By Alan Clement
South Sudan has tabled an SSP 8.58 trillion national budget for FY 2025/26, projecting a fiscal deficit of SSP 1.58 trillion as the government prioritises stabilisation, debt servicing and salaries.
The Government of South Sudan on Tuesday presented its draft national budget for the 2025/26 fiscal year to the Transitional National Legislature (TNLA), outlining a spending plan anchored on oil revenues and domestic financing amid continued macroeconomic pressure.
During the first ordinary sitting of the legislature and Council of Ministers, Minister of Finance and Planning Bak Barnaba Chol formally presented the draft national budget. The submission marked the opening of deliberations on government spending priorities for the fiscal year.
Alongside the budget, the Minister tabled the Appropriation Bill and the Finance Bill. He emphasized that the proposals were grounded in constitutional and statutory authority, citing Article 88(1) of the Transitional Constitution and the Public Financial Management and Accountability Act (PFMAA), 2011.
According to the Minister, total expenditure for FY 2025/26 is projected at SSP 8.58 trillion, while total revenue is estimated at SSP 7.00 trillion, leaving a fiscal deficit of SSP 1.58 trillion.
The government noted the budget is fully domestically financed, with the bulk of resources expected from oil revenues. Of the projected revenue, SSP 5.22 trillion is expected from oil, while SSP 1.78 trillion is projected from non-oil sources, including taxes, fees and other non-tax revenues.
The figures underscore the government’s continued dependence on oil, despite repeated policy commitments to diversify the revenue base.
The Finance Ministry framed the FY 2025/26 budget as a “discipline-driven stabilisation budget,” rather than an expansionary fiscal programme.
Minister Bak stressed that the budget was prepared against a backdrop of fiscal stress, elevated inflation and structural vulnerabilities, compounded by disruptions in oil production during the previous financial year
South Sudan’s nominal GDP for FY 2025/26 is projected at SSP 20.6 trillion (about USD 4.5 billion), a decline from last year largely attributed to oil shutdowns that sharply reduced export earnings.
The budget projects a rebound in economic activity, led by the resumption of oil production. The oil sector is expected to expand by 37.8 percent, while the non-oil sector is projected to grow by 5.5 percent, supported by gains in agriculture, trade, and services.
It further forecasts oil production at around 95,000 barrels per day, following the restart of operations by the Dar Petroleum Operating Company (DPOC), signalling renewed momentum in South Sudan’s energy sector.
Despite the anticipated recovery, inflation remains a central concern. The budget places inflation at about 15 percent, driven by exchange-rate pressures and supply-side constraints.
In response, the Finance Ministry stressed that the fiscal policy for FY 2025/26 is deliberately anti-inflationary, with emphasis on expenditure rationalisation and restraint.
Between January and May 2025, the official exchange rate averaged SSP 4,373.88 per US dollar, while the parallel market averaged SSP 5,456.4, reflecting limited foreign exchange reserves and reliance on deficit financing.
With the resumption of oil exports, the government said it aims to rebuild reserves during the second half of the fiscal year to support exchange-rate stability
On the expenditure side, wages and salaries account for SSP 1.90 trillion, reflecting the government’s stated priority to clear salary arrears and stabilise household incomes for public servants.
Debt servicing has been allocated SSP 842 billion, as the government seeks to restore sovereign credibility and reduce exposure to litigation arising from unpaid obligations.
The budget allocates SSP 1.17 trillion for infrastructure development and SSP 1.29 trillion for capital projects, underscoring priorities in infrastructure, security, rule of law, education, and economic functions.
While the humanitarian and health sectors remain heavily dependent on off-budget support from development partners, highlighting persistent gaps in domestic financing.
In addition to domestic allocations, the government earmarked USD 187 million for debt servicing in FY 2025/26, covering principal and interest payments. The Finance Ministry said the move signals renewed commitment to honoring obligations and improving creditworthiness.
According to the finance ministry, the fiscal deficit of SSP 1.58 trillion will be financed through a combination of grants, concessional financing and exchange-rate management measures coordinated with the Bank of South Sudan.
The government said these measures are aligned with ongoing public financial management reforms.
The budget presentation comes after a difficult FY 2024/25, during which South Sudan experienced a sharp contraction in fiscal space following a reported 70 percent decline in oil production.
According to the Finance Ministry, the total resource envelope for FY 2024/25 amounted to SSP 2.26 trillion against an approved expenditure of SSP 4.17 trillion, creating a substantial financing gap
Despite the constraints, the government said it managed to pay up to nine months of salary arrears to civil servants at national and state levels and allocated SSP 22 billion to support the National Elections Commission, reflecting competing fiscal pressures.
The tabling of the budget was not without controversy. During the session, some lawmakers raised procedural objections, noting that the budget was presented later than the timelines prescribed by law.
However, Speaker of the TNLA Jemma Nunu Kumba ruled that the House should proceed with the process, citing the country’s unique challenges and the need to formalise and legalise the budget through parliamentary approval
She appealed to lawmakers to balance legal requirements with national interest, noting that Parliament itself operates under the same budget framework.
With the budget now before the legislature, lawmakers have up to 45 days to scrutinise the proposals, debate allocations and consider amendments before a final vote.
The review period is expected to focus on revenue assumptions, deficit financing, sectoral priorities and compliance with public financial management laws.
The government has said timely approval of the budget is essential to restoring fiscal discipline, stabilising the economy and laying the groundwork for recovery as the country navigates its ongoing political and economic transition.