#'%.%9'.7)]/.8)L534N35) K'%'0-8:)*+)#'%.%9/ & D9*%*6'9)27.%%'%() Y/B$I7'9)*+),*$-T),$&.%)

Transcription

1 Approved);$&(/-)H.I7/0) #'%.%9'.7)]/.8)L534N35) K'%'0-8:)*+)#'%.%9/ & D9*%*6'9)27.%%'%() Y/B$I7'9)*+),*$-T),$&.%) August 2014

2 TABLE OF CONTENT INTRODUCTION 5 REVENUE AND EXPENDITURE SUMMARY TABLES RSS 2014/15 Resource Envelope 18 RSS 2013/14 Approved Budget 19 RSS 2013/14 Supplementary Budget 21 RSS 2013/14 Actuals 23 RSS 2014/15 Approved Budget (by fund) 25 RSS 2014/15 Approved Budget (all funds) 27 RSS 2014/15 Expenditure Estimates by Expenditure Item 29 STAFFING LEVELS, SALARY SCALES AND ALLOWANCES RSS 2013/14 Staffing Structure by Spending Agency 30 Salary Scales 32 Allowances 37 TRANSFERS TO STATES AND COUNTIES RSS Transfers by Sector and Spending Agency 39 RSS Transfers by Location and Chapter 41 RSS 2013/14 Transfers Totals for all Locations 43 RSS 2013/14 Transfers Details to States by State 44 ACCOUNTABILITY SECTOR Sector Summary 55 Ministry of Finance& Economic Planning 57 Audit Chamber 65 National Bureau of Statistics 69 Anti- Corruption Commission 76 South Sudan Fiscal Allocation & Monitoring Commission 80 South Sudan Reconstruction and Development Fund 84 National Revenue Authority 87 ECONOMIC FUNCTIONS SECTOR Sector Summary 89 Ministry of Petroleum & Mining 91 Ministry of Information & Broadcasting 95 Ministry of Electricity, Dams, Water Resources and Irrigation 99 Ministry of Telecommunications & Postal Service 110 Urban Water Corporation 116 Electricity Corporation 120 Investment Authority 124 2

3 National Bureau of Standards 127 Petroleum and Gas Commission 131 Ministry of Trade, Investment and Industry 133 EDUCATION SECTOR Sector Summary 142 Ministry of Education, Science & Technology 144 HEALTH SECTOR Sector Summary 168 Ministry of Health 170 HIV/AIDS Commission 183 Drug and Food Control Authority 188 INFRASTRUCTURE SECTOR Sector Summary 192 Ministry of Land, Housing & Physical Planning 194 Ministry of Transport, Roads & Bridges 199 South Sudan Roads Authority 210 NATURAL RESOURCES SECTOR Sector Summary 214 Ministry of Agriculture, Forestry, Cooperatives & Rural Development 216 Ministry of Tourism & Wildlife Conservation 229 Ministry of Environment and Sustainable Development 238 Agricultural Bank 243 South Sudan Land Commission 246 Ministry of Livestock and Fisheries Industry 250 PUBLIC ADMINISTRATION SECTOR Sector Summary 258 Office of the President 261 Ministry of Cabinet Affairs 273 Ministry of Foreign Affairs & International Cooperation 281 Ministry of Labour 286 National Legislative Assembly 291 South Sudan Civil Service Commission 294 South Sudan Local Government Board 298 South Sudan Employees Justice Chamber 302 South Sudan Public Grievances Chamber 307 National Elections Commission 310 Council of States 314 National Constitution Review Commission 317 Ministry of Public Service & Human Resource Development 319 3

