By Kuir Mayen Kuir
April 29, 2025, News reaching Juba once again dimmed hopes for economic recovery.
The International Monetary Fund (IMF) has denied South Sudan access to additional loans, citing persistent corruption, misuse of previous funds, and general noncompliance with financial governance frameworks.
This recent rejection marks another failed attempt following a similar one in 2024, where the IMF flagged noncompliance with policy recommendations under the Staff Monitored Programs (SMP) and involvement in non-concessional loans (Owino, 2024).
From a diplomatic lens, the IMF’s decision may be seen as part of broader geopolitical tension. The recent exchange of diplomatic communications between the U.S. and South Sudan over the deportation of Nimeiri Garang, a Congolese national believed to have breached both U.S and South Sudan’s immigration laws, could suggest growing international frustration.
A political and diplomatic resolution may be necessary before Washington fully withdraws its support for South Sudan economic resuscitation.
However, from a development finance perspective, the IMF is justified in its insistence on accountability. Loans are development finance tools meant to spur economic growth, environmental improvement, and societal welfare. Such funds should result in tangible infrastructure and services such as roads, bridges, irrigation systems, electricity and water systems. All these designed to benefit the population and, ultimately, repay the loan. A figurative demonstration of this could be the Grand Ethiopian Renaissance Dam (GERD).
Lessons from the Ethiopian dam project
A prime example is Ethiopia’s Grand Renaissance Dam, a $5 billion project financed partly through Chinese loans and domestic revenue. Despite opposition from Egypt and other Nile riparian states, Prime Minister Abiy Ahmed remained relentless. Today, the dam positions Ethiopia as a potential continental power exporter, with countries like Kenya, Uganda, and possibly South Sudan set to benefit, and of course this entirely depends on diplomatic and commercial agreements between these countries.
China’s loan approach may be less stringent in comparison to that of IMF, but the principle remains that proper use of funds results in transformative projects which boost the welfare of the people.
South Sudan’s Track Record
According to the IMF (2025), South Sudan’s outstanding credit stands at $246 million. The last disbursement under the Rapid Credit Facility (RCF) was in March 2023. What remains unclear is how this loan was utilized. What infrastructure was built? How many citizens benefited? As highlighted in Mikal’s (2019) research from the University of Nairobi, access to low-interest loans significantly impacts the growth of micro and small enterprises—provided the borrowers possess entrepreneurial skills. Misused funds, however, produce no economic returns and as Mikal concluded “Usage of finances is equally as important as accessing it,”
If South Sudan is to retain IMF confidence, loan utilization must be transparent, effective, and development-oriented. There are no shortcuts about this.
Security and Corruption: Obstacles to Growth
While insecurity has since hindered development in the country, the elephant in the room now remains corruption. This menace not only retards economic and societal growth but also tarnishes South Sudan’s global image. If drastic measures, such as those proposed by Vice President H.E. Taban Deng Gai are required to stem this rot, such as exterminating a corrupt convict by firing squad, then so be it. Corruption is not just a political issue; it is a developmental emergency. It has to be deeply uprooted from its solace, so that the society can breathe once again.
A Development Finance Roadmap Forward
Based on the perspective of a development Finance expert, methods of receiving finances must change. Instead of channeling funds directly into government accounts, South Sudan could present detailed project frameworks and request financiers to work with vetted contractors. Key government priorities might include:
- Constructing flood-control infrastructure in Upper Nile
- Building transnational road network to connect the states and enhance regional trade
- Installing water treatment and power generation plants
- Scaling mechanized agriculture to improve food security
By adopting such models, contractors receive funds directly, bypassing government bureaucracy and limiting opportunities for embezzlement. This ensures citizens benefit directly, aligning with President Kiir’s past calls for anti-corruption reforms. This approach has many benefits.
Conclusion
Loans are vital for development—not for enriching a few. Mismanagement of such resources risks turning South Sudan into a debt-burdened state. If handled wisely, however, loans can elevate the nation’s economy and improve livelihoods. Anything short of development and more of personal interest must not be funded by loans and other national coffers.
Besides loans, the country should explore instruments like government bonds and treasury bills. While these require a more stable macroeconomic environment, they represent sustainable paths to development when supported by a competent central banking system and regulatory framework.
About the Author:
Kuir Mayen Kuir holds a degree in Economics and Statistics from the University of Nairobi and is a final-year Master’s student in Development Finance at KCA University. He can be reached via email: mayenkuir12@gmail.com.
References:
Mikal, M. S. (2019). Development Finance and its Effects on Investment and Employment in MSEs in Nairobi County [Unpublished master’s thesis]. University of Nairobi.
Development Policy Financing. (2015). The World Bank Group A to Z 2016, 32c-33. https://doi.org/10.1596/978-1-4648-0484-7_development_policy_financing
IMF Member Financial Data. (2025). https://www.imf.org/external/np/fin/tad/balmov2.aspx?type=TOTAL
IFAD. (2024). Demystifying Development Finance.
International Monetary Fund. (2024). History of Lending Commitments.
Klaassen, L. (2021). Everywhere and Nowhere to be Seen: China’s Role in the GERD Dispute.