Inside government’s policies to seal financial leakages
The government is banking on the recent recovery in global oil prices and public finance management reforms to formulate policies that will govern spending priorities in the proposed budget.
The ministry outlined the government’s macroeconomic policy objectives within the broader framework of the national development strategy, which includes the continued implementation of the 11 priorities of the public financial management reform strategy in the economic and social policies for the fiscal year 2021–2022 (PFMRS).
According to the Ministry of Finance and Planning, inflation fell from 22.8 per cent in the fiscal year 2020/2021 to 16.3 per cent in the fiscal year 2021/2022, resulting in at least one per cent economic growth from 5.4 per cent in the fiscal year 2020/2021.
It added that diversifying the economy by making agriculture the engine of inclusive growth and a long-term source of income for the poor and vulnerable, and allocating more resources to R-ARCSS implementation and human physical capital formation are also some of the priorities of the government in the budget.
Fiscal policy for 2021/2022
In the fiscal policy, the draft budget states that the government intends to maintain fiscal discipline by establishing a treasury single account (TSA) and operationalising the cash management unit (CMU), which would distribute funds quarterly and in advance to all expenditure units, avoiding unnecessary payment follow-up at the ministry of finance.
To remove the prevalent problem of ghost employees and salary arrears, the biometric system will be fully implemented for all public sector employees, who will thereafter be compelled to create bank accounts with commercial banks into which their monthly salaries will be placed.
The strategy also called for the establishment of the public procurement and asset disposal authority (PPADA) in the 2021/2022 budget to establish a transparent and accountable procurement system and bridge the trust gap between the government, development partners, and citizens.
It also emphasised the need to analyse and verify all arrears on goods and services given by the private sector to various government agencies, publish quarterly economic and budgetary reviews, increase non-oil revenue collection, and maintain efficient fiscal and monetary policy coordination.
Monetary policy for 2021/2022
The Minister of Finance and Planning Agak Achuil Lual emphasised that as part of the exchange rate reform aimed at liberalising the foreign exchange market, which began in April 2021, the ministry of finance and planning, in collaboration with the central bank, committed to refrain from monetary financing of the budget deficit at the Council of Ministers meeting No. 04/2020.
“These measures have helped not only to stabilise our exchange rate but also to reduce inflation from 70 per cent in January 2021 to 16.0 per cent and fiscal year 2021/22,” Mr Agak Achuil noted in the monetary policy.
He stated that monetary policy for 2021–202 will continue to be focused on macroeconomic stability, with inflation falling from 22.8 per cent in 2021–202. He also spoke of ‘‘consolidating current rate reforms by committing the Bank of South Sudan to intervene in the foreign exchange market on a case-by-case basis when there is unfavourable volatility in the market.’’
The other objective is to ‘‘build international reserves to the equivalent of three months’ worth of imports to allow South Sudan to meet its external payment obligations, retain the value of the South Sudanese Pound, and protect against unforeseen shocks.’’
The Bank of South Sudan will create deposit issuance funds in order to encourage the growth of financial services in the country and reduce poverty. There is also the development of the national payment system, which comprises RTGS, ACH, and CSD, as well as electronic and mobile payment systems.
Revenues estimates and measures
However, according to the Ministry of Finance and Planning, gross domestic revenues for 2021/2022 are expected to be SSP 647.4 billion, accounting for 28.9 per cent of the GDP (GDP). Oil revenues amount to SSP 589.1 billion, or 91.0 per cent, while non-oil revenues amount to SSP 58.3 billion, or 9.0 per cent.
According to the report, overall oil production in 2021-2022 will be 156,000 barrels per day, down from 170,000 barrels per day in 2020/2021. According to the ministry of finance, the decrease in oil production is attributable to the depletion of some oil wells as well as the consequences of floods in 2020.
It was also disclosed that the government owns 42 per cent of the profit from oil production, while the benchmarked price for Dar Blend is expected to rise.
