Bad Credit for South Sudan?

By Emma Vickers, Global Witness,

An engineer points at the damage to an oil pipeline in a largely damaged oilfield in Heglig over which South-North Sudan blames one another for(Photo credits: Reuters)

An engineer points at the damage to an oil pipeline in a largely damaged oilfield in Heglig over which South-North Sudan blames one another for(Photo credits: Reuters)

April 30, 2015(Nyamilepedia) — We saw a new warning signal from the moribund South Sudanese economy last week. Parliamentarians gave the government the go ahead to negotiate a risky $500 million loan from the Qatar National Bank (QNB).

Why risky?  Because this is no insignificant sum for the world’s most oil dependent state. Last year, South Sudan received $1.7 billion of oil money into state coffers. If this loan is approved at the proposed interest rate, the Qatari bank will be owed almost half of that amount- $781 million, paid back over 7 years.  This is the equivalent of the US government taking out a loan larger than their military and education budgets combined.

The deal is doubly risky because, if cash is lacking, the Government has agreed to pay in the only other currency available to it – oil. Using crude as collateral threatens to lock the country into a dangerous cycle of debt- oil dollars are used to pay off old loans while new loans fund the budget. By taking this loan, the government risks selling South Sudan’s future to pay for today.

This might not matter, if the money were invested in corresponding assets, such as infrastructure or in education, which should create a richer economy in the future; one which is capable of repaying the loan.  However, as detailed below, serious doubts exist about Government spending priorities. Opposition MPs have already expressed concerns about the wisdom of the loan. These concerns must be heard and addressed by the Government.

Cabinet affairs minister, Martin Elia Lomoro, cited the ‘dire situation’ of the economy as the reason for striking this deal. True, the economy is in dire straits. The oft-cited figures – oil production down by a third, prices at half what they were 12 months ago – are taking their toll on the Government’s ability to finance its current budget. Police report that they often have to wait months for overdue salaries, state governments complain that their allowances have dried up, and the Parliament recently announced the halting of most activities due to lack of funds. Clearly some organs of Government are having trouble treading water.

But the squeeze doesn’t seem to be affecting everyone equally. Budget reports reveal that the President’s office overspent its budget by 369% – or $33 million – between July and September last year. It seems that, while some sectors are without the cash to fulfil basic functions, others are free to spend as they please.

The inconsistency raises an important question – where will the $500 million be spent? South Sudanese MPs have, quite rightly, demanded more detail on exactly which development projects the Cabinet have promised this stop-gap cash to. This information must come quickly, and the Parliament must be given time to deliberate the propositions.

Another critical question is whether the Government can tighten its belt elsewhere to avoid taking on more high risk debt? It has yet to demonstrate that the QNB loan is the only way to keep the economy afloat, rather than being the same knee jerk strategy followed by other heavily indebted oil rich countries who have mortgaged their people’s future for short term gain.

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12 comments

  • Èlböw Çhúöl

    Emma thanks you very much.these drunkards r there to destory our future.

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    • In fact brother The drunkard government is confused. They eat money blind with out knowledge about the country’s money that they are using

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      • Let us give the drunkard government the credit. The cows boys thought they succeeded from the war with Arabs, but they did not know that they still have another war with economic. If they were to fight the corruptions and win the war with economic, then at least they can drink peacefully. Poor cowboys their ignorance keep them behind. So long as the cowboys are still running the government, they will continue to drink until the last Tusker. Welcome to Juba cowboys and drink as much as you want.

        Like

  • Reblogged this on GatNor and commented:
    Situation critical

    Like

    • Why can’t Nyamile post the news regarding the defeat of their rebels and the capture of Nhialdiu, Guit and some parts of Mayom here?? Rebels are terribly defeated in Guit, Nhialdiu and Mayom counties, they claim was tactical withdrwal to Avoid civilian casualties, where,did you spare civilians when you entered Bor, Bentiu, Malakal and Akobo, just accept defeat and come back to SPLA main stream instead of languishing in the bushes, Government has long hand of getting ride of you. SPLA Juba are on the match to Koch, Leer and Payinjar counties; Please rebels of Warload Fool Riek, better surrender than dying for empty horse enjoying in Addis Hotels who has become the Camp Manager of Hotels through out while you die here shamlessly.

      Like

  • Bloody oil,bloody refineries and bloody pipelines.

    Like

  • money lovers(Dinka) TUSKER become the leading drink in Dinka city Juba

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    • You are Northerners and good for your BOTTOM.

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    • Do not blame Dinka. Dr. John Garang said that in Juba, you can drink beer as much as you want. So Dinka listened to their Heroic leader the only one John Garang de Mabior.

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    • What do you expect. When one leaves the Kraal to Juba, instead of drinking blood, and milk, she or he has to drink Tusker. Welcome to Dinka. No more blood nor milk. Just drink as much Tuskers as you can because your Father Dr. John Garang de Mabior said so.

      Instead of SPLA Oyeee, Tusker Oyeee..You can also drink as much Nachui as you want. Juba is no longer the Kraal. You must be advised that Tusker or Nachui is not like blood or milk. Please drink responsibly.

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  • You are our brother from North,you have to keep your DrY BoTToM Cool if you want.

    Like

  • Look at stupid Goweng always drunk your tusker and now you claim to be Dinka who drunk tusker what ashame to you.

    Like

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