INFLATION RATE EXPECTED TO INCREASE

UNCLAS KHARTOUM 000319 SIPDIS SENSITIVE SIPDIS DEPARTMENT FOR AF/SPG AND EEB PLEASE PASS TO USAID FOR AFR E.O. 12958: N/A TAGS: AFIN EAID EFIN PREL SU SUBJECT: INFLATION RATE EXPECTED TO INCREASE ¶1. (SBU) An IMF team visiting Sudan the week of February 26 concluded that the inflation rate is likely to increase, perhaps to as high as 20 percent. In a meeting with Econ officer, members of the IMF team stated that, while inflation one year ago was running at about 7 percent, it is now estimated at 16 percent and could well reach 20 percent. The IMF attributed the increase in inflation to the government's expansionary budget. ¶2. (SBU) The IMF team noted that strong inflows of foreign direct investment are fueling economic growth in Sudan. Foreign direct investment in 2006 was estimated to be USD 3.5 billion and is projected to increase to USD 3.8 billion in ¶2007. The largest single source of foreign investment is China, with substantial inflows from the Gulf as well. HUME