The National Legislative Assembly [©Gurtong]
By Waakhe Simon Wudu
JUBA, 21st March 2012 [Gurtong]
According to the Deputy Minister of Finance, Ms. Mary Jervas Yak, who presented the austerity budget to parliament, the budget is planned to run from February 2012 to June 2012 before the passing of the 2012/2013 fiscal year budget.
The budget which indicates a cut down of 50% on operational and capital budgets and a cut down of 10% on States’ transfers, highlighted a significant decrease in government expenditure.
Other major cuts were being made on the Ministry of Defense by 10% though it still remains with the lion share, and organized forces, Ministries of Health, Education, Agriculture, Petroleum and Mining by 20%. While a massive cut of 85% is being made on South Sudan Reconstruction and Development Fund, Local Government Board, Employees Justice and Public Grievance Chambers.
The Finance Ministry’s report to the August House indicates that, all other government spending agencies have been cut down by 54%. All these cuts are being made from the South Sudan 2011/2012 draft budgets.
The 3.45 Billion SSP austerity budget brings the 2011/2012 South Sudan fiscal year draft budget to 9.39 Billion SSP. The report also indicates that government has so far spent 5.95 billion SSP - almost half of the 2011/2012 draft budget.
Collections & Measures
Oil revenue collection for the fiscal year 2011/2012 is expected to be 10.2 Billion SSP , and when combined with the 296 Million SSP of non oil revenue collections, it is expected to add up to 10.5 Billion SSP as the report indicates. “Available resources are 9.78 Billion SSP,” the Deputy Minister confirmed.
Early this year the Government shut down her oil exploitation due to a row with Khartoum over transit fees and allegations of theft. The South Sudanese Finance Minister Kosti Manibe Ngai explained that, oil is the largest revenue provider that caters for an estimated 90% of the government finances. The situation forced the State to come up with austerity measures.
The Deputy Minister of Finance, Ms. Mary Jervas Yak told the legislators that despite its approval the austerity budget is bound to any changes by the Austerity Measures Committee appointed by the President earlier on to monitor the implementation of the budget.
She cautioned that, “the austerity budget represents a significant decrease in government expenditure; as a result, we will be buying fewer goods and services from the private sector and importing less from abroad. This means that there will be a decline in economic activities,” she added.
Meanwhile the Ministry has maintained public servants salaries in the new measures.
Among the measures include; considering alternatives for domestic and foreign financing for key infrastructure projects, alternative road/water transportation of oil barrels to neighbouring ports and eventual construction of pipelines.
“Any borrowing must however, be kept to a minimum, and used to fund activities which will stimulate economic growth such as infrastructure and roads,” the report indicated.
“The Bank of South Sudan is also considering exchange rate management measures to reduce the demand for foreign currency. Although tempting, simply printing money to finance the gap must not be allowed as this may result in a sustained hyper inflation,” the report continued.
The Ministry of Finance and Economic Planning has also taken strict measures on the management of non oil revenue collections. Jervas added that, “the Ministry of Finance will be signing contracts with two commercial banks in the coming months so that revenue can be paid directly into the banking system, not to government officials.”
According to the austerity budget, the Ministry of Defense and Veteran Affairs takes the largest budget share with 1.36 Billion SSP, followed by the Police with 243.9 Million SSP, General Block Transfers with 210.3 Million SSP then Prisons and General Education follows.
She also announced strict measures that all government spending agencies must take into consideration and announced penalties against institutions that will overspend their budgets as it was a case in the previous fiscal financial years.
“Agencies must prioritize their activities and programs to sustain core service delivery and development projects. All necessary expenditure must be cut down to the barest minimum and any procurement procedures must be in full accordance with the law,” the Deputy Minister told the legislators.
The leader of the minority Mr. Onyoti Adigo told Gurtong that, “the economy of South Sudan is going to drop and inflation is likely to increase unless strict implementation of the Austerity Budget is observed by the Austerity Measures Committee.”
He challenged the Ministry for failing to unveil how much loan the government will need to fund some of her projects that lack support. “These are short ways of rigging things,” Adigo told Gurtong exclusively.
He said the Austerity Measures are likely to affect employment, an area that the government needs to focus on.
After presentation in its first reading yesterday, the Austerity Budget Bill was referred to the Committees of Economic Planning and Legislation and will be tabled after 10 days in the August House for debate.