Oil Quarrels with Sudan lead to Budget Shortfall

South Sudan plans to borrow 4.9bn South Sudanese pounds (SSP), or about US$ 1.6bn, to fund its 2013/14 budget of 17.3bn SSP, Finance Minister Aggrey Tisa Sabuni said this morning. The landlocked African nation has been on an austerity budget to weather a 16-month shutdown of its oil production in a row with neighbouring Sudan, through which it has to transport its oil. The main source for its budget, oil has been flowing again since April, but output is down 50% at 200 000 barrels a day compared to levels before the shutdown. Sabuni told parliament the government hoped to raise 10.6bn SSP in oil revenue this fiscal year and 1.5bn SSP in non-oil revenues.

Sabuni said the government was forced to borrow 4.7bn SSP in international and domestic markets during the last fiscal year. “If the oil is not shut down again, our financial situation should improve markedly through this fiscal year,” Sabuni told lawmakers. Oil ministry officials have said they hope to increase production to 250 000 bpd before the end of the year. Sabuni said 8.1bn SSP of this year’s budget is set aside to repay loans and pay arrears, rebuild cash reserves and pay Khartoum agreed pipeline and other fees. This year’s budget is up 2.58bn over last year’s austerity budget. It also sees an increase in spending on social services and a cut in the percentage given to the security sector – from 58 percent in 2012/13 to 50% this year.

South Sudan’s fiscal year ends in June. An earlier 17.3bn SSP budget was introduced in June, but recalled after President Salva Kiir sacked his entire cabinet in July. Lawmakers now have 45 days to approve the budget.

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