The 7th Edition of South Sudan Economic Monitor (SSEM) titled ‘A Pathway to Overcome the Crisis’ released today by the World Bank assessed that South Sudan`s economy is projected to contract by 30 percent in FY24/25, but is projected to rebound in FY25/26, if there is a resumption in oil exports of the country’s Dar Blend Oil. The SSEM further notes that South Sudan’s economy has declined for five consecutive years and projects that Gross Domestic Product (GDP) per capita is estimated to decline to around half of FY20 levels.
The report indicates that the projected contraction is primarily due to the disruption of oil production which has led to a significant decline in export revenues, estimated at $7 million per day. This has strained public finances, contributing to salary arrears and reduced spending on essential services like health and education. Additionally, hyperinflation and widespread food insecurity affect nearly 80 percent of the population, while poverty is calculated to have risen to 92 percent based on available data. Weak governance, poor management of oil revenues, and ineffective fiscal policies have also contributed substantially to these issues. Furthermore, the underdeveloped financial sector limits economic diversification and access to credit.
Despite these challenges, the SSEM highlights the potential for a brighter future for South Sudan through decisive action and comprehensive reforms. The report underscores the urgent need for measures to stabilize the economy and foster sustainable growth.
“The situation is very challenging, but the government has committed to undertaking reforms to tackle macroeconomic and fiscal challenges and enhance governance. If carried through, these reforms will provide for greater macroeconomic stability as well as greater, fiscal sustainability that will allow the government to improve its delivery of services to the population,” said Charles Undeland, World Bank Group Country Manager for South Sudan. “By maintaining macroeconomic stability, improving governance, and enacting strategic structural reforms, South Sudan can unleash the potential of its private sector and pave the way for recovery and prosperity. The World Bank Group is keen to support the government in these efforts,” he added.
The SSEM suggests that the following policy measures could assist the Government of South Sudan in tackling inflation and fiscal challenges:
- Strengthen macroeconomic framework and;
- Increase exchange rate flexibility and curtail monetary financing of the deficit to contribute to macroeconomic stabilization;
- Strengthen oil revenue management and transparency of fiscal policy;
- Boost non-oil revenues, support economic diversification and prioritize social spending;
- Implement a credible strategy to clear salary arrears of government employees;
- Address pervasive poverty and enhance drivers of growth, including agriculture production, implement key structural reforms.
“A fundamental shift in South Sudan’s policy and institutional framework is needed to reduce poverty and enhance economic growth. Many of the essential actions to addressing the root causes of poverty in the country and for providing the basis for lasting peace are long-standing government policy and institutional reform commitments. Investing in a growth model that creates more, and better jobs will be key to poverty alleviation. The overarching priorities should be to invest in building human capital and state capacity, create the conditions for a dynamic private sector to boost growth, and support the development of local institutions and civil society,” said Kamer Karakurum Ozdemir, World Bank Senior Economist.
The SSEM is an annual World Bank report series that assesses key economic developments, prospects, and policies in South Sudan. It is intended for a broad audience including policymakers, business leaders, analysts, and development partners involved in macroeconomic and structural reform priorities in South Sudan, as well as the general public.
Distributed by APO Group on behalf of The World Bank Group.