4 RULE OF LAW SECTOR Sector Summary 326 Ministry of Justice 328 Ministry of Interior 333 Police 338 Prisons Service 342 Fire Brigade 350 Judiciary of South Sudan 355 South Sudan Law Review Commission 359 Bureau of Community Security and Small Arms Control 363 South Sudan Human Rights Commission 368 Commission for Refugee Affairs 373 SECURITY Sector Summary 377 National Mine Action Authority 379 Disarmament, Demobilisation & Reintegration Commission 386 Ministry of Veteran Affairs 390 SOCIAL & HUMANITARIAN AFFAIRS SECTOR Sector Summary 395 Ministry of Gender, Child & Social Welfare 397 Ministry of Culture, Youth & Sports 403 South Sudan Relief & Rehabilitation Commission 408 Peace Commission 413 War Disabled, Widows & Orphans Commission 418 Ministry of Humanitarian Affairs & Disaster Management 423 ANNEXES Annex 1: RSS Budget Historical s ( /14) 426 Annex 2: RSS Budget Revenues and Expenditures ( /14) 427 Annex 3: 2014/15 Revenue Classification 430 Annex 4: 2014/15 Expenditure Classification 433 Annex 3: Ministers, Heads of Commissions/Agencies and Accounting Officers 437 4

5 FOREWORD TO INTRODUCTION When I presented the 2013/14 Budget last year we were emerging from a period of prolonged fiscal austerity. We had been able to survive the austerity effects of the oil shutdown through judicious use of our limited resources, including domestic loans and oil advances, but these efforts required significant sacrifices across the board and came at the expense of our development expenditures. Our hope then was that the resumption of oil production would allow us to lift austerity and to resume development spending in the second half of this financial year. Unfortunately, an entirely unforeseen set of circumstances overtook us in December The crisis that unfolded has sent shockwaves through the nation, caused untold suffering and come at a significant economic cost. At a macro level, our economy is weathering the crisis. Initial uncertainty led to volatility in the exchange rate and prices in January 2014, but through prudent macroeconomic management, we have managed to keep the exchange rate stable and avoided a return to high levels of inflation. However, the crisis has severely impacted on economic activity. Oil production has been affected, trade has been interrupted, and hundreds of thousands of households have been unable to plant their crops for this season. The crisis has both reduced the revenues available to us, and forced us to re- focus our immediate priorities away from development, towards security and emergency relief. In February of this year, the National Legislative Assembly approved a Supplementary Budget, which re- allocated funds away from non- essential capital expenditures to security and a contingency fund for emergencies. This revised focus will need to continue in the coming financial year. In 2014/15 we will use our limited resources to maintain security, keep Government running and provide core services. However, we will also make efforts to pay down our debts and pay off some of our arrears, so that our finances remain on a sustainable footing. With the remaining funds we will support a few carefully selected investments to underpin our peace and reconstruction efforts. Aggrey Tisa Sabuni Minister Ministry of Finance and Economic Planning 5

6 INTRODUCTION 2013/14 Budget Execution Shortfalls in non- oil revenue, donor grants and net financing totalling SSP 1,596 million partially offset by increased net oil revenue of SSP 265 million, forced spending reductions of SSP 1,331 million. Many May and June obligations had to be deferred until the beginning of the following fiscal year which will ultimately impact on the budget execution. 2013/14 Summary Budget Execution Oil Revenue 2013/14 Sup. Budget 2013/14 Provisional s Variance Oil Production Revenue 10,411 9,965 (446) Oil Lease Revenue 74 Gross Oil Revenue 10,411 10,039 (446) Oil payments to Sudan 3,087 2,589 (498) 2%/3% for oil producing States/Communities (139) Net Oil Revenue 6,972 7, Non- Oil Revenue Total 1, (1,016) Grants from Donors (350) Financing New Borrowing 4,914 5, Loan Repayments (Principal) 3,800 4,906 1,106 Net Financing 1, (373) Total Resources available 10,403 8,929 (1,474) Total Spending 10,403 9,072 (1,331) Surplus/Deficit - (143) (143) Net oil revenue was SSP 265 million more than budgeted even though production was lower than projected. Higher prices combined with payments to Republic of Sudan being lower than originally estimated and reduced payments to oil producing communities more than offset the impact of the lower production. Non- oil revenue increased slightly from 2012/13 to SSP 951 million but was less than half of the budgeted amount, with a total shortfall of SSP 1,016 million. A portion of the shortfall can be attributed to the conflict which began in December 2013 but lack of resources for the operations of the Taxation Directorate and other administrative issues also contributed to the shortfall. Donor grants to the budget did not materialize after the conflict began and net financing from loans was 373 million less than projected. 6

