South Sudan still benefits from loans guaranteed by future oil sales. This was revealed in a report to the United Nations Security Council dated November 22, 2019, but published this week.
The document indicates that despite the recommendations of the international financial institutions and the danger that this practice involves for external debt, the system continues and weakens the country’s economic stability. “The petroleum ministry has not put an end to the practice of pre-sales financing arrangements for petroleum, despite the recommendations of the International Monetary Fund,” the report said.
According to the document, UN experts have not been able to verify the government’s financial responsibilities regarding oil advances, cargo and repayment terms, but they assure that the government uses them to finance its projects .
However, in June 2019, when President Kiir dismissed Minister of Petroleum Ezekiel Lol Gatkuoth, he asked his replacement Awow Daniel not to demand or accept any advance on oil before the actual sale of production on the international market.
A public inquiry was even opened last year on the mechanisms used in oil pre-sales. The results have never been published.
Source: Agence Ecofin