By Monica Johnson, International Banker
On July 9, South Sudan marked its 14th anniversary as an independent nation—but did so in a decidedly subdued fashion. With the world’s newest country having been mired in a series of deep economic and political crises for well over a decade, the anniversary was the 11th consecutive year that passed without official Independence Day celebrations. And with ongoing regional conflicts threatening to continue hobbling essential oil-export revenues for the foreseeable future, the latest cancellation of festivities may not be the last.
In July 2011, after decades of civil war in Sudan, the world welcomed South Sudan as its newest nation-state, following a referendum in which a majority of voters in southern Sudan chose to secede from the rest of Sudan. By December 2013, however, the fledgling nation was engulfed in a devastating conflict of its own between factions that supported President Salva Kiir Mayardit (also known as President Kiir) and those that allied with then-deputy Riek Machar. The subsequent years have seen South Sudan face a myriad of unfortunate economic shocks and an increasingly desperate humanitarian situation.
The crisis can be partly explained by the ongoing war in neighbouring Sudan, which has witnessed almost 200,000 refugees pour across the border into South Sudan, with cross-border trade for most goods and necessities slowing to a trickle. In February 2024, the conflict caused significant damage to the main oil pipeline that transports upwards of 70 percent of South Sudan’s oil production (around 150,000 barrels per day) to the global market via Port Sudan, which is located on the Red Sea coast of its neighbour to the north; this, in turn, triggered a prolonged halt to South Sudan’s oil-export revenue as well as a collapse in US-dollar inflows.
Being the world’s most oil-dependent country, with virtually all of its revenues coming from exports of crude oil, the ongoing hostilities between the Sudanese Armed Forces (SAF) and the Rapid Security Forces (RSF) have devastated South Sudan’s economic prospects, with a 46-percent deficit in public finances this year underpinning the acute lack of funding for essential services. “Oil is the lifeline of South Sudan’s economy, contributing 90 percent of South Sudan’s fiscal revenue,” China’s ambassador to South Sudan, Ma Qiang, confirmed in an interview with local news outlet Radio Tamazuj on May 23. “In February 2024, the production of oil field in Block 3 and 7 was forced to stop due to [the] blockage and rupture of the oil pipeline.”
Assessments of South Sudan’s economic outlook thus make for sober reading. A March report by the World Bank, for example, forecasted a staggering 30-percent contraction for the Full Year 2024/25, with the disruption of oil production cutting export revenues by $7 million per day. This curtailing of public finances has therefore prompted widespread salary arrears, as well as marked reductions in spending on essential services such as health and education. With South Sudan’s economy having declined for five consecutive years, the World Bank’s “South Sudan Economic Monitor” (SSEM) projected that gross domestic product (GDP) per capita would shrink to just half of FY20 levels.
Additionally, hyperinflation and widespread food insecurity affect nearly 80 percent of the population, while poverty is calculated to have risen to 92 percent based on available data, the World Bank report added. “Weak governance, poor management of oil revenues, and ineffective fiscal policies have also contributed substantially to these issues. Furthermore, the underdeveloped financial sector limits economic diversification and access to credit.”
Such unfortunate maladies for the South Sudanese people are occurring against the backdrop of an already desperate situation. According to the United Nations (UN), they face many daunting challenges, including meeting basic needs such as food, healthcare and safety, with the United Nations Development Programme (UNDP) reporting in late May that 82 percent of households are multi-dimensionally poor—that is, they are experiencing poverty across multiple aspects of life beyond income or monetary measures—and that 7.7 million people (about 57 percent of the population) don’t have enough food.
Dwindling global aid, severe food insecurity, a cholera outbreak, rising living costs, a climate emergency and a displacement crisis are just some of the additional challenges faced by South Sudan at present, the UNDP added. “All the dark clouds of a perfect storm have descended upon the people of the world’s newest country—and one of the poorest,” UN Secretary-General António Guterres acknowledged in a recent speech.