7 The crisis also brought new spending pressures. The Government responded to this situation by implementing a number of measures including: Passing a supplementary budget in February, acknowledging the realities of the situation and: shifting resources away from development expenditures to security and a contingency fund for emergencies; while also reducing hardship and ensuring a functioning government by restoring allowances to pre- austerity levels. Controlling emergency spending through the use of a Crisis Management Committee Paying salaries through payment committees only to employees present in person Organising a SSP 550 million per month overdraft facility with the BSS to be recouped from future oil revenues. Raising additional financing of USD 400 million in advances from the CNPC facility and SSP 100 million in Treasury Bills. These measures ensured that funding for essential operating services was maintained. Salaries for government personnel and transfers to states and counties continued to be paid, though not always within the calendar month. Overall these measures allowed the government to continue functioning and service delivery to be maintained in the wake of the crisis. However, the effect of these measures has also resulted in a further shift away from development expenditure towards recurrent spending. The shortfall in revenue, grants and financing and increased security spending forced additional spending reductions beyond those approved in the supplementary budget. SSP 1 billion of 2013/14 spending was deferred until the beginning of the following fiscal year, including some salaries, transfers and operating costs for May and June Macroeconomic Environment South Sudan has faced severe macroeconomic challenges since becoming an independent country on 9th July However the country has weathered the storm from the pressures caused by the initial population influx post- independence, the oil shutdown of 2012, through the austerity budgets of 2012/13 and 2013/14 and the recent crisis which erupted in December The 2012 oil production shutdown entailed an economic shock on a scale that could have easily destabilized the country with the loss of oil revenues leading to large deficits in the fiscal budget and the trade balance. The government continued operating throughout the period of the shutdown through prudent fiscal management. It was able to draw on modest financial reserves accumulated from previous budget surpluses to finance operations for a period. Subsequently it raised both domestic and foreign debt to fill the financing gap, although on commercial terms and for almost immediate repayment once oil production resumed. It also passed an amendment to the 2009 Taxation Act, which raised duty rates on a number of non- oil revenues. As a result, non- oil revenue collections increased, albeit from a very low base. The government also implemented an austerity budget which entailed large spending cuts. The fiscal management of this crisis period was successful and economic stability was maintained. However, GRSS accumulated debt of close to SSP 8 billion, by the end of the FY 2013/14, as well as a stock of arrears estimated to run into billions of pounds. Oil production resumed in 2013, following an agreement with the Republic of Sudan, but was slightly less than anticipated, due to fighting in mid- December 2013 that caused a shutdown of the oil wells in Unity State and also reduced production in Upper Nile. Production in 2014 is anticipated to be 7

8 markedly lower than previously projected, at 60 billion barrels for the year rather than 90 billion, due to the ongoing effects of the crisis. Over the long term the dominance of the oil sector is projected to decrease as a result of the depletion of existing oil reserves and the growth of the non- oil private sector unless new oil fields are brought into production. Non- Oil Sector The crisis has also had a severe negative impact on real economic activity outside of the oil sector. The agricultural sector has been impacted through: the displacement of a part of the rural population resulting in a missed planting season (March/April 2014) in many areas; a lack of access to seeds together with consumption of grain originally intended for planting resulting in further harvest losses; and the destruction of market infrastructure, transport infrastructure and storages of agricultural products which will further reduce the availability of both domestic and imported agricultural products. As a result of these disruptions agricultural production is expected to decrease sharply in 2014 and remain subdued in While the stimulative effect of the restoration of government allowances in the second half of 2013/14 will likely have a positive impact on real economic activity, the ongoing military conflict will have countervailing negative effects through the destruction of inventories and assets, reduced transportation volumes due to security risks, and reduced demand for both housing and other services. Additionally increased uncertainty about future economic prospects will weigh down on private consumption and private investments. Therefore overall output in the non- oil private sector is expected to decline in 2014 and remain low in The experience of other African countries suggests that the impact of a civil war has negative ripple effects on output for many years after the cessation of hostilities. Exchange Rate Following the conflict in December 2013, the exchange rate was particularly volatile throughout January Although the official exchange rate continues to remain at 2.96 SSP to the U.S. Dollar, the Black Market Rate had been relatively stable since June 2013, except for a sharp and short- lived depreciation during the temporary exchange rate regime change in November of that year. The rate was then extremely volatile following the eruption of violence and civil unrest in December, depreciating throughout January However, the rate has subsequently appreciated steadily since February and appears to now have stabilised around 4 SSP to the U.S. Dollar. 8

