South Sudan’s debt crisis rooted in gov’t failure to manage oil wealth – report

JUBA – South Sudan is facing a worsening debt crisis driven by the government’s failure to implement its own petroleum revenue laws, according to a new policy brief by the Juba-based think-tank, Sudd Institute.

The report, authored by economist Bec George Anyak, warns that the country’s financial instability is “not merely an unfortunate consequence of external shocks but a direct result of a systemic failure to implement the nation’s own legal frameworks for fiscal governance.”

According to the Sudd Institute, the government’s failure to operationalize the sovereign wealth funds required under the Petroleum Revenue Management Act (PRMA) of 2013 has created what Anyak calls a “fiscal vacuum” filled by opaque, high-interest, oil-backed loans.

These loans, the brief released on October 11, 2025 says, have triggered “a cascade of defaults and high-stakes legal challenges from international creditors.”

“The government’s preference for off-budget spending is a powerful indicator that the sovereign wealth funds were never intended to be functional,” the brief says, describing the current fiscal structure as a “shadow system” designed to facilitate corruption and patronage.

The policy paper highlights multiple international court cases involving Qatar National Bank, Afreximbank, and BB Energy, showing that South Sudan has repeatedly defaulted on oil-backed debts.

In one example, Afreximbank secured a $657 million judgment from a London court earlier this year after South Sudan defaulted on pandemic-era loans. The government, the report notes, “did not mount a defense, effectively conceding liability and leaving state assets vulnerable to seizure abroad.”

The brief argues that South Sudan’s debt crisis was avoidable. It points to the PRMA’s original provisions—particularly the Oil Revenue Stabilization Account and Future Generations Fund—as safeguards that could have prevented the fiscal collapse.

“By failing to save revenues when they were available, the government had no fiscal buffer when shocks occurred,” the report says, adding that the absence of these mechanisms “forced the government to resort to emergency, non-concessional financing, which explicitly violates its own law.”

Anyak draws a stark comparison between South Sudan and Mozambique, whose 2013 “hidden debt scandal” led to national economic collapse. He contrasts that with Uganda’s Petroleum Fund, established under the 2015 Public Finance Management Act, as a model for transparent oil governance.

The brief calls for an immediate moratorium on new oil-backed borrowing, the creation of a public debt registry, and the activation of the PRMA’s sovereign wealth funds. It also urges the government to conduct independent audits and adopt Uganda-style accountability mechanisms to restore public trust.

“The institutional blueprint for fiscal stability already exists in South Sudanese law; it simply needs to be implemented,” Anyak concludes, warning that “a continued reliance on the current management model will only mortgage the country’s future and increase its vulnerability to external shocks.”

The Sudd Institute says that without these reforms, South Sudan risks “an inevitable fiscal collapse” as debt servicing consumes a growing share of oil revenues—the country’s main source of income, which accounts for over 90% of government revenue.