Determinants ofBudget Deficitsin Sudan:(1980- 2017)

Abstract

Sudan has been suffering from continued budget deficit and attempts have been made by successivenational governments to resolve it as a critical economic problem but inadequate understanding of the determinants budget deficits andthe basis of the relationship between the budget deficit and the key macroeconomic variables on the part of policy makers might have been partly responsible for the ineffectiveness of past efforts of correcting budget deficits. Therefore, thisstudy aims to determine empirically the extent to which budget deficit in Sudan is influenced by key macroeconomic variables during the period 1980 to 2017. The importance of the study stems from the fact that it provides analytical evidences on causes of budget deficits and accordingly suggests appropriate economic policy framework to correct the budget deficits problem in Sudan.To achieve thestated objectives, annual data was obtained from the Central Bank of Sudan (CBS and the Central Bureau of Statistic, then the model is estimated by employing the autoregressive distributed lag (ARDL) approach supported by E-Views program. The overall results of the regression analysis of testing the hypotheses indicate that there is a significant relationship between the budget deficits and the key macroeconomic variables which were proposed by this study to influence the budgets position in Sudan. Thus, the inflation rates and exports are found to be positively associated with budget deficits while real GDP growth rateand exchange rates are negatively linked to budget deficits during the study period. Finally, the study concluded that budget deficit is influenced by the key macroeconomic variables during the period 1980 to 2017. To overcome the budget deficit problems and at the same time promote a sustainable economic development in Sudan., the study provided a number of recommendationsincluding: