South Sudan has secured $88 million loan from the Africa Export-Import Bank after receiving cabinet approval.
While reacting to the loan on Friday, local economic analysts, stated that the hefty loans would not solve the country’s serious economic problems.
According to the country’s Information Minister, Michael Makuei, the loan was secured so that the government could settle all its internal outstanding debts.
“The Afreximbank in the last meeting approved a loan of $25 million. This time the bank has decided to increase the amount, and it also approved that they will give us an additional sum of $63 million for the same pandemic trade impact mitigation,” said Makuei.
Makuei explained that the government will pay back the loan with the country’s oil revenue,
Ahmed Morgan, an economic analyst and a senior economics lecturer at the University of Juba, said the government should have a clearly stated the purpose for borrowing tens of millions of dollars, since the loans will come due for the next generation.
In the past, the government received numerous loans from various countries and institutions, but the money was later squandered or used for something other than its intended purpose, according to Morgan.
He said borrowing to fix the budget deficit was one thing, but borrowing this amount money to remedy an economic crisis wouldn’t work.
“Economic problems in the country can only be fixed when you actually fix the pay for production in the economy, which we don’t have in the current state.
“And the basics for production of a good economy, we are supposed to have sustainable peace and general stability for security purposes so that we start local production for local consumption,” Morgan told South Sudan in Focus.
He said the government should use the new loans to pay civil servant salaries in arrears and current salaries.
“Civil servants have not been paid for months; then the government has to come up with plans on how it will never go back to the same position again. I have been complaining that we need to strengthen our policies of foreign exchange, by reducing imports of such things, not forgetting that South Sudan is an oil-producing country and still we are importing the final products of oil,” Morgan said.