9 Official and Black Market Exchange Rates (USD/SSP) Official Rate Black Market Rate (mid) Inflation The inflation rate declined significantly in The average monthly inflation rate in 2013 was just 1.7% compared to 46.6% in The overall trend has been in line with that of neighbouring Kenya and Uganda from where South Sudan imports the vast majority of its consumer goods. However the decline in prices has been steeper in South Sudan as a result of the austerity measures of the 2012/13 and 2013/14 budgets. Prices have actually been falling (deflation) since May The upward pressure on prices stemming from increased government spending has been offset by the appreciation in the exchange rate discussed in the previous section and reduced private sector demand. Inflation in the Region (Annual % change in CPI) 100 % 80 % 60 % % 40 % 20 % 0 % - 20 % Jan/10 Jul/10 Jan/11 Jul/11 Jan/12 Jul/12 Jan/13 Jul/13 Jan/14 South Sudan inflafon Uganda inflafon Kenya inflafon

10 2014/15 Revenue and Financing Plans Total resources for 2014/15 are estimated to be SSP 876 million (8%) higher at SSP 11,279 million, than the SSP 10,403 million budgeted for 2013/14. Net oil revenue is estimated at SSP 8,889 million in 2014/15, a SSP 1,927 million (28%) increase over the SSP 6,972 million budgeted for 2013/14. Non- oil revenue is estimated at SSP 2,654 million in 2014/15, a SSP 687 million (35%) increase over the SSP 6,972 million budgeted for 2013/ Grant financing is estimated to decline by SSP 192 million (55%) in 2014/15 compared to the SSP 350 million budgeted for 2014/15. However, grant financing for 2013/14 was not realised. Net financing is estimated to be negative in the amount of SSP 433 million, as South Sudan starts to pay down its loans. Planned Revenues and Financing 2014/15 (SSP Millions) 2013/ / / /15 Budget Budget Increase Increase Original Plan Nominal % change Net Oil Revenue 6,972 8,899 1,927 28% Non- Oil Revenue 1,967 2, % Grants % Net Financing 1, , % - new borrowing 4,914 3,278-1,636-33% - loan repayments 3,800 3, % Total Resources 10,403 11, % Net oil revenues are forecast to increase by 31% to SSP 8.9 billion over the SSP 6.8 billion estimated for 2013/14. The 2014/15 forecast is based firstly on the assumption that production in the Upper Nile fields will increase from 180,000 barrels per day at the start of the year to 220,000 barrels per day by the end of the year. Secondly it is assumed that production in Unity State will gradually recommence during the fiscal year rising from 5,000 barrels per day on recommencement to 40,000 barrels per day at the end of the year. The forecast increase in the government share is due to the higher share of production coming from Upper Nile relative to Unity where the government share from is estimated at 47.5 per cent due to large losses stemming from the shutdown in 2012 which have yet to be recovered, while the share from Upper Nile is estimated to be 60% as losses from 2012 have been recovered. Price estimates are based on projections from the IMF. Non- oil revenues amount to SSP 2,654 million in 2014/15, which is 35% higher than the SSP 1,967 million estimated in 2013/14 budget. Actual non- oil revenue collections for 2013/14 were only SSP 951 million. As such the SSP 2,654 million projection for 2014/15 is an ambitious revenue collection target for the GRSS revenue collection agencies over the coming fiscal year, requiring a 175% increase in collections above current levels. Grants from donors for on budget support to the GRSS are expected to amount to SSP 158 million in 2014/15. This represents a 55% decline on the SSP 350 million budgeted for donor budget support in 2013/14. However as discussed above this budgeted amount was not realised. Net financing is projected to be negative 433 million in 2014/15 as the GRSS will repay more than it will receive in new loans. 10

