South Sudan to Borrow $250 M for Budget Deficit, Mitigate Covid-19 Impact
August 25, 2020
By Deng Machol
Juba – To address the shortfall in its supplementary budget, the peace government of South Sudan has announced plans to borrow $250 million from the African Export and Import Bank to cover the country’s budget deficit and to mitigate the negative impact of Covid 19 on economy growth.
This comes after the Governor of the Central Bank Gamal Abdalla Wani admitted that the bank does not have enough foreign reserves as it used to as the South Sudanese Pound depreciated further against the US dollar in the conflict-hit nation.
African Export-Import Bank, also referred to as Afreximbank, is a pan-African multilateral trade finance institution created in 1993 under the auspices of the African Development Bank.
Its purpose is to financing, promoting and expanding of intra-African and extra-African trade.
Two weeks ago, President Salva Kiir instructed the Economic Cluster to proceed with the economic reform agenda, after the committee noted that taxes where being diverted into individual accounts.
Last week, the country’s economics cluster in the unity government approved a 60-billions-Pound supplementary budget, in effect extending the fiscal year 2019/2020 budget.
The Cluster, headed up by Vice President Dr. James Wani Igga, approved the additional budget as the cost of running the revitalized government in the absence of a fiscal year budget.
Lily Albino Akol Akol, Deputy Minister of Agriculture and Food Security, said the government is in the final stages of sealing a deal with the bank, affirming that the loan will be used to bridge the deficit in the country’s revenues created by the pandemic effect on the economy.
According to Deputy Minister, Ms. Akol the amount presented by the Ministry of Finance was based on projections of oil prices and tax collections.
South Sudan has been struggling to raise enough money from the oil and non-oil revenue to fund a peace government, which was formed in February, 2020.
However, the Juba government gets almost all of its revenue from crude oil, but current output, at about 180,000 barrels per day (bpd), has plummeted from a peak of 250,000 bpd before the outbreak of conflict in 2013, according to official figures.
“In principle, Afreximbank agreed to continue with the process of finalizing the loan provided that the government of South Sudan goes through the right procedures,” Akol told state – owned SSBC TV on Monday.
She stated that the loan will cover losses created by the coronavirus pandemic.
Akol further disclosed that the economic cluster has given the green light to the finance minister to continue negotiating with the bank to secure the loan.
“The Honorable Minister [of finance] also presented the priority of the government to be funded through this loan but most importantly, mitigation of the negative impact on the economy brought about by COVID-19,” she said.
“The loan facility also will make sure that the government will procure necessary supplies and also implement some very important infrastructural projects which will provide job opportunities for many of our youth, ” the deputy agriculture minister added.
She said a formed six-member committee from the country’s economic cluster will look into the priorities of the government and make sure that the priorities are to be funded by this loan.
“So we will look at the implementation of the peace agreement, the fight against Covid-19, and food security in terms of availability of necessary commodities in the market as well as agricultural production,” said Akol.
South Sudan, which clocked nine years of independence this year, has been blighted by a years of conflict and corruption, most of the country remains undeveloped, including the health sector.
President Salva Kiir, in his keynotes speech during the ninth anniversary of the country’s independence, admitted that non-oil revenues are not being fully remitted into the single block account of the National Revenue Authority due to immensely corruption in his government.
President Kiir said even without oil revenue, if collected and well managed, the non-oil revenue should be able to meet the government’s expenditures as a wages and operations.
Kiir further announced that his government will be exploring ways and means to speedily rectify the situation so that at the very least, it can pay monthly salaries on time.
However, the government’s employers has gone with six months without salaries.
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