The Impact of Fiscal and Monetary Policies on Economic Performance in Sudan

Abstract

This research investigated from an empirical view, the impact of Fiscal and Monetary Policies on Economic Performance in Sudan. The importance of the research emerged from the vital role that is played by Fiscal and Monetary Policies on economic performance in Sudan. The Fiscal and Monetary Policies have a positive effect on production and consumption sectors and then on economic performance in Sudan. These policies do not play the stipulated role in Sudan and that is seen from the rate of GDP during the period of the study. Hence, the research attempts to investigate the effectiveness of fiscal and monetary policies on economic performance in Sudan during the period, 1990-2010. GDP was chose as a measurement of development (dependent variable). And money supply (M) and profits margins (R) and government expenditure (G) and taxation (T) in addition to net export (NX), saving (S) and investment (I) were chose as explanatory variables. Y = fi (G, T, M, R, NX, S, I) The data of the study were obtained from various sources including the Central Bank of Sudan (CBS), Taxation Chamber (TC) and Central Bureau of Statistics (CBS). Using these data vi Ordinary Least Squares Technique is applied to the linear form of the model. The empirical results show the importance of Fiscal and Monetary Policies on economic performance. But the strong evidence is that Fiscal Policy exerts more influence and effectiveness on the economic performance than Monetary Policy during the period of study. The research recommends that: the necessity of developing revenues, rationalize expenditure, decrease the annual increasing in amount of money. In addition to that, enhance the role of Central Bank in order to control and supervise banking activities in Sudan