This Country Economic Memorandum is the first economic report in a decade. It gives priority to updating knowledge about the evolution of social and economic developments during the 1990s. It reviewareas of progress in macroeconomic reforms and the lack of success in governance and institutional reforms. Substantial reforms were undertaken in this period , but the civil war continued to have a serious negative impact on Sudan's people and its economic prospects. While the results of the reforms have been promising, particularly in the area of macroeconomic stabilization and liberalization, the distribution of economic wealth needs to improve. Although there has not been any national household survey since 1978, social indicators point to low levels of welfare throughout Sudan, with some indicators well below those in Sub-Saharan Africa. among the many issues facing the Sudanese economy are these: There has been high growth but skewed distribution. Stabilization has been costly in social terms: expenditures were cut by more than 50 percent relative to gross domestic product (GDP), causing considerable reductions in social services and infrastructure development. Key services were decentralized, delegated to states and local communities, which had neither the revenues nor the administrative capacity for these tasks. High poverty rates persist. Social inequalities threaten to undermine macroeconomic stability. Moreover, the civil war was costly in terms of human suffering. Millions are internally displaced, there are almost a million refugees in camps in neighboring countries, the death toll is estimated at 2 million, and warring armies continue to claim substantial resources. However, peace negotiations look encouraging. For peace to be sustained, it must be accompanied by economic and governance reforms, and a formula for equitable sharing of resources and power must be found for resolving the major root causes of decades of civil war. Reconstruction and development needs are enormous and will require external financing. Even after debt rescheduling, additional resources will be needed and the Sudan will urgently be expected to put measures in place to improve public resources management. As for the major sectors, infrastructure needs major rehabilitation and development, agricultural reforms need to be pursued, improved social services are a high priority, and war-affected areas face special difficulties like food insecurity. The needs of women require special attention, particularly in those parts of the country where women suffer severely from the violence and lawlessness that emerged as a result of the prolonged civil war. Many are widows and many have suffered also from rape, insecurity, and other traumas. the average ratio iof adult women to adult men is two to one in war-affected areas in southern Sudan, and only one out of ten women is literate,