South Sudan: Economic Outline

Economic Indicators

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After decades of conflict, South Sudan became an independent state in 2011, but has suffered from social unrest and economic crisis. The peace agreement signed in September 2018 is expected to re-establish long lasting social peace and economic stability. However, the economy was hit hard by the global Covid-19 pandemic, locust invasions, falling oil prices and three consecutive years of extensive floods. After contracting by -6.6% in 2020, GDP growth rebounded to 5.3% in 2021, boosted by higher oil prices. According to IMF estimates, economic growth is expected to accelerate to 6.5% in 2022 before easing to 5.6% in 2023.

In 2021, despite the continuation of the Covid-19 crisis and another year of floods, South Sudan’s economy started to recover, supported by higher oil prices. The authorities successfully implemented a reform program aiming to restore macroeconomic stability by strengthening fiscal discipline, removing distortions in the foreign exchange market and improving transparency (IMF). The value of the South Sudanese pound stabilized and the gap between parallel and official rates was eliminated (IMF). From an estimated fiscal deficit of 7% GDP in FY 2020/21, a surplus of 2.6% GDP is expected for FY 2021/22, mostly due to the recovery of oil revenues and the reduction of Transitional Financial Agreement payments to Sudan (IMF). According to IMF estimates, public debt increased from an estimated 35.8% GDP in 2020 to 64.4% GDP in 2021. It is expected to decrease to 35.1% GDP in 2022 and 25.6% GDP in 2023, thanks to fiscal consolidation efforts (IMF). After skyrocketing to an estimated 550% in September 2016, inflation decreased sharply, but it remained volatile due to supply chain distortions, monetization of budget deficit and currency depreciation. The macroeconomic stabilization reforms contributed to a significant decline in inflation, but it remained high at an estimated 24% in 2020 and 23% in 2021. It is expected to remain stable at 24% in 2022 and to slightly reduce to 19.3% in 2023, still fuelled by higher food prices. Benefitting from buoyant oil revenues, the 2021/22 budget increases significantly allocations for social spending (education and health) and doubles the wage bill to offset an erosion of real wages (IMF). In addition to preserving macroeconomic stability, the authorities remain committed to strengthening governance and implementing public financial management reforms to tackle a legacy of non-concessional external debt (IMF). The peace agreement and the opening of four border crossings with Sudan are vital opportunities for reviving an economy that is not yet well-organised and largely dependent on Sudan. The country still has few asphalts routes and poor access to electricity and drinking water. Key challenges include peace and security concerns (ongoing conflicts in the Blue Nile, Darfur, and South Kordofan states), institutional and human capacity weaknesses, oil dependency, underdeveloped industry and infrastructure, vulnerability to climate change and widespread poverty.

The economic crisis has led to an acute deterioration in humanitarian conditions. About 60% of the country’s population is estimated to face food insecurity and more than 4 million people are displaced (IMF). Real disposable income is estimated to have declined by about 70% since independence in 2011, contributing to an increase in the poverty rate from 50% in 2012 to about 82% (IMF). The country is a victim of uncontrolled deforestation caused by the increase in illegal and lucrative timber collection. The lack of a central grid to supply electricity makes combating deforestation especially difficult. The country has one of the lowest adult literacy rates in the world (28%), poverty has increased to affect nearly 60% of the population, and according to the World Bank, unemployment rate was 14% of the workforce in 2020 (modeled ILO estimate). South Sudan is ranked 185th out of 189 countries in the Human Development Index published by UNDP. The COVID-19 crisis is expected to aggravate poverty and unemployment, with disproportionate effects on youth and women (AfDB).

Monetary Indicators	2016	2017	2018	2019	2020
South Sudanese pound (SSP) - Average Annual Exchange Rate For 1 GHS	12.38	26.52	30.83	n/a	28.74

Source: World Bank - Latest available data.

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Latest Update: February 2023