Rather than seeking to avert this crisis by negotiating with Sudan, those in charge in the South seek to expedite the countries economic collapse by spending what foreign currency they have remaining to fund rebels and wage war on their Northern neighbour.
EXCLUSIVE: South Sudan economy on the verge of collapse, World Bank warns
May 6, 2012 (WASHINGTON) – The newly independent state of South Sudan is quickly headed towards an economic cliff in light of its decision to shut down oil production which went into effect earlier this year, says a confidential report by the World bank.
South Sudan took with it 75% of the oil reserves that existed when it was united with the north. But the landlocked nation could only export its oil through the pipelines that run through Sudan’s territories and end at the Red Sea port city.
Following a bitter row over how much Juba should pay Khartoum for the service, South Sudan made a unilateral decision to suspend oil production in response to Sudan’s seizure of a portion of the exported oil to make up for what it says are unpaid transit fees.
a briefing by a senior World Bank official on March 1st obtained by Sudan Tribune paints a very bleak picture of what awaits South Sudan’s economy in the months ahead.
"[T]he World Bank has never seen a situation as dramatic as the one faced by South Sudan," the World Bank’s Director of Economic Policy and Poverty Reduction Programs for Africa Marcelo Giugale is quoted as telling representatives of the major donor groups including the United States, United Kingdom, European Union (EU), Norway and the International Monetary Fund (IMF) among others.
The same presentation was given to the top officials in South Sudan on February 29, 2012.
Giugale told the donors that neither South Sudan president Salva Kiir nor senior member of his cabinet "were aware of the economic implications of the [oil] shutdown".
According to the transcript, the World Bank official "candidly said that the decision was shocking and that officials present had not internalized nor understood the consequences of the decision".
South Sudan is a unique and unprecedented situation globally, Giugale said because "countries in crisis usually face a collapse in growth rather than of GDP".
As a result of "sharp" drop in influx of hard currency and once citizens in South Sudan realize that value of their local currency is slipping "there will be a run for the dollars and families with dollars will almost certainly shift them outside the country".
Giugale pointed out that because most South Sudanese are not fully financial literate the run on the point has not yet happened.
"Once it starts, the currency will almost certainly collapse," Giugale says.
The World Bank official went on to analyze the situation of South Sudan’s foreign reserves and it is estimated that even with austerity measures adopted by the government in Juba, depletion of reserves can occur by next July "at which point state collapse becomes a real possibility".
If South Sudan takes the drastic measure of cutting monthly spending by 77%, the reserves can only last until December 2013.
Social impact of the oil shutdown is no less daunting as Giugale points out. The percentage of population in living in poverty will jump from 51% in 2012 to 83% in 2013. In gross numbers 3.6 million more people will fall below the poverty line.
Under-five child mortality will double from 10% live births in 2012 to 20% in 2013 and school enrollment will drop from 50% to 20% over the same time period.
Giugale also dismissed arguments made by South Sudanese officials that a large percentage of the population will be immune from the impact because it is not part of the cash economy.
"Even the poorest households interact with the cash economy during the three-five month hunger gap through some form of trade, usually livestock. The terms of trade for livestock (goats and cattle) will depreciate sharply against imported staple food commodities pushing millions of households out of the market and deepening food insecurity. This is likely to occur at the height of the planting and harvest season, with profound implications for the next two-three productive cycles" Giugale says.
NO VIABLE ALTERNATIVE
The options before South Sudan are very limited and include implementation of severe austerity measures and establishing social safety net programs.
Even if Juba were to triple non-oil revenue as they project its impact will be "negligible" the World Bank official says.
Giugale stated that the World Bank analysis might help speed up reforms within South Sudan civil service that were otherwise not possible. But he cautioned that an economic collapse "could result in social and political fragmentation, unrest and instability".
The G-6 donors group reacted to the World Bank finding by issuing a warning to South Sudan government that they are not prepared to fill the fiscal gap and as the situation continues they will not support the programs asked for by Juba.
"We anticipate a reorientation of our programs to protect the vulnerable, focused on life saving interventions. We cannot additionally implement the aid strategies that have been agreed upon," the donors said.
South Sudan is urged by the donors to resolve the current standoff with Khartoum over the oil exports in order to build its institutions and capacity.
The United Nations Security Council (UNSC) on Wednesday ordered north and south Sudan to return to negotiations within two weeks and resolve several issues including oil within four months.
Any side that fails to comply or cooperate with mediation could face sanctions, according to the UNSC resolution.
(ST)
http://www.sudantribune.com/EXCLUSIVE-South-Sudan-economy-on,42512
South Sudan took with it 75% of the oil reserves that existed when it was united with the north. But the landlocked nation could only export its oil through the pipelines that run through Sudan’s territories and end at the Red Sea port city.
Following a bitter row over how much Juba should pay Khartoum for the service, South Sudan made a unilateral decision to suspend oil production in response to Sudan’s seizure of a portion of the exported oil to make up for what it says are unpaid transit fees.
a briefing by a senior World Bank official on March 1st obtained by Sudan Tribune paints a very bleak picture of what awaits South Sudan’s economy in the months ahead.
