By Bida Elly David
South Sudan Minister of Finance and Economic Planning has admitted that there is poor utilization of the Country’s oil revenues.
Oil is the main source of the country’s revenues; it provides 90% of the nation’s budget with its generated income.
Minister Dior Tong Ngor said the oil earnings have been poorly utilized and not being used properly to foster economic growth and development.
“The most fundamental challenge is how the resulting wealth is used wisely and shared fairly across sectors of society. Oil is an important source of revenue for the government of South Sudan,” he said.
“We have other challenges in using the oil money to fuel agriculture, the tourism sector, the mining sector, and the animal resources that we have in the service sector,” he added.
The minister made the comment during his opening remarks at 6th South Sudan Oil and Power Conference and Exhibition in Juba, on Thursday.
But overdependence on the oil sector coupled with poor management of the resource is a problem, and Minister Tong said the issue weakens productivity in all non-oil revenue sectors.
The finance minister also observed challenges in foreign exchange management, pointing out that the fluctuating exchange rate was badly striking economic stability in the country.
The minister noted that high vulnerability to fluctuation in commodity prices has all been associated with the oil resources.
“There is also a challenge of friend-seeking behavior that undermines governance and imposes difficulties in robust growth and enabling institutions,” he said.
Tong suggested that South Sudan, as the leading oil producer in the region, must use oil resources to diversify the economy and create enough jobs to raise the living standards of its citizens.
He reiterated the need to develop the right macro-economic policies to properly address the continuing economic challenges, noting that without the policy, South Sudan will run a risk of contracting dash disease.
“Dash disease is when we put much of our energy into oil and neglect all the other sectors of the economy. Such dependency slows productivity growth in other sectors of the economy,” he explained.
Minister Dior reiterated the lack of emergency reserves for South Sudan as one of the key pillars to rescuing the country during uncertainty.
Tong said that other countries have prioritized putting extra resources aside for future uncertainties, which South Sudan does not.
“Many countries deal with unfulfilled swings by building reserve funds to smooth consumption spending. Putting some funding aside is very important for precautionary reasons. It is good for future generations,’’ he said.
The minister called for a commitment to good governance on management of oil resource revenues.
He stressed that government Institutions need to have a high level of accountability as a key to managing resources in the country.