11 Net Financing 2014/15 Budget (SSP millions) New borrowing Repayments Net Financing - Multilateral Budget Support Loans BSS Loans 0 2,186-2,186 - Treasury Bills External Loans (Commercial) 3, ,048 - External Loans (Projects World Bank/China) Total 3,278 3, /15 Expenditure Plans In line with the increase in the resource envelope total spending is estimated at SSP 11,279 million. This is an increase of SSP 876 (8%) in 2014/15 over the SSP 10,403 million in spending budgeted for 2013/14. All of the government financed spending increase will be allocated to an arrears fund to begin to address the backlog of arrears accumulated in previous years and an emergency contingency fund designed to deal with national emergencies. Agency spending is estimated to increase by 2% with funds provided by donors. Planned Expenditure 2014/15 (SSP Millions) 2013/ / / /15 Budget Budget Increase Increase Original Plan Nominal % change Total Resources 10,403 11, % Agency Spending 9,733 9, % - Own Resources 9,563 9, % - External Resources % Arrears Fund % Emergency Contingency Fund Interest payments % Total Expenditures 10,403 11, % Surplus / (Deficit) /15 Planned Expenditure by Building Block The unique situation surrounding the planning and formulation of the 2014/15 budget called for a novel strategy, which was provided by the Minister when he presented the building blocks strategy to the CoM and NLA in March of Budget Allocations to Building Blocks (All Fund Sources) Building Block Allocation (millions) 1 Salaries 4,378 2 Transfers to States and Counties 2,470 3 Basic Operating Costs 2,704 4 Arrears Fund Emergency Contingency Fund Priority Investments in Peace & Reconstruction 676 Total 11,279 11

12 The purpose of these building blocks was threefold. Firstly to set aside allocations for expenditures that are essential for keeping Government running. These are salaries, operating costs and transfers in order of priority. Secondly to cater in advance for the unknown expenditure obligations that will inevitably emerge during the course of the year. These are the set aside arrears and contingency funds. Finally, the allocation of any remaining resources to areas of political priority, particularly with regard to capital expenditure. Budget Highlights After allocating budgets to the six building blocks described above, these building block budgets were divided among spending agencies. To achieve budgetary continuity, the division was done using formulae based on the previous year s originally approved budget (in contrast to the supplementary budget that was designed to respond to immediate demands during the crisis). In terms of salaries, all agencies were allocated increased budgets based on the staffing numbers in 2013/14, catering for the restoration of housing allowances for the full year 2014/15. In total, this meant an increase in the salary budget of SSP 845m, or 24% over the 2013/14 budget and an increase of SSP 193 million or 19% over 2013/14 (original approved budget) levels in conditional salary transfers. The operating budget increased by SSP 292m, or 15% over the 2013/14 (originally approved) agency budget, before additions and cuts by the National Legislature. To divide these additional funds, all agencies (a few exceptions had to be made) were allocated the same proportional increase (25%) over 2013/14 budget levels. Aside from these proportional increases, several agencies were allocated additional funding for the implementation of new policy programmes. The most notable of these additional fund allocations in the operating chapter were aimed at improving non- oil revenue collection. As such, the National Police received a 61% increase in operating budget, and the Ministry of Trade, Commerce and Investment received an increase of 700%, instead of the 25% other agencies received. These funds were allocated to improve revenue collection at the borders, as well as domestically. Similarly, the Ministry of Justice and the Law Review Commission were allocated additional operating funds to support the revenue collecting agencies with judiciary measures and the preparation of appropriate legislation. The second focus of additional fund allocations in the operating chapter was set on the Ministry of Roads and Bridges, which received an additional 40% of operating budget above its 2013/14 levels. The additional funds for this Ministry are meant to complement additional funds it received in the capital chapter, and are to be used primarily for the implementation of infrastructure projects that can foster peace through improving communicability and inter- regional exchange routes, as well as, help reconstruct destroyed infrastructure in the country. Total allocations for Capital spending in 2014/15 reduced by 39% over the originally approved budget 2013/14 when comparing solely government funded spending, and 30% when including foreign loan and grant financed projects. In this chapter initially only spending agencies that were selected to implement projects that would either help collect more revenue, or rebuild infrastructure received budget allocations. During the budget process several other agencies have moved some of their budget allocations from other chapters into capital. 12

