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As food prices rise, pound drops, Juba puts off Independence Day fete

Saturday July 09 2016
food

Juba continues to face tension as prices of food and other basic items continue to rise and the Transitional Government of National Unity struggles to operate without resources. FILE PHOTO | AFP

South Sudan marked its fifth Independence last week without a state celebration ceremony due to lack of funds.

The youngest country is fast moving towards “failed state” status as an economic crisis deepens with fresh fighting in Wau in Bahr el Ghazal state.

Juba continues to face tension as prices of food and other basic items continue to rise and the Transitional Government of National Unity struggles to operate without  resources.

Donors have withheld grants of about $60 million demanding comprehensive economic reforms.

The International Monetary Fund has warned that the country is heading towards economic ruin, with inflation at almost 300 per cent and the South Sudan Pound falling by 90 per cent this year.

According to the South Sudan charge d’Affaires to Kenya Jimmy Deng, the available resources will be used to assist those facing starvation.

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Mr Deng said that the government is working towards increasing revenue collection, reduce unnecessary government expenditure such as overseas travel with the hope that these measures will sustain the economy until the donors come on board.

The pound has depreciated by almost 90 per cent since devaluation in December 2015. Food prices have skyrocketed this year, with the price of the country’s staple cereal, sorghum, rising by 400 per cent.

Geoff O’Donoghue, director of operations at the Catholic Agency for Overseas Development (CAFOD), who recently returned from Juba, said the country is at a fragile stage.

“Lives have been shattered by the conflict, and further compounded by the struggling economy, sending people deeper into poverty,” he said.

Besides economic crisis and continued conflict in Wau that has so far claimed 40 lives and displaced 10,000 people, South Sudan is also facing its worst food shortage in history. According to the World Food Programme, some 4.8 million South Sudanese could go hungry before the next harvests expected next month.

The donors have been demanding economic reforms, which include the Central Bank and the Ministry of Finance to tighten regulations, while the government is expected to show evidence of fighting corruption and reduction of wastage.

Juba had earlier in the week complained that donors were demanding the removal of Finance Minister David Deng Athorbei, and Central Bank Governor Kornelio Koryom Mayik, before they could resume funding.

The donors and presidential spokesperson Ateny Wek Ateny have since denied that such a precondition existed.

“It is not about the removal of individuals but an issue of a sustainable economy and the question of the central bank and Ministry of Finance will come as an economic reform package,” clarified Mr Deng.

Besides the effect of the civil war that broke out in December 2013 and went on for 21 months, South Sudan has been battling official corruption which has also kept away some donors.

Prior to the war, President Kiir revealed that over $4 billion had been embezzled by former ministers and top government officials since the interim period in 2006.

The war and the fall in global oil prices has had a serious impact on the country’s economy that derives 98 per cent of its total revenue. The country currently produces only 160,000 barrels per day compared to 350,000 barrels before the civil war.  

In June, the South Sudan oil revenue had fallen by 75 per cent to $60 million a month, while the country generates only $40 million a month in tax revenue and customs duties. 

President Kiir and former rebel leader, Dr Riek Machar signed a peace agreement in August 2015 and subsequently formed a transitional government in April 2016.

However, the traditional economy is yet to pick up since close to 2 million were displaced, while people have lost their cattle, seed stores, tools, businesses or land.

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