Sudão do Sul: Contexto econômico

Economic Indicators

After decades of conflict, South Sudan became an independent state in 2011 but has continued suffering from social unrest and economic crisis: although the peace agreement signed in September 2018 was expected to re-establish long-lasting social peace and economic stability, such expectations were not met. The formation of a unity government (February 2020), the reconstitution of the Transitional National Legislative Assembly (August 2021), and the unification of the army’s command structure (April 2022) represent significant steps towards its implementation, but progress has been slower than expected and the process will not be complete before 2025. The GDP experienced a contraction of about 1.3% in FY2022/23, primarily due to consecutive years of flooding, hampering oil production, and elevated food inflation linked to the conflict in Ukraine and ongoing COVID-19 effects. However, signs of recovery in private sector activity are evident, supported by macroeconomic stability improvements from IMF-backed reforms, increased government spending fueled by rising oil prices, enhanced credit flow to businesses, and expanded harvested areas. Growth is projected to rebound to 2% in FY2023/24, driven by a sustained non-oil sector recovery and expanded crop cultivation. Although oil production has partially recovered from flood impacts, a temporary decline offsets gains. Over the medium term, growth is anticipated to hover around 4%, buoyed by oil output recovery and non-oil sector enhancements (World Bank data).

The economy remains excessively reliant on oil, which accounts for nearly all exports and over 90% of government revenue. In FY2022/23, fiscal pressures were more pronounced than expected. Enhanced oil prices and reforms in non-oil revenue administration augmented total revenues by 42%. However, expenses surpassed planned allocations by 29%, with an overall spending rise of 41.9%, driven chiefly by increased operational and capital expenditures. The FY2023/24 budget raised capital spending, hiked public sector salaries by 130% to offset inflation impacts, and boosted transfers to regions. Nevertheless, salary arrears accumulated since the fiscal year's outset, leading to deficit monetization. Data for FY24Q2 reveal ongoing central bank overdrafts and the use of oil advances to finance the budget. Inflation has surged, climbing from 13.3% in the first half of 2023 to 31.9% in January 2024, primarily due to currency depreciation. The Sudan conflict and the recent Red Sea crisis have disrupted oil revenue inflows, leading foreign exchange reserves to plummet from 0.5 months of import coverage in June 2023 to 0.2 months by December 2023. With increased reliance on deficit monetization, the official exchange rate has depreciated by 42% since the beginning of 2024, while the premium in parallel markets has expanded to 13.7% (World Bank). In March 2023, the International Monetary Fund's Executive Board gave the green light for the allocation of SDR 86.1 million (roughly equal to USD 114.8 million) to South Sudan through the Rapid Credit Facility's (RCF) Food Shock Window aimed at supporting the country in tackling food insecurity. 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. The peace agreement and the opening of four border crossings with Sudan are vital opportunities for reviving an economy that is not yet well-organized and largely dependent on Sudan. The country still has few asphalt 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. Poverty remains severe, with 7 out of 10 people living in extreme poverty. Around 8.9 million individuals, 78% of the population, face severe food insecurity exacerbated by global food price hikes and domestic floods. Additionally, 2 million people are internally displaced, with 55% being women and girls, while 2.1 million remain refugees in neighboring countries. Since the onset of the conflict in Sudan, over half a million Sudanese refugees and returnees from South Sudan have registered in the country, intensifying existing humanitarian challenges. According to the World Bank, the unemployment rate stood at 12% in 2023, down from 12.4% one year earlier, while the country’s GDP per capita was estimated at USD 1,182, the third-lowest in the world.

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: May 2024