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Experts predict hard times for South Sudan as economy plummets

Author: Chany Ninrew | Published: Friday, May 17, 2024

Oil facility in Tharjiath, Unity State. | Photo: Benjamin Takpiny.

The International Crisis Group said South Sudan’s economic woes resulting from disrupted oil exports could lead to multiple crisis including catastrophic hunger and political turmoil.

The national currency has continued to weaken drastically against the US dollar since the beginning of 2024, triggering a sharp increase in commodity prices and leaving many families struggling to make ends meet.

One dollar currently trades at an average of 1572.5SSP, according to the Central Bank exchange rate posted on May 17, 2024, while in the black market, a dollar costs more than 3,000 SSP.

The policy group said in a report published on Wednesday that the civil war in Sudan has severely disrupted South Sudan oil exports, depriving the latter’s coffers of oil income – which is the main source of revenue.

The Sudan war, it said, put South Sudan’s financial lifeline at risk, especially after one of the pipelines transporting 60% of its crude oil broke down in February 2024, and will require months of complex repairs.

“The consequences for South Sudan will be dire: the government will run out of money and the national currency’s value will plunge,” it said.

Crisis Group said chronic food shortages will worsen in South Sudan where over 7 million are already going hungry, a situation that it argues signifies renewed instability and fighting.

Sudan’s Ministry of Energy and Petroleum declared a force majeure on South Sudan oil in March 2024, saying it was unable to facilitate the shipment of the crude oil from Paloch in Upper Nile State, citing interruptions from the conflict.

In April 25, 2024 the Vice President of Sudan’s junta government Malik Agar, said the transportation of South Sudan crude oil through the Jabalayn – Port Sudan Pipeline would resume within two months.

However, the policy group, citing expert analysis, has now revealed that there is no end in sight as it is technically impossible to repair the pipeline and resume operation in that short time.

“Many of those with direct knowledge of the situation say South Sudan’s oil exports are unlikely to resume without a months-long ceasefire that allows technicians to repair and rebuild the pipeline on site,” it said.

It further revealed that oil sale is jeopardized by distrust portrayed by Sudan’s paramilitary outfit – the Rapid Support Force against the South Sudan government over its relations with the junta.

According to the group, RSF officials want South Sudan to cut off payments to Burhan’s government by placing the transit-related fees in an escrow account until the war ends, a proposal that the Sudanese army would reject.

“If South Sudan is unable to restore oil exports from the Upper Nile field soon, the currency will decline ever faster against the dollar while elite squabbling over the shrinking pot of oil money intensifies.”

Crisis Group also said the pipeline disruption is standing in the way of South Sudan’s pursuit of a 13 billion dollars’ loans from the United Arab Emirates in exchange for 20 years of crude oil supply.

“The pipeline disruption appears to have disrupted negotiations for a multi-billion dollar loan, which started in late 2023, but Juba hopes to revive those talks while obtaining smaller, short-term loans to tide over the administration in the meantime.”

The International Crisis Group is an independent organization working to prevent wars and shape policies that will build a more peaceful world.

Crisis Group says it sounds the alarm to prevent deadly conflict and build support for the good governance and inclusive politics that enable societies to flourish.

It was founded in 1995 – in response to devastating wars in Somalia, Rwanda and Bosnia – to alert the world to potential conflicts before they spiral out of control.

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