By Deng Machol
JUBA, South Sudan — South Sudan’s government has announced sweeping spending cuts and the cancellation of widespread tax exemptions under a new economic stabilization and structural reform policy aimed at curbing inflation driven by declining oil production and mounting external shocks linked to regional conflict.
Speaking at a press conference in Juba on Wednesday, Minister of Finance and Planning Bak Barnaba Chol said the reforms mark a decisive shift away from short-term, fragmented interventions toward a more coordinated and sustainable economic strategy.
According to Chol, the policy was endorsed by the Council of Ministers following what he described as a period of severely constrained public finances. The reforms focus on sharply limiting government expenditure while expanding non-oil revenues to stabilize the currency, rein in inflation, and restore confidence in public finances.
“Government spending will be restricted to priority areas, including salaries, security operations, peace implementation, and elections,” Chol told reporters.
He added that all non-essential payments, contracts, and capital projects will be deferred, while recruitment across government institutions has been temporarily frozen, except for critical staffing needs.
The austerity measures come as oil revenues — the backbone of South Sudan’s economy — continue to decline due to persistent disruptions along export pipelines running through conflict-affected Sudan, leaving the country exposed to revenue shocks beyond its control.
As part of the revenue-raising drive, Chol announced the immediate cancellation of all non-statutory tax exemptions, which he said have significantly eroded government income. The move affects exemptions on fuel imports, food items, construction materials, and luxury vehicles.
“All kinds of non-statutory exemptions should be stopped,” Chol said. “Only statutory exemptions — covering embassies, international organizations, and United Nations agencies — will remain in place for now.”
He noted that the Ministry of Finance will also review, assess, and where necessary renegotiate existing exemptions granted to embassies, international organizations, UN bodies, and related institutions in line with the Status of Forces Agreement (SOFA).
The policy further grants the Ministry authority to review and renegotiate key oil-sector arrangements, including Exploration and Production Sharing Agreements (EPSAs) and SOFAs, as part of broader reforms aimed at strengthening transparency and long-term viability in the petroleum sector.
Looking beyond oil, Chol said the government will intensify efforts to expand domestic tax collection, introduce a value-added tax (VAT), strengthen customs systems, and support private-sector growth.
Priority sectors identified for economic diversification include agriculture, livestock, fisheries, mining, and export-oriented commodities such as sesame and gum arabic, which officials see as critical to reducing the country’s dependence on oil revenues.
The government says the reforms are essential to stabilizing South Sudan’s fragile economy amid ongoing regional instability and domestic fiscal pressures.
