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War Destroying S. Sudan Economy

War Destroying S. Sudan EconomyWar Destroying S. Sudan Economy

Soaring inflation and a likely currency collapse are adding to South Sudan’s woes after 17 months of civil war characterized by brutal attacks on civilians.

The latest battles between government and rebel forces have centered on the country’s last remaining functional oil fields, Vision reported.

Oil dollars once accounted for over 90 percent of government revenue in the four-year old nation, which contains sub-Saharan Africa’s third largest reserves – making it one of the world’s most oil-dependent economies.

Now, with the UN reporting over half of the country’s 12 million people needing assistance and some areas on the brink of famine, South Sudan is also one of the most aid-dependent states.

Fighting broke out in December 2013 when President Salva Kiir accused former deputy Riek Machar of attempting a coup, setting off a cycle of retaliatory killings across the country.

Amid reports of massacres, rape and the systematic destruction of towns, international sanctions have been repeatedly threatened.

Now rebels say they are trying to capture Palouch, the processing point for all remaining oil production where crude is pumped northwards to Sudan. Its loss would be a crippling blow to an already struggling economy.

Oil production has slumped by some 40 percent from around 240,000 barrels per day (bpd) before fighting began. Officially, production is 165,000 bpd, although analysts suggest it could be as low as 130,000 bpd, although it continues to be the main source of foreign income – either as direct revenue or from loans based on future production.

Without the fields, South Sudan would lose its only significant source of income to fund its war.

 

Financialtribune.com