Over-reliance on oil imperils the economy

Over-reliance on oil imperils the economy
Bentiu local oil refinery site. [Photo: courtesy]

The Minister of Finance and Planning, Agak Achuil Lual, told the journalists during a press conference in Juba that the government did not have ready cash to pay its employees and it is always forced to borrow money for their salaries.

“If I have to pay salaries, I have to borrow, and when I borrow, that means that your oil is being sold in advance,” he said.

“It is not that the government is sitting on the money and not paying arrears.” I have instructed my people to prepare three months’ pay sheets for January, February, and March. “Where am I going to get the money if the oil has been sold in advance up to 2027? That means I will go to 2028 to request money from someone so that in 2028, you will be given that oil,” Agak stressed.

Also, he talked about the huge amount of money being spent on the implementation of the peace agreement since the government does not get any financial support from outside the country for peace implementation.

 “Some of the proceeds from oil were going to repay the loans and that is why there are years of salary build-up. Because there are priorities over priorities and a lot of arrears have accumulated, “Achuil said.

Agak disclosed that the World Bank and the International Monetary Fund (IMF) had cancelled all loans for South Sudan until the financial, and economic management reforms provided for in Chapter Four of the revitalised agreement are fully implemented, the Minister of Finance has said.

This state of affairs is so serious that it needs a quick approach to address the anticipated economic meltdown before the situation gets there. With the cancellation of the loans by the World Bank and IMF, it means the budget deficit is likely to be a big challenge.   Oil exploration has already proven not to be benefiting the citizens because a good amount of it has been sold in advance.

It is now time for the government to start focusing on sectors like agriculture to generate more revenue. This would not address the current situation, but in a long run is going to be reliable. There are several oil-producing countries around the world but none of them is entirely dependent on oil production. Despite the fact that crude oil has been the major revenue driver for many African countries like Libya, Nigeria, Algeria, Sudan, and Egypt, they have seriously invested in agriculture. It is one thing to extract crude reserves in large quantities, but it is also another thing to get the maximum benefits from it.

So, there is a need for South Sudan to invest in agriculture to boost its economy rather than depend on resources that do not help.