With oil sales tied up, South Sudan battles to pay salaries

“The reason why we are not paying the arrears is that the oil money is going towards the payment of loans which have been taken before and paying for some of the priorities of the government,” he told reporters in Juba, the capital. “Where am I going to get the money if the oil has been sold in advance up to 2027?"

The government will allocate oil sales for 2028 and beyond in order to pay salaries for this year, he said.

The finance ministry recently paid the November and December salaries but now owes for the first four months of 2022.

President Salva Kiir’s government depends on oil proceeds to pay salaries and finance other development projects. Internal revenue sources are not enough to support government expenditure.

But the government has borrowed heavily against the country's oil exports. In 2019 authorities agreed to allocate 10,000 barrels of crude oil per day as payment to Chinese firms building roads in the country.

Some spending is seen as profligate. A decision in 2018 to give each of the country's 400 legislators a $40,000 loan to buy personal cars was widely criticized in a country where most government employees live in relative poverty. Medical workers are among the least paid, with most nurses and midwives earning under $100 per month.

Some government employees who spoke to The Associated Press said they are finding it hard to look after their families amid rising commodity prices in Juba and elsewhere.

“Food is expensive and children are stressing us for school fees,” said a government office messenger, Tereza Akol. “Our situation is bad.”

Akol said she hasn't received a payment since January.

Mary Poni, who works as a cleaner in a government office, said she now has a side job as a vegetable seller in order to put food on the table. “How can you serve a government which doesn’t care about you?” she said.

Kiir last year directed finance authorities to allocate 5,000 barrels of crude oil per day to regularize salary payments, but that has not yet been implemented.

South Sudan produces 3.5 billion barrels of oil annually. Monthly oil earnings of roughly $57 million cover just a fraction of the government's monthly expenditure of $200 million, according to official figures.

Achuil, the finance minister, gave no details about government debt when he spoke last week.

Some government critics accuse the government of taking corrupt loans as many are finalized without parliamentary approval.

“These loans are very corrupt because there (is) lots of money being exchanged under the table," said Peter B. Ajak, an economist who previously worked for the government. "This is why money of five years is already spent.”

There were high hopes for peace and stability in South Sudan when the country gained its long-fought independence from Sudan in 2011. But the country slid into civil war in December 2013 largely based on ethnic divisions when forces loyal to Kiir battled those loyal to his deputy president, Riek Machar.

Tens of thousands of people were killed in the civil conflict which ended with a 2018 peace agreement that brought Kiir and Machar back together in a government of national unity.

But South Sudan's oil production has not yet recovered fully.