Qatar to loan South Sudan $100 million: official
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May 10, 2012 (KHARTOUM) – The government of South Sudan has managed to
secure a total of $600 million in loans amid growing fears about how
long the new nation’s economy can survive following its decision to
halt its entire oil production this year.
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A worker walks at the power plant of an oil processing facility at an
oilfield in Unity State April 22, 2012 (Reuters)
Juba retaliated to Khartoum’s move of seizing part of its oil to make
up for unpaid oil transportation fees. The two countries negotiated in
length without agreeing on how much landlocked south should pay for
using the north’s oil infrastructure.
Sudan lost three-quarters of its roughly 500,000 bpd of crude oil
output when South Sudan gained independence in July 2011 under a 2005
settlement that ended two decades of civil war.
This week the Sudanese finance minister said that Khartoum stands to
lose $2.4 billion in revenues this year as a result of the oil
dispute. The budget has projected that Sudan will receive around $36
per barrel in oil transit fees from the south.
On the other hand, a confidential document obtained by Sudan Tribune
this week showed a senior World Bank official warning that South
Sudan’s economy could go bankrupt as early as next July after
depletion of its reserves.
But an official in Juba dismissed the fears and said that help is on the way.
South Sudan Deputy Finance Minister Marial Awou Yol told Bloomberg
news that his country secured a $100 million line of credit from Qatar
National Bank (QNB) and will receive a $500-million loan within a
month from an unidentified provider. Loans are also being sought from
countries including China.
“We have oil in the ground, we can mortgage this oil for money,” Yol
said. Lines of credit will be used to give importers access to foreign
currency to buy goods including fuel, and future loans will allow the
government to release dollars into the economy to fight inflation, he
said.
The official said South Sudan’s pound value is being affected by
uncertainty about where the government will acquire foreign exchange
after losing revenue from oil production.
“The system is being driven by speculation” and adjusting the official
exchange rate to bring it in line with the black market would only
create more uncertainty, he said. Instead, the government plans to
stabilize the currency by injecting foreign exchange into the economy
obtained from the loans it’s negotiating.
(ST)
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