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South Sudan, on the verge of bankruptcy due to the war that prevents oil exports

South Sudan, on the verge of bankruptcy due to the war that prevents oil exports

Sudan of the South is on the verge of bankruptcy due to the cessation of its oil exports, interrupted by the war that began a year ago in Sudan between the Army and the paramilitary group Rapid Support Forces (FAR) and which stopped the operation of the oil pipeline that transported the crude oil from the youngest country in Africa.

The impossibility of exporting oil, on which the public treasury depends in a 90%has plunged South Sudan into a new economic crisis, with the fall in the value of the national currency against the dollar, high prices in the market, difficulty in paying salaries to civil servants and covering basic services, as well as greater fragility of security conditions.

No oil due to war

The Sudanese government explained in a letter to the Juba authorities on March 28 the problems it faces in transporting South Sudanese oil through its pipelines in Al Jabalin, close to the shared border, and Port Sudan, on the Sudanese coast in the Red Sea.

Sudan attributed these difficulties to the continuous fighting between the Army and the FAR in multiple parts of the country, and stated that resolving the situation is “complex given the current war conditions”, so he declared a “state of force majeure” which prevents it from fulfilling its obligation to deliver the oil through the pipeline.

Panic spread in South Sudan. The South Sudanese pound experienced a steady decline against the US dollar and reached an official exchange value of 1,800 pounds to the dollar and 2,000 pounds to the dollar on the black market.

Consequently, commodity prices increased because South Sudan is especially dependent on imports of food, fuel and construction materials from East African countries due to the lack of local agricultural or industrial production.

The effects at street level

Peter Mayai Tong, 35 years old and an employee at the University of Yuba, told EFE that he cannot continue working “due to the high fares of public transport”, unaffordable because he does not receive his salary as a civil servant.

“It’s a real disaster. The dollar is rising and the market is in a state of madness. I can no longer go to the office every day due to the high cost of transportation. It costs me around 5,000 pounds a day (US$8.5), while I face the problem of feeding my three children. Now we live on one meal a day, just rice. “We have not received our salary in the last month and we do not know what will happen in the future”he related.

Nader Mohamed Idris, 40 years old, merchant and owner of a grocery store in the Konyo Konyo market in Juba, tells EFE that they can no longer control the prices of products due to the repeated increases in the dollar in the last week, when sales They stopped almost completely due to high prices and the lack of liquidity of the citizens.

“We will stop selling soon if the dollar continues to rise. We want to know the benefits that will allow us to continue in this trade. Now there is no movement in the market due to the lack of salaries and high prices, which we increase due to the increase in taxes. “We are also victims of this crisis.”he added.

Political reactions

Sukirri Juma Paul, member of the Economic Committee of the National Parliament, believes that the current crisis will have important effects in the near future, and calls on the Government to control the market and the value of the currency.

“This crisis will continue for almost a year. Our estimated monthly losses are 100 million dollars and if the government does not urgently intervene, security conditions will deteriorate and crime will increase. In addition, state apparatus will cease to function completely.”he added.

The Ministry of Finance considers that the best solution to this crisis is to increase agricultural production to provide the necessary food and request financial aid from friendly countries, in addition to increasing non-oil income to cover the deficit recorded in the general state budget.

The South Sudanese Minister of Finance, Awou Daniel Chuang, told EFE that they will try “In the coming days, control the exchange price, providing hard currency from friendly countries to import basic products, especially food and fuel.”

It will also provide “Salaries to state employees and workers”although he acknowledges that “The ideal solution is to return to agriculture and production and increase non-oil income as soon as possible.”

This situation occurs while the country continues to suffer the largest refugee crisis in Africa since it gained independence from Sudan in 2011 and the civil war broke out in 2013, which was ended by the 2018 peace agreement between the Government and the opposition.

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Source: Gestion

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