"[T]he World Bank has never seen a situation as dramatic as the one faced by South Sudan," the World Bank’s Director of Economic Policy and Poverty Reduction Programs for Africa Marcelo Giugale is quoted as telling representatives of the major donor groups including the United States, United Kingdom, European Union (EU), Norway and the International Monetary Fund (IMF) among others.
The same presentation was given to the top officials in South Sudan on February 29, 2012.
Giugale told the donors that neither South Sudan president Salva Kiir nor senior member of his cabinet "were aware of the economic implications of the [oil] shutdown".
According to the transcript, the World Bank official "candidly said that the decision was shocking and that officials present had not internalized nor understood the consequences of the decision".
South Sudan is a unique and unprecedented situation globally, Giugale said because "countries in crisis usually face a collapse in growth rather than of GDP".
As a result of "sharp" drop in influx of hard currency and once citizens in South Sudan realize that value of their local currency is slipping "there will be a run for the dollars and families with dollars will almost certainly shift them outside the country".
Giugale pointed out that because most South Sudanese are not fully financial literate the run on the point has not yet happened.
"Once it starts, the currency will almost certainly collapse," Giugale says.
The World Bank official went on to analyze the situation of South Sudan’s foreign reserves and it is estimated that even with austerity measures adopted by the government in Juba, depletion of reserves can occur by next July "at which point state collapse becomes a real possibility".
If South Sudan takes the drastic measure of cutting monthly spending by 77%, the reserves can only last until December 2013.
Social impact of the oil shutdown is no less daunting as Giugale points out. The percentage of population in living in poverty will jump from 51% in 2012 to 83% in 2013. In gross numbers 3.6 million more people will fall below the poverty line.
Under-five child mortality will double from 10% live births in 2012 to 20% in 2013 and school enrollment will drop from 50% to 20% over the same time period.
Giugale also dismissed arguments made by South Sudanese officials that a large percentage of the population will be immune from the impact because it is not part of the cash economy.
"Even the poorest households interact with the cash economy during the three-five month hunger gap through some form of trade, usually livestock. The terms of trade for livestock (goats and cattle) will depreciate sharply against imported staple food commodities pushing millions of households out of the market and deepening food insecurity. This is likely to occur at the height of the planting and harvest season, with profound implications for the next two-three productive cycles" Giugale says.
NO VIABLE ALTERNATIVE
The options before South Sudan are very limited and include implementation of severe austerity measures and establishing social safety net programs.
Even if Juba were to triple non-oil revenue as they project its impact will be "negligible" the World Bank official says.
Giugale stated that the World Bank analysis might help speed up reforms within South Sudan civil service that were otherwise not possible. But he cautioned that an economic collapse "could result in social and political fragmentation, unrest and instability".
The G-6 donors group reacted to the World Bank finding by issuing a warning to South Sudan government that they are not prepared to fill the fiscal gap and as the situation continues they will not support the programs asked for by Juba.
"We anticipate a reorientation of our programs to protect the vulnerable, focused on life saving interventions. We cannot additionally implement the aid strategies that have been agreed upon," the donors said.
South Sudan is urged by the donors to resolve the current standoff with Khartoum over the oil exports in order to build its institutions and capacity.
The United Nations Security Council (UNSC) on Wednesday ordered north and south Sudan to return to negotiations within two weeks and resolve several issues including oil within four months.
Any side that fails to comply or cooperate with mediation could face sanctions, according to the UNSC resolution.
(ST)
http://www.sudantribune.com/EXCLUSIVE-South-Sudan-economy-on,42512
1 - 20 of 62 Posts
the state of south sudan was always set up to fail, the diaspora that they pride themselves of having hasn't brought anything, the state is still under the control of SPLA. anyway, good luck to them, they surely need the luck
Is anyone really surprised by this?
I think they should try and come up with a solution. Things will get worse!
And what was the alternative?
South Sudan HAD to split from Sudan that was non negotiable
and they have to protect their interests against a hostile Northern neighbor.
Really I think African countries should be doing a lot more to help South Sudan.
Sudan is ruled by a deranged lunatic by the name of Al Bashir, his rule does not bode well for South Sudanese and Sudanese people.
South Sudan HAD to split from Sudan that was non negotiable
and they have to protect their interests against a hostile Northern neighbor.
Really I think African countries should be doing a lot more to help South Sudan.
Sudan is ruled by a deranged lunatic by the name of Al Bashir, his rule does not bode well for South Sudanese and Sudanese people.
Very sad situation.
South Sudan has been pushed to this position. The sooner LAPSSET opens, the better.
South Sudan has been pushed to this position. The sooner LAPSSET opens, the better.
So true.And what was the alternative?
South Sudan HAD to split from Sudan that was non negotiable
and they have to protect their interests against a hostile Northern neighbor.
Really I think African countries should be doing a lot more to help South Sudan.
Sudan is ruled by a deranged lunatic by the name of Al Bashir, his rule does not bode well for South Sudanese and Sudanese people.
Al-Bashir will come to an unhappy ending, thats for sure.
