Economy

Despite moderate levels of external debt, the combined impact of a civil conflict, a large fall in oil prices, and high levels of fiscal spending has left South Sudan in debt distress. This crisis has caused payment delays on international obligations, on civil servant salaries, and other government obligations. Moreover, international lines of credit have been restructured on longer maturities, international reserves have declined to near exhaustion, and the country is currently constrained from accessing long term external financing. However, assuming implementation of the recently adopted economic adjustment policies and a successful peace process, the debt outlook would improve considerably which could allow for a gradual resumption of external financing. However, vulnerabilities remain high and a
prolonged period of lower oil prices or failure to address the country’s economic and security problems could cause continued debt sustainability problem.

This weekly review contributes to the debate on how the COVID-19 induced hysteresis effects could affect growth in South Sudan. It addresses two related questions: What channels would transmit the COVID-19 scarring effects to the output? What can public policy do to support recovery?

South Sudan, along with many of its neighbouring countries in north-east Africa, faces a seemingly intractable economic crisis. Cycles of civil war and brokered elite peace deals since 2013 have entrenched widespread economic breakdown with locally specific dynamics. This has resulted in increased security surveillance, repression and control. It has also encouraged sustained armed recruitment and out-migration across national borders for survival.

This research project aims to understand the dynamics of this protracted economic and political crisis from the perspective of poor residents in the conflict-affected borderland of South Sudan and southern Darfur in Sudan. The study asks two core questions: First, how do residents in the borderlands of South Sudan seek survival, welfare and better lives in the economies and cross-border migrant pathways available to them? Second, how do young men and women navigate the risks of migrant and military work across South Sudan, Sudan and further afield?
The pathways of young people into migrant and military work in South Sudan, across the border with Sudan and towards Egypt, Libya and onwards are catalyzed and connected by the repressive structures of the economic system in the South Sudan borderlands. This report begins with a description of the exploitative economy that traps and impoverishes residents on this borderland. It is this economy that frames the decisions and pathways of the young men and women who seek work and lives elsewhere.

The report then follows these young people to militarized livelihoods in Juba, across the border to Darfur and Khartoum, through the peri-urban settlements and gold mining fields in Sudan, and onwards to Egypt, Libya, Chad and beyond. The report concludes with an exploration of the borderland migrant networks that keep people alive and connected through these pathways and choices.

This study assesses the macro-fiscal framework for jobs in South Sudan, working with the limited macro-fiscal data available on the fiscal years 2019 and 2020. The macroeconomic environment can hardly be more difficult for South Sudanese looking to make a living. For workers, the dramatic contraction of non-oil output since the beginning of the conflict reflected a loss of job activities and a breakdown in market demand. A 60-fold increase in prices since before the conflict poses a serious obstacle to job activities, while an overvalued exchange rate weakens incentives. The oil sector is a big part of the economy, and the budget is dependent on oil revenue – but with weak governance, too little spending goes toward investment in development. The public sector in employment is large and a source of patronage, but it has an important function as a source of demand for goods and services. The study is one of a set of four reports assessing different aspects of jobs in urban South Sudan in order to formulate policy for recovery.