JUBA, SOUTH SUDAN - The United Nations has voiced concern about South Sudan’s ailing economy and says its people could suffer from spiraling inflation in the coming months, while around half the population already faces food shortages.
South Sudan has taken in little revenue since January, when the government shut down oil production amid a dispute with Sudan over transit fees.
South Sudan’s U.N. humanitarian coordinator, Lise Grande, said Tuesday the organization fears the economic downturn that followed the shutdown could have a huge impact on the population in the coming months.
“I think what we’re very worried about is that austerity, as it bites deeper and deeper into households - it’s going to have to be humanitarian agencies that are going to have to step up their operations, step up their support, and help those families make it through,” said Grande.
South Sudan took over three-quarters of Sudan's oil reserves when it became independent last July, but relies on its former civil war foe to export its crude through northern pipelines and a port.
The south has refused to pay what it considers excessive fees to use those facilities, and in January took the drastic step of shutting down all oil production. The move was especially crippling since South Sudan depends on oil for 98 percent of its revenue.
The lack of revenue has hit the import-dependent economy hard, and leaked documents from a World Bank briefing in March warned that the economy could collapse as early as July if the shutdown continues and harder austerity measures are not imposed.
Grande said it would be left up to aid agencies to support the population.
“Unless the oil production is started again, the number of people who are going to require emergency assistance is going to be rising in the next coming weeks and months,” said Grande.
But the U.N. said it has received only 32 percent of a $760 million appeal made before the oil shutdown. It says the recent border clashes between Sudan and South Sudan will likely increase funding needs.
Food is the major problem in South Sudan. U.N. agencies have predicted that 4.7 million people would face shortages in 2012 due to erratic rains, internal violence and closure of trade routes along the as-yet-undefined border with Sudan.
Now, the lack of dollars in impoverished South Sudan has sparked inflation in food prices, and Grande fears that the number of people forced down to just one meal a day could quickly rise from an already startling 2.7 million.
“We can already tell that with the depreciating currency, that the price of basic food commodities is increasing," added Grande. "In some places we are seeing increases of as high as 300 percent and in the border communities on average the increase for basic supplies has been 100-200 percent.”
The U.N.’s World Food Programme (WFP) is racing the clock to try to pre-position enough food for rising numbers of people in need, who include people displaced by the violence, refugees, returnees from Sudan and farmers whose crops have failed.
But the WFP also faces a shortfall of $100 million and unless the oil is turned on or a bailout for South Sudan appears soon, the population looks set to get hungrier.