South Sudan borrows high interest loans to try to fix falling economy
Oct 2, 2020(Nyamilepedia) — South Sudan cabinet of ministers has secured at least $88 millions in loans from the Africa Export-Import Bank (Afreximbank), according to the government spokesman and the Minister of Information, Hon. Michael Makuei Lueth.
Briefing the media after a cabinet ministers meeting in the capital, Juba, the Minister of Information said the Council of Ministers has agreed to borrow the loans with hopes to repay it later on with oil money.
The loans, according to Michael Makuei, will be used to settle internal debts and pay salaries for public servants, some of whom have not been paid their dues for 13 months.
“The Afreximbank in the last meeting approved a loan of $25 million. This time the bank has decided to increase the amount, and it also approved that they will give us an additional sum of $63 million for the same pandemic trade impact mitigation,” said Michael Makuei.
South Sudan has borrowed extensively from around the world and also from within the country.
The government has borrowed at least $100 million USD from commercial banks in the country.
This and poor regulations contribute to economic crises as commercial banks and the black market refuse to be regulated by a mere debter that cannot repay their loans and can’t impose its own regulations.
According to the U.N. Human Rights Council, Yasmin Sooka, chair of the U.N. Commission on Human Rights in South Sudan, who addressed the U.N. Human Rights Council last month, South Sudan’s economic crises are being worsen by corruption as leaders are looting the country.
“Looting and pillage aren’t just offshoots of war — they are arguably the main drivers of the conflict,” said Sooka.
“South Sudan’s political elites are fighting for control of the country’s oil and mineral resources, in the process stealing their people’s future.” She continued.
According to Economic analysts, the quickest means for South Sudan to fix its falling economy is through empowerment of local production of exports and to do so the country must have a permanent peace and stability.
“Economic problems in the country can only be fixed when you actually fix the pay for production in the economy, which we don’t have in the current state.” said Ahmed Morgan, an economic analyst and a senior economics lecturer at the University of Juba
“And the basics for production of a good economy, we are supposed to have sustainable peace and general stability for security purposes so that we start local production for local consumption,” said Morgan,
Morgan added that South Sudan must enact policies that address simple issues such as salary payment and ensure that public servants are always paid on time.
“Civil servants have not been paid for months; then the government has to come up with plans on how it will never go back to the same position again.”
Morgan believes that South Sudan can reduce imports and improve its exports saying that oil can be processed in the country before being exported.
“I have been complaining that we need to strengthen our policies of foreign exchange, by reducing imports of such things, not forgetting that South Sudan is an oil-producing country and still we are importing the final products of oil,” Morgan continued.