The Economic Impact On The Economy

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Sudan’s economy was agricultural-led economy before the production of crude oil. Agricultural sector had a higher share of the Gross Domestic Product (GDP) almost 48% of the GDP during that period and employed approximately 80% of the labour force (BBC, 2013). However, the discovery of the crude oil and the advent of crude oil exportation in the third quarter of 1999 caused a notable change in Sudan’s economic structure. In 2008, Oil export earnings constituted 95% of the total export proceeds, leading to crude oil revenues contributing 60% of the total government revenues (International Monetary Fund, 2009). Since then, the economy became dependant on crude oil revenues to finance government budget and provided the required foreign exchange to pay imports bill. During the period 2000 – 2011, Sudan witnessed a higher growth rate of its Gross Domestic Product, driven mainly by the oil sector (World Bank, 2009). This situation has exposed the economy to the negative effects of fluctuations in oil prices in the global markets. It is worth noting that during the period under investigation Sudan was a net oil exporter, this manifested in the quantities of crude oil produced compared to the domestic consumption. That is, crude oil supply outweighed domestic demand. Furthermore, there was a lack of knowledge in understanding the impact of global crude oil price shocks on the macroeconomy. The government concerned about the amount of foreign inflows received from exporting its crude
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