13 Additions and Cuts by the Assembly The National Legislature has amended the 2014/15 Draft Budget in several areas before appropriating it. In order to finance additions of SSP 163m, cuts in four items in the operating chapter were applied uniformly. All spending agencies except the Ministry of Defence and the National Security Service were affected. SSP 58m were cut from travel budgets, setting agencies budgets back to their 2013/14 budget level for this expenditure item, except for those whose allocations for this item in the Draft Budget were smaller than in 2013/14. SSP 79m were cut from training budgets, corresponding to a cut of 54% across agencies. Further cuts of SSP 15m were made from budgets for supplies, tools and materials, and SSP 11m out of budgets for other operating expenses (both cuts amount to 3% of the respective budgets). The National Legislature has allocated most of the additional spending to the National Legislative Assembly (SSP 90m). The second biggest addition was made to the budget of the Ministry of Transport, Roads and Bridges, who was allocated additional SSP 26m for the Wau, Juba and Malakal airports. Further additions were: SSP 6.6m for Police training, SSP 4m to improve Prison Services, SSP 5m for a feasibility study for Ramciel (Ministry of Lands, Housing and Physical Planning, SSP 5m for garbage collection in all ten States (Ministry of Environment and Sustainable Development), SSP 5m for a new laboratory for the National Bureau of Standards, SSP 5m to improve urban water supply in Juba (Ministry of Electricity, Irrigation and Water Resources), SSP 5m for the Audit Chamber, S SP 4m for the Anti- Corruption Commission, SSP 3m for the vaccination of livestock (Ministry of Livestock and Fisheries Resources), SSP 2m for the recruitment of additional staff for the Orthopedic and Rehabilitation Center (Ministry of Gender, Child and Social Welfare), SSP 1m for the Ministry of Justice for the printing of law gazettes and finally SSP 0.75m for the Council of States for domestic travel. 2014/15 Planned Expenditure by Chapter The building blocks that are considered essential to keep government running, salaries, operating costs and transfers, make up the bulk of chapter allocations. Only 13% of the Budget 2014/15 is allocated to capital, and that includes support from donor partners and the arrears fund. This distribution among chapters is not how GRSS wishes it to be, and results rather from necessity than choice. Once peace is consolidated, the Government hopes it may be possible to increase capital expenditures by increasing non- oil revenues and reducing arrears repayments, as well as by reducing payroll costs through a far- reaching demobilisation programme for the army and Organised Forces. Despite current constraints almost a quarter of the Budget 2014/15 is allocated to State & County transfers. Block Grants amount to SSP 964 million and conditional transfers to SSP 1,507 million. This is the highest level transfer allocations have ever reached in absolute terms and represents the commitment by the GRSS to decentralization and local service delivery. 13

14 2014/15 Planned Expenditure by Sector The distribution of budget allocation among sectors changes slightly in the 2014/15 budget. These changes have three main drivers: After the restructuring of Government in March 2013 several agencies moved sectors. The Wildlife agency that used to be part of the Ministry of Interior was merged with Tourism to become a separate ministry in the Natural Resources sector. In addition, the agencies Commerce and National Bureau of Standards moved to the Economic Functions Sector. Some sectors are more salary intensive than others. For example, salaries make up only 17% of the government funded Budget of the Infrastructure Sector, whilst they make up 79% of the Budget in the Security Sector. The restoration of all salary allowances in this Budget mean that the budgets of salary intensive sectors have increased by more than sectors that are capital or operating cost intensive. The amount of external funds budgeted to flow through Government systems has more than doubled since last year 2014/15 Budget Allocations to Sectors (Total Funds SSP millions) 2013/ /15 change change 2013/ /15 supp. plan nominal % % share % share Accountability % 3% 3% Economic Functions % 3% 4% Education % 6% 6% Health % 4% 4% Infrastructure % 5% 3% Natural Resources & Rural Devt % 2% 3% Public Administration 1, % 10% 7% Rule of Law 1,437 1, % 14% 14% Security 3,642 3, % 36% 35% Social & Humanitarian Affairs % 1% 1% Block Transfers % 9% 9% Interest Payments % 2% 2% Emergency Contingency Fund % 2% 2% Arrears Fund % 5% 7% Total 10,403 11,279 1,046 10% 100% 100% State transfers Despite the crisis, transfers to States and Counties will increase slightly in 2014/15 from SSP 2,234 million to SSP 2,470 million (SSP 2,939 including the oil transfers to Unity and Upper Nile). The main increases are detailed as follows: State Block Grants will increase by SSP 83 million to SSP 625 million to fully restore it to pre- austerity levels and to enable State governments to finance their running costs and other priorities; Health conditional transfers will increase by SSP38 million to SSP 151 million to enable the introduction of infection allowances for primary health workers to reduce the disparity between government employed primary health workers and those employed by NGOs; and 14

