Peace in Sudan key to South Sudan’s economic recovery: AfDB report
By Denis Ejulu
South Sudan’s economic recovery amid hyper inflation is solely dependent on peace in neighboring Sudan, which it relies upon to export it’s main earner of foreign exchange, a new report by the African Development Bank (AfDB) revealed on Wednesday.
The 2025 country focus report noted that South Sudan’s economy contracted by about 27.6 percent in 2023/24 from 2.5 percent growth in 2022/23 due to oil export disruption by the conflict in Sudan.
It explained that this was driven by decline in household income, government expenditure cuts, and drop in investment.
Hoth Tot Chany, senior economist with the AfDB in South Sudan noted that the ongoing conflict in Sudan has increased cost of imports, disrupted trade, and slowed economic activity.
“Recent macro-economic shocks including oil production disruption, persistent floods and recurring droughts, sub-national violence which affected agriculture production, and spiraling exchange rate, have influenced monetary policy outcomes and inflation target, resulting in policy slippages,” Chany said during the launch of the report in Juba, the capital of South Sudan.
He disclosed that inflation which grew by 65.6 percent in 2023/24 is projected to remain moderate at 65.0 percent in 2024/25.
The report revealed that overall fiscal surplus reduced to 5.8 percent of GDP in 2023/24 down from 7.0 percent of GDP in 2022/23, due to loss of two-third of oil revenue as a result of pipeline damage in early 2024.
It also noted that financing the 2024/25 fiscal budget is subject to the security and political situation in the neighboring Sudan despite budget projections putting oil revenue at 55 percent of the total budget resources.
In addition, it noted that the country remains at high risk of debt distress, with the stock of external debt estimated at 38.3 percent of GDP as at the end of June 2024, adding this is despite the World Bank/International Monetary Fund assessment, noting the debt was still sustainable.
“Development spending needs and fairly large stock of non-concessional external debts including oil-backed loans have affected external position. These external financial needs, are estimated at 6.8 percent of GDP in 2023/24 and are projected to reach 9.7 percent of GDP in 2024/25,” the report said.
It also disclosed that foreign reserves declined to an estimated 0.3 months of imports cover in 2023/24 owing to declined foreign exchange earnings from oil exports, adding that imports have been largely financed through remittances and humanitarian assistance.
Emilio Dava, senior fragility and resilience officer with AfDB country office in South Sudan noted that South Sudan has the potential to achieve unprecedented economic growth and transformation when it exploits it vast natural resources such as oil, minerals, cattle and fisheries.
“Materializing this potential, is a monumental task that requires among other things institutional capacity building and modernization, upskilling of the labor force and tapping into the huge youth bulge, streamlining of investment and trade policies to enable local private sector development and value addition especially in the current context of shifting global trade politics,” Emilio said.
He also emphasized the need to realize sustainable peace and political stability, enhancement of financial inclusion and having investments in critical social and economic infrastructure to support growth.
Emilio revealed that the bank’s strategic focus and engagement has been centered around agriculture, value chain development to promote economic diversification and building resilience.
