Gov’t projects 2.1 per cent revenue growth despite economic upheavals
The government has predicted a marginal positive growth in revenue collection in the 2022/2023 budget estimates, despite a projected decline in oil production from 156,000 barrels per day to 150,000 barrels per day.
While oil revenues finance 90 per cent of the country’s budget, Finance and Planning Minister Agak Achuil expects an increase in the nation’s revenue by 2.1 percent.
The forecast was included in the SSP 1.3 trillion budget for the 2022–2023 fiscal year that was delivered to the Transitional National Legislature (TNL) yesterday for review before it was adopted.
Agak made note of the budget’s difficult preparation environment—a generalized rise in the price of goods and services around the world.
Agak said the increase in oil prices has a positive impact on oil revenue, which could enhance fiscal space and reform efforts toward the establishment of a strong Public Financial Management (PFM) system, despite the fact that it has negative effects on South Sudan’s economy that are likely to offset gains resulting from an increase in oil revenues.
Although the increase in oil prices on the international market has increased oil revenues, the Minister claimed that the resources estimate is limited due to the increase in the cost of imported goods. Agak concluded that given the macroeconomic outlook, developing and implementing economic policy will be extremely difficult.
“The negative effects of floods are reflected in the projected 2.8 percent contraction in our real Gross Domestic product (GDP) in FY 2021/2022. As a result, our real GDP is expected to grow by 2.1 percent in the FY 2022/2023,” said Agak.
He said execution of the budget will be affected by global macroeconomic instability underpinned by climate changes, COVID-19 pandemic and man-made disasters such as the current war in Ukraine in addition to internal factors such as poor infrastructure, inter-communal conflicts and insecurity in some parts of the country.
According to Agak, the government’s 2022–2023 budget seeks to address the endogenous factors. He claimed that maintaining peace is necessary for addressing these endogenous factors, and that the FY 2022–2023 budget prioritizes the revitalized agreement’s implementation as well as infrastructure in general and roads in particular.
“This is the context in which to consolidate peace, combat COVID-19 and stimulate the economy through practical and tangible combination of fiscal and monetary policy measures. More importantly the FY 2022/2023 budget is guided by the revised National Development Strategy (R-NDS) with the five clusters of the peace agreement as its key pillars to promote economic stability and facilitate private sector participation in the economy” said Minister Agak.
He said the budget is consistent with the government’s commitment to refrain from monetary financing and to meet its objectives for sustainable and inclusive growth without reliance on non-concessionary external financing.
“That is we will use our limited resources to consolidate peace, combat COVID-19 pandemic and stabilize the economy. We will particularly focus on improving infrastructure to create a more conducive environment for investment and diversification away from oil”
“We are therefore, hopeful that the reforms within this budget, combined with peace will lay the foundation for institution for resilient institutions for effective service delivery, economic recovery, growth and poverty reduction”
Agak said attaining the growth objective in FY 2022/2023, demands that the private sector must play a stronger role in economic development adding that the private sector must play a bigger role in economic development if the FY 2022–2023 growth objective is to be met.
Furthermore, credit availability and accessibility will need to be improved. On our part as the government, we should continue to concentrate on implementing structural reforms and providing infrastructure in order to lower the cost of doing business, he continued.
He asserted that the economic recovery is also stimulated and expressed confidence that it can continue as more people return to their homes and engage in productive activities like agriculture the economic recovery can be sustained.
Revenues Estimates and Measures
The Minister estimates that the gross domestic product (GDP) for FY 2022/2023 will be SSP 832.8 billion, of which SSP 715.7 billion will come from oil and SSP 513.6 billion from non-oil sources. The estimated daily oil production is 150,000 barrels.
In FY 2022/2023, SSP 117 billion in non-oil revenues—an increase of 58.8 billion—are anticipated. The National Revenue Authority’s tax administration reforms, which include digitizing tax collection, expanding the tax base, and the proposal to fully deploy NRA staff in all non-tax revenue collection institutions, are to blame for the anticipated increase in non-oil revenues.
Furthermore, we have suggested modifying the fee structure for a few non-oil revenue categories.