South Sudan’s government plans to rely on new borrowing to plug a wide budget deficit in the 2025/26 financial year, according to a draft budget presented earlier this week, even as debt repayments are set to rise sharply.
Finance Minister Bak Barnaba Chol told parliament the proposed budget projects total expenditure of 8.58 trillion South Sudanese pounds (SSP) against expected revenues of 7.01 trillion pounds, leaving a financing gap of 1.57 trillion pounds — equivalent to a deficit of 8 percent of gross domestic product.
The shortfall is to be covered largely through fresh loans and adjustments to oil revenue projections, underscoring the country’s continued dependence on debt and volatile crude income.
Budget documents seen by Radio Tamazuj show the government is seeking financing from a range of sources, including external commercial borrowing, projected loan disbursements of about 802.8 billion pounds, and support from the International Monetary Fund’s Food Shock Window. Authorities said they aim to prioritise concessional external loans to keep borrowing costs low, while still allowing for commercial financing if needed.
The planned borrowing will add to an already heavy debt burden. Total debt servicing in the 2025/26 fiscal year is projected at $187.3 million (SSP 842.4 billion), the budget shows.
Principal repayments alone are estimated at $178.5 million (SSP 802.85 billion), accounting for roughly nine percent of total government spending, while interest payments are put at $8.79 million (SSP 39.55 billion).
Commercial creditors and oil-backed advance lenders are set to receive the bulk of repayments, totalling $169.1 million, including payments to companies such as Sahara Energy and Nasdec. Bilateral repayments, largely to China, are estimated at $11.45 million, while multilateral lenders including the World Bank and the African Development Bank are due about $630,000.
Chol said the budget adopts an “expansionary fiscal stance” aimed at supporting economic recovery, with the government targeting real GDP growth of 5.3 percent. However, the plan highlights persistent vulnerabilities, including heavy reliance on oil revenues, which are expected to account for 74 percent of total income, and the impact of regional instability.
The fiscal deficit is projected to narrow slightly from nine percent of GDP in the current financial year to eight percent in 2025/26. More than half of total spending is allocated to public administration, infrastructure and security, according to the budget draft.
South Sudan, which gained independence in 2011, has struggled with economic instability following years of conflict, oil disruptions and limited access to international financing.