Today marks the last day of my stay in Juba with my friend Stefani. We've had an amazing day so far (and an amazing trip) -- I'm still processing and digesting, and am working on a summary post that will reflect on all the super-awesome people and experiences we've had!
For now, though, I wanted to add some more insight into a more technical, solemn subject: the role of oil in the stability of the South Sudanese state. In the context of that blog, I focused mainly on the long-term obstacles to development a robust health system over the next few years -- including the lack of reliable funding streams from the public sector. Concept was pretty simple: when you lose oil money, your capacity to provide government-sponsored healthcare diminishes pretty quickly. This seemed bad, but not devastating -- even without long-term development in the health sector (and others), the country wouldn't be that much different from the status quo, right?
This seemed to be the logic of the leaders of South Sudan -- that, even though pulling the plug on oil would definitely hurt, it's nothing that a country and a people that survived 50 years of conflict couldn't weather through.
It all sounds great! .....Except for the tiny little fact that it seems mathematically impossible. In the months after S. Sudan shut off the oil, it was reported that the World Bank notified key leaders that the country was hurtling toward the verge of economic collapse. Models incorporating the decision to forgo the source of 98% of governmental revenues estimated them approaching total depletion of state fiscal reserves as early as this summer.
I had heard these rumors, and read some articles, but like many folks here, dismissed them to the back of my mind. It was another problem that could, and would, be addressed sometime soon. But for now, this country needed the emotional catharsis of finding some way to stick it to the North. To show them who's boss. To collectively flip them the bird. Insert your favorite angry cliche here.
Then, I saw a copy of the leaked World Bank report from March 1st, and actually realized things could get pretty ugly. The brief is quick to point out that the World Bank has "never seen a situation as dramatic as the one faced by South Sudan", and that collapse of GDP and depreciation of the S. Sudanese currency are rapidly approaching on the horizon. Later lays out a timeline for exhaustion of state reserves based on strength of austerity measures the S. Sudanese government decides to implement:
And, the WB lays out broad social implications of the oil decision, suggesting that the proportion of South Sudanese living in poverty is likely to rise from 51% in 2012 to 83% by 2013. Enrollment rates in school are projected to drop from 50% in 2012 to 20% in 2013. And finally, the under-5 child mortality rate is expected to double from 10% of live-births in 2012 to 20% in 2013. These measures are similar to those of S. Sudan in 2004 -- essentially, the decision to shut-off oil could regress development in some areas to the point where it was before signing of the Comprehensive Peace Agreement in 2005. This report goes onto explain that the decision has alienated some members of the donor community, who are reluctant to fill-in-the-gaps in health, education, etc. for a country that isn't demonstrating the capacity or priority to care for its people.
Ok, whew. The situation is sobering. However, it's important to acknowledge the fact that I (and economists at the Bank) can talk about these statistics and numbers easily because I never had to live in this country during a time of instability or insecurity caused by tensions with the North. I can't understand the resilience of this community, nor the ability to bear any burden in the name of their national sovereignty, because we're just observers on the side. This may be a calculated decision made with knowledge of the hardships to come. This may be a standoff that is soon to end given the recent talks in Addis with reps from Khartoum.
But either way, at least to me, the numbers don't add up.
(Edit: I literally just heard a reporter at the table next to me announce that, as of today, South Sudan is unofficially restarting oil in July. I'm glad to know this post is much less relevant now. Oye, South Sudan!)
For now, though, I wanted to add some more insight into a more technical, solemn subject: the role of oil in the stability of the South Sudanese state. In the context of that blog, I focused mainly on the long-term obstacles to development a robust health system over the next few years -- including the lack of reliable funding streams from the public sector. Concept was pretty simple: when you lose oil money, your capacity to provide government-sponsored healthcare diminishes pretty quickly. This seemed bad, but not devastating -- even without long-term development in the health sector (and others), the country wouldn't be that much different from the status quo, right?
This seemed to be the logic of the leaders of South Sudan -- that, even though pulling the plug on oil would definitely hurt, it's nothing that a country and a people that survived 50 years of conflict couldn't weather through.
It all sounds great! .....Except for the tiny little fact that it seems mathematically impossible. In the months after S. Sudan shut off the oil, it was reported that the World Bank notified key leaders that the country was hurtling toward the verge of economic collapse. Models incorporating the decision to forgo the source of 98% of governmental revenues estimated them approaching total depletion of state fiscal reserves as early as this summer.
I had heard these rumors, and read some articles, but like many folks here, dismissed them to the back of my mind. It was another problem that could, and would, be addressed sometime soon. But for now, this country needed the emotional catharsis of finding some way to stick it to the North. To show them who's boss. To collectively flip them the bird. Insert your favorite angry cliche here.
Then, I saw a copy of the leaked World Bank report from March 1st, and actually realized things could get pretty ugly. The brief is quick to point out that the World Bank has "never seen a situation as dramatic as the one faced by South Sudan", and that collapse of GDP and depreciation of the S. Sudanese currency are rapidly approaching on the horizon. Later lays out a timeline for exhaustion of state reserves based on strength of austerity measures the S. Sudanese government decides to implement:
And, the WB lays out broad social implications of the oil decision, suggesting that the proportion of South Sudanese living in poverty is likely to rise from 51% in 2012 to 83% by 2013. Enrollment rates in school are projected to drop from 50% in 2012 to 20% in 2013. And finally, the under-5 child mortality rate is expected to double from 10% of live-births in 2012 to 20% in 2013. These measures are similar to those of S. Sudan in 2004 -- essentially, the decision to shut-off oil could regress development in some areas to the point where it was before signing of the Comprehensive Peace Agreement in 2005. This report goes onto explain that the decision has alienated some members of the donor community, who are reluctant to fill-in-the-gaps in health, education, etc. for a country that isn't demonstrating the capacity or priority to care for its people.
Ok, whew. The situation is sobering. However, it's important to acknowledge the fact that I (and economists at the Bank) can talk about these statistics and numbers easily because I never had to live in this country during a time of instability or insecurity caused by tensions with the North. I can't understand the resilience of this community, nor the ability to bear any burden in the name of their national sovereignty, because we're just observers on the side. This may be a calculated decision made with knowledge of the hardships to come. This may be a standoff that is soon to end given the recent talks in Addis with reps from Khartoum.
But either way, at least to me, the numbers don't add up.
(Edit: I literally just heard a reporter at the table next to me announce that, as of today, South Sudan is unofficially restarting oil in July. I'm glad to know this post is much less relevant now. Oye, South Sudan!)
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