South Sudan puts hope in oil and gas production to finance $1.6 billion budget

(Bloomberg) – South Sudan is pegging its hopes on the resumption of crude oil production to finance a $1.6 billion budget for the current fiscal year.

The government proposes to spend 4.172 trillion South Sudan pounds in the budget year through June, according to a speech to lawmakers by Minister of Finance Marial Dongrin Ater. The Treasury will seek grants and concessional loans to bridge the deficit, according to the speaking notes handed to reporters in the capital, Juba.

“When production of Dar blend resumes, the government will recover 70% of projected oil revenue amounting to 1.7 trillion pounds,” Ater said on Wednesday. “We estimate that crude oil prices will average at $79 per barrel.”

The ministry projects the economy will resume positive growth to 6.8% in the year through June, after contracting 5% in the prior 12 months. It sees average inflation of 5.8% during the period, from 5% at the end of 2023.

The ministry and the central Bank of South Sudan “will work to reunify the exchange rate to bridge the gap between parallel market and official rates,” at around 2,527 pounds per dollar, he said.

In the nine months through March, South Sudan produced 150,000 bpd. This plunged 70% in the final three months of the fiscal year after its main export pipeline ruptured in February. Last week, President Salva Kiir’s office signaled progress in plans to restore production after a meeting with Sudan’s military leader Abdel Fattah Al-Burhan in Juba.

“The continued disruption of crude oil production and export is a national security matter and should be treated as such,” Ater said.