[South Sudan] Struggle to pay salaries as oil sales repay loans

[South Sudan] Struggle to pay salaries as oil sales repay loans
11 May 2022

In South Sudan, many civil servants have gone unpaid for months because the government has run out of funds and income from oil exports is allocated to servicing loans until 2027, ABC News reports.

Among the government employees demanding salary arrears are members of the security forces, doctors and nurses, according to Finance Minister Agak Achuil.

“The reason why we are not paying the arrears is that the oil money is going towards the payment of loans which have been taken before and paying for some of the priorities of the government,” the minister told reporters in capital Juba. “Where am I going to get the money if the oil has been sold in advance up to 2027?"

The government will allocate oil sales for 2028 and beyond in order to pay salaries for this year, he said.

The finance ministry recently paid the November and December salaries but it now owes salaries for the first four months of 2022.

President Salva Kiir’s government reportedly depends on oil proceeds to pay salaries and finance other development projects. Internal revenue sources are not enough to support government expenditure.

However, the government has borrowed heavily against the country's oil exports. In 2019 authorities agreed to allocate 10,000 barrels of crude oil per day as payment to Chinese firms building roads in the country.

Some of the government’s spending is considered wasteful. A decision in 2018 to give each of the country's 400 legislators a $40,000 loan to buy personal cars was widely criticised in a country where most government employees live in relative poverty. Medical workers are among the lowest-paid, with most nurses and midwives earning under $100 per month.

Some government employees spoke to The Associated Press and said they are finding it hard to look after their families amid rising commodity prices in Juba and elsewhere.

“Food is expensive and children are stressing us for school fees,” government office messenger Tereza Akol said, “Our situation is bad.”

Ms Akol said she hadn't received a payment since January.

Another employee, Mary Poni, works as a cleaner in a government office and said she now has a side job as a vegetable seller in order to put food on the table, “How can you serve a government which doesn’t care about you?”

President Kiir last year directed finance authorities to allocate 5,000 barrels of crude oil per day to regularise salary payments but the directive has not yet been implemented.

South Sudan produces 3.5 billion barrels of oil annually. Monthly oil earnings of roughly $57 million cover just a fraction of the government's monthly expenditure of $200 million, according to official figures.

Minister Achuil gave no details about government debt when he spoke earlier this month.

Critics have reportedly accused the government of taking corrupt loans because many are finalised without parliamentary approval.

“These loans are very corrupt because there (is) lots of money being exchanged under the table," Peter B. Ajak - an economist who previously worked for the government - said. "This is why money of five years is already spent.”

There were high hopes for peace and stability in South Sudan when the country gained its long-fought independence from Sudan in 2011. But the country slid into civil war in December 2013 primarily based on ethnic divisions when forces loyal to Kiir battled those loyal to his deputy president, Riek Machar.

Tens of thousands of people were killed in the civil conflict which ended with a 2018 peace agreement that brought Kiir and Machar back together in a government of national unity.

South Sudan's oil production has yet to fully recover.


Source: ABC News

(Quotes via original reporting)

In South Sudan, many civil servants have gone unpaid for months because the government has run out of funds and income from oil exports is allocated to servicing loans until 2027, ABC News reports.

Among the government employees demanding salary arrears are members of the security forces, doctors and nurses, according to Finance Minister Agak Achuil.

“The reason why we are not paying the arrears is that the oil money is going towards the payment of loans which have been taken before and paying for some of the priorities of the government,” the minister told reporters in capital Juba. “Where am I going to get the money if the oil has been sold in advance up to 2027?"

The government will allocate oil sales for 2028 and beyond in order to pay salaries for this year, he said.

The finance ministry recently paid the November and December salaries but it now owes salaries for the first four months of 2022.

President Salva Kiir’s government reportedly depends on oil proceeds to pay salaries and finance other development projects. Internal revenue sources are not enough to support government expenditure.

However, the government has borrowed heavily against the country's oil exports. In 2019 authorities agreed to allocate 10,000 barrels of crude oil per day as payment to Chinese firms building roads in the country.

Some of the government’s spending is considered wasteful. A decision in 2018 to give each of the country's 400 legislators a $40,000 loan to buy personal cars was widely criticised in a country where most government employees live in relative poverty. Medical workers are among the lowest-paid, with most nurses and midwives earning under $100 per month.

Some government employees spoke to The Associated Press and said they are finding it hard to look after their families amid rising commodity prices in Juba and elsewhere.

“Food is expensive and children are stressing us for school fees,” government office messenger Tereza Akol said, “Our situation is bad.”

Ms Akol said she hadn't received a payment since January.

Another employee, Mary Poni, works as a cleaner in a government office and said she now has a side job as a vegetable seller in order to put food on the table, “How can you serve a government which doesn’t care about you?”

President Kiir last year directed finance authorities to allocate 5,000 barrels of crude oil per day to regularise salary payments but the directive has not yet been implemented.

South Sudan produces 3.5 billion barrels of oil annually. Monthly oil earnings of roughly $57 million cover just a fraction of the government's monthly expenditure of $200 million, according to official figures.

Minister Achuil gave no details about government debt when he spoke earlier this month.

Critics have reportedly accused the government of taking corrupt loans because many are finalised without parliamentary approval.

“These loans are very corrupt because there (is) lots of money being exchanged under the table," Peter B. Ajak - an economist who previously worked for the government - said. "This is why money of five years is already spent.”

There were high hopes for peace and stability in South Sudan when the country gained its long-fought independence from Sudan in 2011. But the country slid into civil war in December 2013 primarily based on ethnic divisions when forces loyal to Kiir battled those loyal to his deputy president, Riek Machar.

Tens of thousands of people were killed in the civil conflict which ended with a 2018 peace agreement that brought Kiir and Machar back together in a government of national unity.

South Sudan's oil production has yet to fully recover.


Source: ABC News

(Quotes via original reporting)

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