South Sudan may struggle to attract oil investment

Significance

Crude oil is central to South Sudan’s economy, providing between 80% and 90% of government revenue and almost all export earnings. Last year’s oil price shock hit the economy hard and prompted two disbursements by the IMF under the Rapid Credit Facility (RCF) in November 2020 and April 2021.

Impacts

• Net foreign direct investment (FDI) will turn positive in fiscal year (FY) 2020/21, following three years of outflows.
• The central bank’s weekly foreign exchange auctions will continue to reduce the gap between the official and parallel market rates.
• Following a contraction of around 4%, GDP is expected to grow modestly at 2-3% in FY 2021/22 and FY 2022/23.