By Tereza Jeremiah Chuei
The standing specialized committee for Finance and Planning at the national assembly has recommended that the Ministry of Finance and Planning (MoFP) and other government institution wanting to borrow loan on behalf of the government first seek approval from the National Legislature before borrowing.
This recommendation as part of the several observations and recommendations that the parliamentary committee for Finance outlined in their report on the budget scrutiny for the fiscal year 2022/23 was presented to the august house in its second reading yesterday.
The Chairperson of the standing specialize Committee on Finance and Economic Planning, Changkuoth Bichiock Reth presented the committee’s report on the Fiscal Year budget 2022/2023 to the parliament.
He stated that there are political and economic implications which the borrowing may have on the people of South Sudan and that it requires parliament permission before the Minister’s approval.
“The Committee recommends that the Minister of Finance and Planning seeks approval of the National legislature before any borrowing, whether domestic or foreign, and provide details of the purpose, objectives, benefits and the economic or political implications which the borrowing may have on the people of South Sudan,” he said.
He however acknowledged that because of conflict, flooding and Covid-19 pandemic crises South Sudan had to rely on external borrowing and loans which had then accumulated to USD 2.05 billion.
“Some of the loans are concession loans from international financial institutions such as the IMF, World Bank, Africa Development Bank and African Exim Bank with favorable interest rate between 1% to 2% given the fiscal imbalance just stated, these institutions are likely to cancel or reschedule these loans under Highly indebted poor Countries (HIPC) program however, some loans were taken from Commercial Banks which charge high interest rates,” he noted.
Changkuoth stated that the repercussion that has happened due to the domestic borrowing and printing currency was direct impact on the exchange rate where the US Dollar appreciates over the SSP.
The committee chair added that the borrowings have also created inflationary conditions and increased unemployment with rising prices of essential commodities in the markets.