A separate report published on June 25 by the African Development Bank (AfDB), moreover, found that 92 percent of South Sudan’s 16 million inhabitants now live on less than $2 a day—a mammoth 55.4-percent rise from the poverty levels recorded 14 years ago, when the country was born. Citing World Bank poverty data, the AfDB’s “Country Focus Report 2025 – South Sudan – Making South Sudan’s Capital Work Better for its Development” also noted that the share of the South Sudanese population living below the poverty line had risen dramatically from 51 percent in 2011 to 92 percent in 2024. “We find that the poverty indicators will continue to worsen unless the challenges facing the country, whether internal or external, are addressed,” the AfDB’s senior national economist warned.
What measures are being taken by South Sudan’s economic authorities to address those challenges? “The government has committed to undertaking reforms to tackle macroeconomic and fiscal challenges and enhance governance,” said Charles Undeland, World Bank Group’s country manager for South Sudan. “If carried through, these reforms will provide for greater macroeconomic stability as well as greater fiscal sustainability that will allow the government to improve its delivery of services to the population.”
By maintaining macroeconomic stability, improving governance and enacting strategic structural reforms, Undeland added, South Sudan could unleash the potential of its private sector and pave the way for recovery and prosperity. “The World Bank Group is keen to support the government in these efforts.”
The AfDB has suggested that addressing fiscal policy should be made a priority to support domestic-resource mobilisation, broaden the tax base and reduce tax-revenue leakages. The bank’s report also mentioned the promotion of budget transparency and accountability as important tasks to undertake.
South Sudanese economist Dr. Kimo Aban Adiebo, meanwhile, contended that dealing with the rampant political instability and insecurity in South Sudan should take precedence for the government if it wants to stabilise the economy. “No matter what the central bank does to address the economic crisis, if the political instability and insecurity have not been resolved, nothing is going to change,” Dr. Aban Adiebo explained in a June 20 interview with Radio Tamazuj. “So, the starting point is for us to fix the politics and security, and automatically, the rebuilding of trust will start, and the economy will pick up.”
To secure economic support, President Kiir has travelled to the United Arab Emirates (UAE) on two occasions this year, the most recent starting on June 22. South Sudan’s president confirmed that both visits were for strengthening “bilateral relations and promoting investment opportunities” in South Sudan. A despatch from Juba stated that President Kiir had travelled to “discuss co-operation in economic, agricultural, energy and infrastructure sectors”; presidential spokesperson David Amuor Majur told the media just prior to the June trip that Kiir would meet with several investment groups to present “a compelling case for investment” in key growth sectors in his country.
In March, the UAE inaugurated the 100-bed Madhol Field Hospital in South Sudan’s Northern Bahr el Ghazal state alongside several clinics that together could serve around two million people, mostly refugees. Additionally, the Western Asian country, comprising seven emirates, had previously pledged $200 million worth of humanitarian aid to South Sudan.
Perhaps most significant of all, on June 20, South Sudan’s government managed to secure a staff-level agreement on a nine-month Staff-Monitored Program (SMP) with the International Monetary Fund (IMF) in support of a formal programme focusing on key economic and financial reforms. “The short- and medium-term economic outlook is moderately favourable and improving, contingent on a continuously improving security environment and political stability,” according to Ms. Mame Astou Diouf, who led the IMF staff team on a visit to South Sudan from June 11 to 20, 2025, to negotiate the SMP.
Ms. Diouf also highlighted the promising development of resuming oil exports through the main pipeline, which began in April 2025. “While real GDP growth is projected to have contracted during FY2024/25 due to the lower oil production, it is expected to recover in FY2025/2026 as oil exports gradually strengthen,” she added. “The rebound in oil exports is expected to significantly improve the current account balance, helping rebuild external buffers. The parallel foreign exchange (FX) market premium stood at 30.8 percent on June 11, 2025.”