South Sudan’s government announced spending cuts, a public sector hiring freeze and plans to introduce new taxes on Wednesday as it launched what it called an economic stabilisation and structural reform programme to address inflation, currency weakness and chronic revenue shortages.
Finance Minister Baak Baranaba Chol told a press conference in Juba that the Council of Ministers last week approved the Economic Stabilisation and Structural Reform Policy as the government’s official framework for restoring confidence in public finances.
“It has been three months since my appointment and many people are asking why the ministry has been quiet,” Chol said, adding that the policy marked the start of “economic stabilisation and structural reforms”.
He said the reforms would be guided by an implementation matrix setting out ministerial orders, policies and timelines, and described the programme as “cabinet-owned”, reflecting consultations within the government’s economic cluster and input from the central bank, revenue authority and other institutions.
Economic strain
Chol said the measures were prompted by worsening economic conditions, including rising inflation, currency instability and structural imbalances linked to heavy reliance on oil revenues and weak domestic production.
“Our people are undergoing suffering,” he said, adding that the government had recognised the need for “key decisions”.
Cabinet had instructed authorities to abandon “fragmented interventions” in favour of a coordinated and realistic reform framework, he said.
Spending cuts
At the centre of the plan is tighter fiscal discipline and what the minister described as restoring “budget credibility”.
The government will prioritise payment of salaries for civil servants and organised forces, as well as funding for security services, peace implementation and elections.
Spending on non-essential claims, contracts and expenditures will be restricted, while recruitment across public institutions will be temporarily suspended except for critical needs, in coordination with the Ministry of Public Service.
“Budget discipline means you stick to the budget as approved by the law,” Chol said.
Revenue measures
To boost revenues, the government plans reforms in the oil sector, expansion of non-oil revenue collection and the introduction of a value-added tax (VAT), according to the minister.
Authorities will also review Exploration and Production Sharing Agreements (EPSA) and Status of Forces Agreements (SOFA), and cancel non-statutory tax exemptions that Chol said had significantly reduced customs and domestic revenues.
Exemptions on fuel imports, food items, construction materials and luxury vehicles will be scrapped, while those granted under international agreements — including for embassies, UN agencies and other international organisations — will remain in place for now.
“These non-statutory exemptions have gone rampant and are affecting our revenues,” Chol said, citing reduced collections at the Nimule border crossing.
Monetary coordination
Chol said the government would work closely with the central bank to align fiscal and monetary policy, address liquidity shortages, manage the foreign exchange market and implement financial sector reforms, including a treasury single account.
The policy also aims to stimulate private sector growth through support to small and medium-sized enterprises and public-private partnerships.
Priority sectors include agriculture, livestock, fisheries, tourism, wildlife, agro-processing, mining and extractive industries, he said, while export promotion will focus on commodities such as sesame and gum Arabic.
Salary arrears
Responding to questions, Chol acknowledged salary arrears for civil servants, organised forces and diplomatic staff, blaming prolonged oil sector shutdowns and weak non-oil revenue collection.
Oil disruptions had sharply reduced state income, limiting the government’s ability to meet payroll and other obligations, he said.
“There has not been a lot of spending simply because there was no money,” he said.
He added that emergency spending powers granted to the president were mainly used to pay salaries and essential services during periods of extremely low revenues.
Legality and accountability
Chol also addressed concerns over spending without a fully approved appropriation law, saying any expenditure outside the approved budget framework would be illegal.
“Any money spent out of budget is deemed to be a crime,” he said, adding that the reform programme places accountability and transparency at its core.
Implementation
The reforms will be overseen by the government’s economic cluster, with regular reporting to the Council of Ministers and guidance from an internal implementation matrix.
“This represents a deliberate programme of adjustment and rationalisation designed to stabilise the economy, protect livelihoods and lay the foundation for sustainable and inclusive growth,” Chol said.
South Sudan, one of the world’s most oil-dependent economies, has long struggled with volatile revenues, limited domestic production and weak tax collection, leaving public finances highly vulnerable to shocks. The government did not give a timeline for when the measures will fully take effect.