South Sudan is keen to trim spending on expensive oil subsidies as it struggles to meet salary obligations for government workers as well as servicing its foreign missions.
Sudan’s financial crisis is already forcing a number of its foreign diplomats back home as countries continue to shut down their consulates over mounting debts, the country’s Deputy Finance Minister, Mou Ambrose Thiik, confirmed to Reuters.
The government expects to receive $820 million from oil this year. Out of that, $453 million will go to neighboring Sudan as payment for using its infrastructure for export; $183 million on the oil subsidy; and $166 million is allocated to the budget, investigations by Reuters revealed.
Slashing oil subsidy could, therefore, free up almost $200 million for the government to invest in key developmental projects and welfare packages.
“We were thinking that we would lift subsidies on the oil and will be able to cover this (deficit) and pay our salaries more easily,” said Thiik. “But we have some resistance from the parliament.”
A member of Parliament, Nailo Mayo, the chair of the finance committee, told Reuters that the legislative arm of government was concerned about the social implications of ending subsidy, particularly with regards to the resulting effect it will have on commodities.
“The committee … is concerned about the social cost, I mean the suffering that could accrue to the poorer section of the community, and also we are afraid of the political cost, that is stability, arising from lack of transport,” he said.