According to Article 49 of the Constitution, the Council of Ministers has the power to initiate legislation concerning the public budget. This draft budget must include projected revenues and expenditures, statements as to how a balanced budget will be attained, amounts of currency on reserve, and related fiscal matters. Article 73 stipulates that the National Assembly must approve the budget, revenues, and expenditures. Although more taxes are collected, in part by a newly created medium taxpayer unit, oil revenues were expected in 2006 to comprise about 60 per cent of central government revenues. Roughly half of the oil revenues were earmarked for the South, which is almost totally reliant on them for domestic revenues. The International Monetary Fund (IMF) has welcomed the central government’s monthly publication of detailed oil statistics and is encouraging Sudan to join the Extractive Industries Transparency Initiative, an international organization established in 2003 to promote transparency and accountability in this sector.
The authorities established a Fiscal and Financial Allocation and Monitoring Commission to insure transparency and accountability in the transfers of funds from the central government to the South and to northern states, as prescribed in the Comprehensive Peace Agreement (CPA) reached in 2005. The Government of Southern Sudan is committed to working with the National Petroleum Commission and the Oil Joint Committees to improve the clarity and predictability to the flow of resources from oil revenue. The budgetary process is guided in the South by the economic strategy prescribed by Article 40 (1) of the Interim Constitution of Southern Sudan to eliminate poverty. With technical assistance from the IMF the central government is also devising a new budgetary framework in line with international standards.
The Supreme Audit Institution of Sudan has oversight into financial matters in the country. As a result of the CPA of 2005 a Southern Sudan Audit Chamber is to be established. However, the government cracked down on the accounting profession. A law passed by parliament in 2004 enabled the government to replace the Sudan Council of Certified Accountants with an Accountancy and Auditing Provisional Council.
As a member of the Common Market for Eastern and Southern Africa (COMESA) Sudan is committed to develop legislation on public procurement that conforms with the modern standards that the member states have agreed to implement. As a result of the CPA of 2005 a modern procurement law for the South was already in draft form by early 2006, providing incentives for contractors to fully mobilize at the beginning of the dry season and to finish their work by the end of dry season.
The Bank of Sudan announced severe measures against money laundering in Prudential Circular 4 of May 20, 2002, reflecting the international recommendations of the Financial Action Task Force (FATF). As a result of central bank supervisory measures, non-performing loans diminished from 8.9 per cent in 2004 to 6.9 per cent of the outstanding loan portfolios of commercial banks at the end of 2005. Capital adequacy increased on average to 12 per cent of banking assets.
The Bank of Sudan, the country's central bank, is in charge of foreign reserves and has also instituted major reforms to restructure the banking system so as to encourage more financing of the private sector. These reforms include a law guaranteeing the independence of the central bank, an anti-money laundering law, and new banking regulations extending the supervisory powers of the central bank to institution only partially engaged in banking activities. The banking system has been run in theory according to Islamic principles, introduced in 1982 and fully applied in 1993, but the Comprehensive Peace Agreement of 2005 has reinstated a dual system of Islamic and conventional banks. The central bank is establishing a federal structure, including a new branch in the South. There are 24 banks, including one state-owned bank, three foreign ones, two specialized banks, two investment banks. Seventeen of the privately owned banks are partly owned either by the government or by foreign investors. The Bank of Khartoum became privately owned in large part after 2001, and management has been streamlined.
There are plans to privatize many facilities in Sudan, including the electrical utility, the national airline, and several agricultural projects. To support growth, reduce the drain on public finances and fund infrastructure development projects that remain beyond the reach of its own resources, the government has sought to draw local and foreign capital into areas of the economy that were previously reserved for the state, and has committed itself to privatizing much of its enterprises. The divestment program began in the early 1990s, with the passage of the Privatization of State Corporations Act in 1992, which earmarked 190 public corporations for sale. However, although 17 public corporations were sold during Phase 1 (1993-95), the privatization program failed to build momentum, and the planned high-profile sale of several key assets, including the National Electricity Company and Sudan Airways, has failed to materialize. Other, smaller sales have taken place in recent years, such as the divestment of the Atbara cement factory in late 2001, and the privatization of the Sudan Duty-Free Zone Company and the Bridges and Road Corporation in the second half of 2002. Sudan's largest bank, the Bank of Khartoum, has been restructured and a 74 percent stake has been offered to private investors.
As the success of these projects has become apparent and the International Monetary Fund (IMF) reform program has taken hold, the government has sought private partners to boost investment in other sectors with some success. This includes the power sector, where the country’s first build-operate-transfer (BOT) power plant is due to come on stream sometime in 2004.
The Khartoum Stock Exchange (KSE) Act of 1994 gave the stock market an independent legal status, and it opened for business on January 2, 1995. 48 companies, six investment funds, and 42 types of government certificates were traded on the KSE at the end of 2004.
International Transparency Standards
Sudan has participated in the IMF’s Global Data Dissemination System since August 2003.