South Sudan: Govt Draws Up 'War Budget', but Oil Production Targets Unlikely to Be Reached

By the evidence of South Sudan's budget, presented to parliament in late June, the country's finance ministry has lost its mind.

This time last year, the Government of South Sudan put forward what it described as a "two-step budget" that would boost social services and economic growth "in a responsible manner."

That budget, covering July 2013 to June 2014, consisted of six months of austerity while oil production recovered from a 15-month shut-down. Spending limits were set at SSP555m ($184m) a month for the first half of the year, rising to SSP1bn by early 2014 "if sufficient resources are available."

It seems that this common-sense approach hasn't lasted long.

Most press coverage of the new budget, covering July 2014 to June 2015, has focused on a reduction in the size of the budget from to SSP11.3bn from SSP17.3bn last year.

But a closer look at the figures reveals that this is anything but an austerity budget. The government is actually planning a 2.5% increase in spending on government agencies - from SSP9,733m to SSP9,968m.

While the increase in spending is marginal, the government is banking on an extraordinary increase in revenues that completely ignores the realities of its economic challenges.

Rather than applying the same principles of good husbandry that characterised its last budget, the new plan relies on a 23% increase in oil earnings, from SSP10,411m to SSP12,780m, and a 35% increase in non-oil earnings, from SSP1,967m to SSP2,654m.

In his budget speech to parliament on 24 June, finance minister Aggrey Sabuni Tisa admitted that the government has a "very poor track record in executing our budget as planned." (He's not wrong: the treasury generated barely 50% of its target non-oil earnings last year.) But with no sense of irony, Tisa has set targets that there is no evidence the government can meet.

Since independence in July 2011, South Sudan has relied almost entirely on its oil earnings to fund the budget. In the second half of 2011, oil earnings accounted for 98% of planned government expenditure, and about 75% of GDP. But in the three years since secession, oil earnings have consistently failed to meet government expectations.