Sizzling South Sudan

Why Oil Is Not the Whole Story

This article is the third installment of a five-part series examining the world's fastest-growing economies, according to the IMF World Economic Outlook.A man dances with fireworks during South Sudan's independence day celebrations. (Goran Tomasevic / Courtesy Reuters)

The newly independent Republic of South Sudan may top the list of the world's fastest-growing economies in 2013. The main reason for this is that last year South Sudan experienced one of the most spectacular economic contractions of any state in modern times -- a situation that is expected to reverse in the year ahead. 

The South Sudanese economy crashed 12 months ago when, during a dispute with northern Sudan, the South Sudanese government shut down the nation's entire oil production. Until then, oil revenues, totaling about $400 million per month, had represented 82 percent of South Sudan's gross domestic product and 98 percent of government revenues. The oil companies were stunned by the shutdown; their revenues fell to zero. A World Bank director commented that the bank had never seen such a dramatic collapse. The IMF, meanwhile, estimates that South Sudan's GDP contracted by 55 percent in 2012.

South Sudan is scheduled to resume oil production soon, but it will take four to six months to reach pre-shutdown levels. Assuming no further delays, South Sudan's economic growth during 2013 could reach an astonishing 70 percent.


South Sudan seceded from Sudan in July 2011, taking with it 75 percent of Sudan's oil production. However, the export infrastructure -- pipelines and ports -- is in the north. The two countries failed to settle a number of border issues and did not agree on tariffs or fees for use of the north's pipelines. In December 2011, northern Sudan began unilaterally diverting South Sudanese oil to its own refineries for illegal sale on international markets. South Sudan responded by shutting down its wells.

In Juba, South Sudan's capital, the government was immediately in trouble. Its non-oil revenue was miniscule, mostly gained through business licenses and import taxes. The minister of finance's 2012 budget projected the government's monthly expenditure to be $250

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