Khartoum Sudan's economy has not failed, President Omar Al Bashir said Sunday despite losing billions of dollars in oil revenue, and the unknown costs of a border war with South Sudan.

The International Monetary Fund has forecast Sudan's real gross domestic product to decline by 7.3 per cent this year after South Sudan separated in July, taking with it about 75 per cent of the formerly united Sudan's oil production worth billions of dollars.

Southern oil represented more than a third of Khartoum's revenues and its largest source of hard currency, leaving the government struggling for alternatives since the independence.

"Yes we are facing econ-omic difficulties, but we have not failed," Al Bashir told the government's strategic planning council, which is starting discussions on Sudan's five-year political and economic plan to 2017.

The council comprises cabinet ministers, state governors, academics, labour representatives and others.

Revenues

An international economist has estimated that the country's already depleted oil revenues shrank by a further 20 per cent — more than $700 million (Dh2.57 billion) — after its main Heglig oil field was damaged and shut down in fighting with invading Southern troops last month.

"There may be added fiscal costs because of the need to import oil," said the economist who declined to be named and added it is impossible to know the military cost of fighting with the South.

A border war with South Sudan began in late March, escalating with waves of Sudanese air strikes against South Sudanese territory and the South's 10-day occupation of Heglig.

Both sides say they are complying with a UN Security Council resolution which ordered them to stop fighting from last Friday.

Oil Minister Awad Ahmad Al Jaz announced last Wednesday that Sudan had begun pumping oil again after partial repairs to the Heglig facility. He did not say how much oil was being pumped.

Officials said the Heglig area's pre-war production was 50,000-55,000 barrels a day, about half the national output.

A source close to the industry said yesterday it would take "months" to return to full production and the oil being pumped now is only "to keep the refinery in Khartoum running."

Sudan's inflation rose 21 per cent in the first quarter against 16 per cent for the same period last year, as the currency plunges in value on the black market, Finance Minister Ali Mahmud Al Rasul said on Thursday, according to official media.