South Sudan has experienced one of the largest income shocks in the world, with the average income of an individual falling by 70% since independence, the Minister of Finance has said.
Stephen Dhieu Dau says the shocks have been intensified by the conflict and the drop of oil prices in the international market.
According to Mr Dhieu, the war has disrupted investment, cutting off major sources of revenues to the government.
He says the South Sudanese pounds has now lost 80 percent of its value against the dollar, leading to a high and a reduction of individual incomes by 70 percent since independence.
He said borrowing from the Central Bank to pay salaries for civil servants, poor financial management that include unnecessary expenditures by the government, have even worsened the situation.
Mr Dhieu made the remarks at the National Legislative Assembly today during a presentation of the annual budget of almost 30 billion pounds for this financial year, which started in July.
“As government we have run down of our foreign reserves and servings and we have limited ability to prevent the severe depreciation we have seen,” he said during the televised sitting.
Mr Dhieu also outlined the ministry’s plans to raise revenues to meet the proposed annual budget projections.
Non-oil revenues also account for a percent of the budget.
“We planned to increase sales tax from 15 to 30% which brings a rate close to those in the neighboring countries and is expected to raise 294 million pounds annually,” he continued.
“Secondly, we will increase exercise on alcohol from 50 to 100% and tobacco from thirty to fifty. This tax on luxury will improve health.”
The minister projects this to raise “unexpected 300 million pounds”.
“Thirdly, improving exercise on telecommunications services from ten to 30% – will bring the rate in line with other countries – would bring the total tax burden.
The ministry also proposed to introduce departure tax of $20 per person on international travel. This is estimated to generate 300 million pounds annually.
Mr Dhieu said the budget is in line with the implementation of the peace agreement, which calls for economic reforms and recovery.
He added that the government expects 128 million pounds to be contributed by donors. The budget will also be funded through income from the sale of oil.
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