*Cabinet proposals for South Sudan's 2016/17 budget/ EIU 30.08.16*
South Sudan's cabinet has approved a budget proposal for fiscal year 2016/17 (July‑June) that would cap government expenditure at SSP29.6bn (around US$520m at current rates of exchange)—187% up on the previous fiscal year in local-currency terms. Analysis According to the information minister, Michael Makuei, further work by the Ministry of Finance will be necessary before the budget is submitted to parliament for approval at an as yet unspecified date. Few details are currently available, therefore, but, according to Mr Makuei, the broad aims of the measure are to consolidate the August 2015 peace agreement and fund the expanded transitional government of national unity, and to restore confidence in local markets by improving key economic indicators. There is little doubt that substantial work is necessary in such areas. Real GDP is estimated to have shrunk by some 5% a year since the country came into existence in 2011, inflation is running at 660% and the currency has lost almost 95% of its value since the central bank shifted to a floating exchange rate in December. This last factor means that in US dollar terms, spending is actually slated to fall sharply, from US$3.55bn in the 2015/16 budget. However, it is unclear how the authorities will fund even this lower level of spending, given that public finances continue to be severely affected by the volatility of oil production and exports. According to the South Sudanese authorities, the Sudanese government has agreed to revise oil transit fees—running at up to US$25/barrel, and thus not far below international oil prices, which we expect to average around US$43/b in 2016. The South Sudanese government has reportedly proposed transit fees in the range of US$12/b. However, negotiations have proved protracted, and are likely to have been delayed again by the renewed outbreak of fighting in July. The authorities may also seek further Chinese loans as a source of financing (offering future oil proceeds as security). Earlier in August, for example, the foreign minister, Deng Alor, stated that South Sudan was seeking a US$1.9bn Chinese loan to fund infrastructure projects. However, loan prospects may be constrained by China's growth slowdown, and increased concerns about security—China evacuated many oil sector employees from the country in July—and repayment prospects. -- To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] Visit this group at https://groups.google.com/d/forum/southsudankob View this message at https://groups.google.com/d/msg/southsudankob/topic-id/message-id For more options, visit https://groups.google.com/d/optout --- You received this message because you are subscribed to the Google Groups "South Sudan Info - The Kob" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. To post to this group, send email to [email protected]. Visit this group at https://groups.google.com/group/SouthSudanKob. To view this discussion on the web visit https://groups.google.com/d/msgid/SouthSudanKob/CAJb14or4ci%3DLYcun-ryG_SMXdBik%2BUphTvqipYW9YOL7MdqzVQ%40mail.gmail.com. For more options, visit https://groups.google.com/d/optout.
