been given possession of the Duty Free shops and Corporation and the Khartoum International Fair and its affiliates the Happy Land Restaurant and the Green Village Hotel.

The SFZ is presently in the process of establishing Sudan's first free zone in eastern Sudan. The Red Sea Zone lies south of Port town and extends along the Red Sea to south of Sawakin town; a length of about 60 kilometers. It includes the new port and Osman Digna Harbour. Railways and roads connect Port Sudan Airport area with the hinterland. The free zone borders Eritrea, Ethiopia and Somalia and across the Red Sea lies Saudi Arabia, the Gulf States and other Arab countries.
It is within easy reach to Kenya, Uganda and Zaire.
Other African nations, especially land locked Chad and Central Africa, can be good markets for zone products and services. The zone's area is more than 600 square kilometers which will make it the largest free zone in the world. The SFZ is also planning another free zone north of Khartoum state.

The Duty Free Shops Corporation which was established in 1970 to serve incoming and outgoing travelers and cater for diplomatic missions resident in Khartoum, is now managed and owned by the SFZ. The SFZ has branches in a number of towns in Sudan, including Port Sudan, Medeni, Gedaref, Dongola, Managil, El Obeid and Nayala.
Preparations are under way to open new branches in Juba and Kassala.
The SFZ has established agencies for expatriates in Saudi Arabia, the United Arab of Emirates, Qatar, Yemen and Western Europe.

The 475,000 square meters Khartoum International Fair lies on the western bank of the Blue Nile at Burri suburb of Khartoum. It is just three kilometers away from the city center and is a few minutes drive to Khartoum International Airport. The fair has four pavilions of international standard with an area of 10,000 square meters. It also houses small retail shops for direct sale to the public. An open exhibition area covers some 40,000 square meters.
Since 1978, the fair hosted fourteen international exhibitions, the last of which was held in February 1997. The SFZ management is currently working to transfer the grounds into a free zone and intensify its activities and operation.
The fair's 15th Session is expected to take place in February 1998.

The stock exchange is aiming at attracting the financial resources and raise the citizens' saving awareness and creating an adequate atmosphere with the objective of taking advantage of these savings in the stock exchange for the benefit of the citizens and the national economy. It is obviously unveiled that some financial resources have remained outside the banks and which can be exploited in development projects managed by the private sector.
The monthly report on the Stock Exchange's regular activities has put the total exchange volume at SD 5,980,711.8 compared to SD 2,235,164.1 last May.
Regarding the sectoral distribution of the volume of exchanges, the insurance sector's came first registering SD 4,342,080 (72%), bank's sector SD 1,441,906.3 (24.1%) while the exchange of other sectors (transport, development, services...etc.) reached SD 162,083,5 (2.7%). The industrial sector's exchange volume was SD 18,051 (.3%) and finally commercial sector SD 19,591 (.3%). The number of shares exchanged have reached 373,113 compared to 276,787 shares exchanged last May. The bank's sectors' shares, topping other sectors, registered 262,969 shares (70.5%), followed by the insurance sector 81,759 shares (21.9%), the commercial sector 190,015 (4%). Other sectors (transport, development and services) exchanged 2,817 shares (2.8%) while the industrial sectors shares reached 2,817 (.8%)

The economic sector is facing many problems including the rise in inflation, the high cost of production and living and low exports revenues. Moreover, the economic activities are not abreast with the economic liberalization policy, a matter which has affected the macro-economy.
Moreover, the economic sector is affected by conditions of continuous deterioration of the Sudanese currency, shortage of resources, the deteriorated infrastructure and the war in the south which has soaked up available resources in addition to the undeclared economic blockade facing the country.
Inflation is the main cause of economic deterioration. The current inflation in the Sudan is a mixture of the three types of inflation -- the inflation that result consequent of the increase in the macro production demand, the inflation resulting from the increase in money supply and the high cost of production.
The increasing of the national products, reduction of money supply and the general budget deficit and increase of the production is the sole way for resolving the economic problem.