Where is South Sudan’s Economy Heading?
By Mading Abraham Majur
October 12, 2015 (SSB) — I have ever shared an opinion in this space that though economies never die, they can become so sick that they fail to meet their basic obligations including behaving like living organism.
One function of an economy is to enable citizens earn a living through salary, farm and non-farm income such as trading and manufacture. The economy must also enable government to meet its obligations such as provision of security, supply of basic social services and payments to its creditors and suppliers of goods and services including salary to workers.
A notable naughty demand on government is the servicing of debts (payment of interest principles) the reason this item needs to be singled out is the fact that it takes precedence over all other planned expenditures of government. This item which has long crossed the million pounds milestone is not only rising but rising very fast. More so there is no hope of reducing it momentum very soon as the current obligations are locked in for more than two decades.
Is South Sudan’s debt sustainable? One member of jury, Mr. Government says yes, the other member, Mr. Reality has already expressed an opinion in the above arguments the mobility of government to meet its obligations in terms of paying salaries, its arrears, pension, and inadequate support to schools, hospitals and payment of decent wage is a clear sign of oversubscribed budget.
Worse still the government is embarking of purchasing heavy weapons fighting the rebels who are putting or increasing demand the underlying illusion is the acquisition of more debts to balance the budget.
While those who argue for and possibly enjoy the benefits of the debts will use unrealistic indicators such as debts to government development project (GDP) ration of less than 40 percent the real pain of debts is already coming through the failure to meet basic obligations and yet a dollar is increasing every day that even the importation of food supplies from the neighboring countries is becoming worse as a result of government failure to stabilize the local pounds against a dollar.
Impacts of continuing to borrow or debts are not only the amounts paid to creditors but also bad behaviors of over expenditure by government at expense of alternative needs-both current and future.
The vice of not timing the budget to what is feasibility in the medium to long-term and instead topping up any shortfalls through borrowing may have already derailed Sudan people’s liberation movement SPLM vision.
Going forward, government needs to respond to the realities of reduced donor money, delayed oil revenues, global economic downturn, growing populations and rising demand for social services as well as continued and increasing fragility of security in the region.
Domestics borrowing is not a substitute to donor money similarly debt sustainability not about the terms associated with the given debt (concessional or otherwise) but rather the level of productivity economic activities contributing towards tax revenues where the revenues fail to increase, it make sense to forego certain planned project a government budget with neither flexibility nor ability to meet the basic expenditure is possibly not worth the name.
What we must urgently avoid is the extension of that namelessness to the whole economy.
The author is the student from Kyambogo University, faculty of arts and social sciences Department of history and political science and he can be reached on majur20155@gmail.com
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