South Sudan diverting oil revenue to finance expensive loans

South Sudan’s transitional unity government is diverting oil revenues to finance interests on expensive loans.

Agak Achuil Lual, Minister of Finance and Planning, revealed Thursday that they are struggling to pay civil servants because the country’s oil proceeds have been sold in advance.

 “Now, if I was to pay this salary I have to get this in advance, somebody to give me money to come and pay this salary which are the arrears and if I want to pay I will have to borrow, and when I borrow that means your oil is being sold in advance,” Lual told journalists in Juba.

In March 2019, the visiting high-level team of the International Monetary Fund (IMF) warned South Sudan to stop selling expensive and opaque oil advances, saying such deals were hindering funding of the revitalized peace deal.

IMF added that the measure would also help to ensure that oil revenues will be fully available for financing budgetary spending.

However, Achuil defended the transactions while arguing that they are selling oil in advance because locally generated revenue are insufficient.

“Maintaining all five vice presidents and the generals in the hotels is a lot of money, and that money was borrowed. So, some of your oil money was going for payment of these loans which is why salary arrears build-up,” he disclosed.

Achuil said since taking over the finance ministry docket, a lot has changed as civil servants were not being paid for months.

 “The oil production went down and we are almost getting nothing, sometimes half cargo by the end of the month which is shared with other consortiums that dig out oil. When that money comes it’s shared among those companies and the government,” he revealed.

He disclosed that a cargo of crude oil fetches nearly 20 million U.S dollars.

Adding that the oil is being sold in advance, leaving them with no option but to borrow  from financial institutions to keep the government running.