South Sudan’s rebounding oil sector the catalyst behind growing economy

South Sudan's economy is showing signs of improvement, with a growth rate estimated at 3.2% during the 2018/2019 financial year, marking a significant rebound from a contraction of 3.5% in the previous financial year, according to the World Bank. The key driver behind this upward trajectory has been the country's oil sector, which has witnessed increased production and stability in production levels at the oil fields. With oil production levels currently at around 133,000 barrels per day and an improved global oil price, South Sudan has seen a surge in revenue, leading to better balance of payments for the government. Additionally, the signing of a peace agreement between the government and the opposition in 2018 set a positive outlook for the economy, with hopes of a stable government and a revived oil sector. However, challenges remain, especially regarding the implementation of the peace agreement and the unresolved issue of the number of states in the country. The formation of a government of national unity has been delayed, affecting the overall economic stability. Despite these obstacles, efforts are underway to address the political challenges and focus on boosting oil production levels to drive economic growth in 2020. The economy's inflation rates have also shown improvement, averaging at 60.8% in 2018-2019, reflecting reduced central bank financing on the budget deficit. Despite this positive trend, high levels of debt and depleted reserve accounts pose challenges that need to be addressed by the new government expected to be formed in February. Looking ahead, the key to further bolstering the country's economy lies in maintaining stability in the oil sector to attract investment from major players. Political stability and a diversified economy are crucial for sustainable growth, as South Sudan looks to reduce its dependence on oil revenues. The government's plans to conduct environmental audits of oil fields demonstrate a positive step towards ensuring sustainability in the sector. By addressing environmental concerns and promoting transparency, South Sudan aims to strengthen its oil industry for long-term growth. Furthermore, ongoing talks on the number of states in the country have been a point of contention, delaying the formation of a government of national unity. Mediation efforts led by South Africa's Deputy President aim to resolve this issue within 90 days, potentially paving the way for a breakthrough and a binding agreement between the government and the opposition. Despite current challenges, the resilience of South Sudan's economy coupled with strategic reforms and political stability could set the stage for sustainable growth in the coming years.