One month on, no reprieve for Juba as donors remain tightfisted

Konyo Konyo market in Juba. Prices of goods have gone up as state grapples with aid freeze. PHOTO | FRED OLUOCH 

By FRED OLUOCH

In Summary

• After one month in existence, the South Sudan transitional government is reeling from a lack of funds to run its operations.
• Despite the formation of the transitional government, donors are demanding that the Central Bank and the Ministry of Finance tighten regulations and eradicate the dollar rent seekers, fight official corruption and wastage, and empower the National Revenue Authority for revenue mobilisation.
• The South Sudanese pound continues to weaken and there is a possibility of currency crash unless a bailout comes from international community.

After one month in existence, the South Sudan transitional government is reeling from a lack of funds to run its operations.

President Salva Kiir has blamed donors for going back on their promise to release the funds as soon as he and his rival Riek Machar formed the transitional government of national unity.

But the return of Dr Machar in April and subsequent formation of the transitional government has not unlocked aid money, as most donors — especially the US and the European Union — are demanding economic reforms and implementation of key provisions of the August 2015 peace agreement.

READ: Juba government to revive economy in the face of weak currency, low oil prices

Aggrey Tisa Sabuni, presidential economic adviser, said the government had been negotiating with the donors over budgetary support but this programme was disrupted by the outbreak of civil war in December 2013 and negotiations have to begin afresh.

Projected oil revenue

Having reduced its budget by 6 per cent in the 2015/2016 financial to $3.6 billion, South Sudan was expecting grants of $54 million from donors to add to the projected oil revenue of $255 million and non-oil revenue of $76 million per month.

But global oil prices dipped from $115 to $46 per barrel, seriously affecting the country’s net oil revenues, as production also dropped from 350,000 barrels 160,000 barrels per day during the civil war.  

By May 2016, oil revenues had fallen by 75 per cent to $60 million a month. Now, the country generates only $40 million a month in tax revenue.

READ: South Sudan to cut embassy staff due to cash crunch

Despite the formation of the transitional government, donors are demanding that the Central Bank and the Ministry of Finance tighten regulations and eradicate the dollar rent seekers, fight official corruption and wastage, and empower the National Revenue Authority for revenue mobilisation.

South Sudan charge d’affaires in Kenya Jimmy Deng said that the partners in the unity government have agreed on programmes for economic recovery and national reconciliation.

“Our international partners are not forthcoming with their pledges for financial assistance. We are trying to harness our internal resources from taxes and Customs duties to meet some of the obligations but they are either limited or not enough to implement all the programmes,” said Mr Deng.

James Gatdet Dak, press secretary in the Office of the First Vice-President, said that despite the executive arm of the transitional government having been formed over a month ago, it is still a skeleton because parliament is yet to be reconstituted and the National Constitutional Amendment Committee lacks funds to begin its operations.

But Jacob Chol, the head of political science department at the University of Juba, told The EastAfrican that donors are not showing any signs of releasing money soon because the transitional government is yet to provide a concrete blueprint to reform the economy.