South Sudan oil sold in advance

Minister of Finance and Planning Agak Achuil Lual addressing journalists on their mission to Washington DC World Bank and IMF Spring Meetings at the Central Bank of South Sudan/ Photo: Philip Buda Ladu

By Philip Buda Ladu

The Minister of Finance and Planning said the government is running on loans borrowed in exchange of oil proceeds which was sold in advance to pay salary arrears of civil servants, organized forces and to cover government priorities.

Agak Achuil Lual, the Minister of Finance and Planning was speaking in a joint press conference at the Central Bank on Thursday following their return from the United States of America (USA) where they participated in the World Bank and International Monetary Fund (IMF) Spring Meetings in Washington DC.

The 2022 spring meeting focused on the World Economic Outlook in the wake of the war in Ukraine, global financial stability, fiscal monitoring and policy advice.

Minister Agak said that they discussed with the World Bank and IMF the impact of the global shock on the Republic of South Sudan which included the ongoing pandemic, climate change challenges and the war in Ukraine.

The finance minister said that the Covid-19 pandemic which affected oil prices and the floods in the country that reduced oil production are the main problems crippling the South Sudan’s economy as the country lost millions of dollars in oil proceeds due to low prices and production.

 “The production went down and when it went down, we were almost getting nothing. Sometimes a half cargo at the end of the month and then sometimes one cargo by the end of the month and you know that the oil is shared by those consortiums which dig our oil out. When it comes then it is shared among these companies and the government,” Agak said.

He revealed that the Ministry of Petroleum and that of Finance used to sell one cargo of oil at almost 20 million US Dollars previously but which isn’t the case now with the global pandemic and floods’ impacts on the country’s economy.

“The government’s share that time was very limited so it doesn’t go as much as two cargos and that was the reason why mostly there were people who went to get some prepayment, loans from other financial institutions in order to keep the government running,” the Minister said.

He said that the government is also implementing the peace agreement alone, that means maintaining the five Vice Presidents, maintaining all these Generals in the hotels and then trying to buy cars for the Vice Presidents and all these things need a lot of money.

“The money was borrowed and when this money was borrowed, people whom the money was borrowed from need to be paid back, so some of your proceeds of the oil were going for payment of these loans and that’s why the arrears of the salaries built up because there were priorities over priorities and when priorities were over priorities this way lots of arrears were accumulated,” Agak underscored.

The finance minister stressed that the reason why they are not paying the salary arrears is because the oil is going for loan payments which have been taken before.

“When you don’t have a cargo to sell or when it is given for a loan which was given before I could come in, there is no way I can stop this thing and say okay, give me this money, that person will take us to court,” exclaimed Agak.

“So, the oil money is going for the payment of loans and paying some of the priorities of the government, it is not that the government is sitting on the money and not paying the arrears,” he added.

Agak said that they are working very hard, and he has told his people to prepare three months’ pay sheets for the months of; January, February and March, but he will only clear them when he goes to borrow against advance oil proceeds.

“Where am I going to get the money? If the oil has been sold in advance up to 2027, that means I will go to 2028 to ask somebody to give me money such that by 2028 he will be given that oil and by the time I am gone somebody will come in my place and he will find out that all oil of 2028 has been sold so he will have to go for 2029,” Agak explained.

“If I want to pay, I will have to borrow and when I borrow that means your oil is being sold in advance. So, this is where your oil money is going, there is nobody eating it, it’s being sold in advance and we pay people in advance,” Agak added.

Minister Agak said that he is trying to eliminate all the arrears but he has to borrow money to pay the arrears and priorities of the government because the revenues are inadequate to cover all those.  

He said that they were advised in Washington DC to manage their cash well, be transparent, and use the oil money to pay arrears and they shouldn’t borrow loans.

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