But the GOSS are idiots. They must have knew all of this would happen. They should have known that they couldnt trust the murderous regime of Al-Bahsir. They should have done EVERYTHING to build another pipeline BEFORE breaking away.
the state of south sudan was always set up to fail, the diaspora that they pride themselves of having hasn't brought anything, the state is still under the control of SPLA. anyway, good luck to them, they surely need the luck
Being a Muslim does not mean to have to support Sudan by default,How long was South Sudan going to allow the genocide and untold misery brought unto them by Khartoum.
Sudan did not prevent the South from using its infrastructure because it had seceded, the reason why the South is being prevented from using our infrastructure is because they have refused to pay what was owed.And what was the alternative?
South Sudan HAD to split from Sudan that was non negotiable
+1111And what was the alternative?
South Sudan HAD to split from Sudan that was non negotiable
and they have to protect their interests against a hostile Northern neighbor.
Really I think African countries should be doing a lot more to help South Sudan.
Sudan is ruled by a deranged lunatic by the name of Al Bashir, his rule does not bode well for South Sudanese and Sudanese people.
Just because you live in Sudan and we dont does'nt make us morons; we know the hard facts on the ground.Sudan did not prevent the South from using its infrastructure because it had seceded, the reason why the South is being prevented from using our infrastructure is because they have refused to pay what was owed.
For a person that is extremely prejudiced against Sudan, don't you think that's a bit hypocritical.Being a Muslim does not mean to have to support Sudan by default,How long was South Sudan going to allow the genocide and untold misery brought unto them by Khartoum.
Sudan allowed the South to secede with 75% of the countries reserves in the hope of achieving peace, but the regime in the South wants to continue conflict mainly at the expense of its people.
Since the South's secession the South has committed a series of provocative acts that the media continues to ignore.
The South attempted to cause hyper-inflation by attempting to smuggle old Sudanese notes in to Sudan after changing their currency forcing us to do also do the same.
The CPA demanded that the North and South disarm their militias in each others respective territories in the event of secession, Sudan abided while the South refused.
The South has attacked and attempted to annexe Sudanese oil fields. Which is shocking greed considering it walked away with 3/4 of the countries fields.
It is not Sudan with is instigating the conflict, any reply is simply a reply to the South's insatiable appetite for conflict with Sudan.
I doubt you believe what you just aid. As a newly Independent country, huge oil deposits and potential what will the South benefit by deliberately provocating a Militarily superior Sudan because as you said they had an insatiable urge for war.:nuts::nuts:For a person that is extremely prejudiced against Sudan, don't you think that's a bit hypocritical.
Sudan allowed the South to secede with 75% of the countries reserves in the hope of achieving peace, but the regime in the South wants to continue conflict mainly at the expense of its people.
Since the South's secession the South has committed a series of provocative acts that the media continues to ignore.
The South attempted to cause hyper-inflation by attempting to smuggle old Sudanese notes in to Sudan after changing their currency forcing us to do also do the same.
The CPA demanded that the North and South disarm their militias in each others respective territories in the event of secession, Sudan abided while the South refused.
The South has attacked and attempted to annexe Sudanese oil fields. Which is shocking greed considering it walked away with 3/4 of the countries fields.
It is not Sudan with is instigating the conflict, any reply is simply a reply to the South's insatiable appetite for conflict with Sudan.
what does him being muslim has to do with anythingBeing a Muslim does not mean to have to support Sudan by default,How long was South Sudan going to allow the genocide and untold misery brought unto them by Khartoum.
there are plenty of muslims fighting against Bashir’s criminal regime you know
That's the sad reality rather than seek to develop the impoverished state the SPLA is letting its hatred for its former enemy guide its policy.I doubt you believe what you just aid. As a newly Independent country, huge oil deposits and potential what will the South benefit by deliberately provocating a Militarily superior Sudan because as you said they had an insatiable urge for war.:nuts::nuts:
The simple fact is that those leading the SPLM are shielded from the effects of an economic collapse, the leadership have accumulated vast wealth through immense corruption over the peace years, and now only care about hurting their former civil war enemies, even if it is at the expense of its people.
As low as your opinions of the Sudanese government is, Sudan has been transformed from having some of the worst infrastructure in Africa to one of the best and while Sudan faces a tough next two years rebalancing its economy, even during the good times the SPLM haven't provided any noticeable development for the south.
I think in this case it does. Why else would a guy from Comoros be "on this side".what does him being muslim has to do with anything
there are plenty of muslims fighting against Bashir’s criminal regime you know
The only Muslims fighting against Bashir are the non-Arab ones in Sudan in places like Darfur.
maybe you should ask him that instead of just assuming its because he is muslimI think in this case it does. Why else would a guy from Comoros be "on this side".
SPLM-N rebels are headed by muslims, Beja rebels are/were muslim.The only Muslims fighting against Bashir are the non-Arab ones in Sudan in places like Darfur.
So its not only Darfuris who fought and are fighting Bashir. There are plenty of other muslims doing that.
This is what happens when a country uses the little money that it has to buy weaponry. Juba doesn't even have roads and the government is more concerned about buying weapons.
1 - 20 of 62 Posts
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