15 Rule of Law and Wildlife conditional transfers will increase by SSP 175 million to SSP 945 million to enable the full restoration of housing allowances for the State Organised Forces. These changes mean that transfers to States and Counties will continue to remain at almost a quarter of the total budget. Figure 8 below shows total transfers to States and Counties are at their highest level in the 2014/15 budget, and have increased each year since 2006, with the exception of the austerity levels of 2012/13 caused by the oil shutdown. In 2014/15, block transfers will amount to SSP 955 million from Government funds, and SSP 9 million from donor funds. These transfers will enable State governments to finance their running costs and other priorities, and support County development through the County Block Grant (SSP 50 million), County Development Grant (SSP 144 million) and externally- funded Payam Development Grant (SSP 9 million). Conditional transfers will amount to SSP 1507 million. Nearly two- thirds of this amount is for the salaries of organised forces at the State level. The largest part of the remaining is to support State and County Education services (SSP 335 million) and Health services (SSP 151 million). Total transfers by sector are shown in figure 9 below. Increasing the provision of basic services to our citizens is one of the priorities of the South Sudan Development Plan. Responsibility for delivering these services is the responsibility of sub- national governments: local governments, supervised by the States. In line with these priorities, a number of new transfers to improve local service delivery in education, health and water were included in the 2013/14 budget, to be introduced from January These transfers are shown in figure 10 below. Despite the crises, these transfers started in March 2014 and have been protected in the 2014/15 budget. Total Transfers by State are shown below. Excluding oil, these range from a total of SSP 339 million for Jonglei to SSP 183 million for Western Equatoria. The total for Block Transfers includes the State Block Transfer, the Sales Tax Adjustment Grant, and two grants which must be passed on in full to Counties: the County Block Transfer and the County Development Grant. Conditional Transfers include all transfers budgeted by national line ministries, including education, health, water, agriculture grants and grants for the state organised forces. 15

16 2014/15 Budget Transfers by State State Block Conditional 2% transfer 3% Transfer to excluding Total Transfers* Transfers to States Communities oil transfers CES EES Jonglei Lakes NBG Unity Upper Nile Warrap WBG WES Abyei Other 0 27** Total 964 1, ,939 2,470 * Includes externally funded block transfers ** relates to transfers for international organisations Debt Position Government borrowing is a fairly recent phenomenon in South Sudan, necessitated by the 2012 oil shutdown as well as the current crisis. At the start of the current financial year, total Government indebtedness amounted to SSP 4,650 million. SSP 1,975 million of this amount related to advances from the oil companies, while SSP 2,725 million was owed domestically, to the Bank of South Sudan and domestic commercial banks. These figures do not include a note for SSP 1,917 million to recapitalize BSS. During the course of the current financial year, the GRSS received a further SSP 5,343 million in new loan disbursements, drawing on the facilities established during the oil shutdown as well as a rolling overdraft from the Bank of South Sudan. Loan Repayments are estimated to amount to SSP 5,002 million in 2013/14. Therefore net borrowings in 2013/14 amounted to SSP 341 million. Currently, South Sudan s total indebtedness is about SSP 7 billion. Including contractual arrears, total indebtedness likely exceeds SSP 9 billion. These loans have been taken on a commercial terms, and require repayment within one year or less except for the BSS recapitalization loan. As such the 2014/15 budget plan reserves SSP billion for loan repayments. The growing indebtedness of South Sudan further illustrates the urgent need to broaden the non- oil revenue tax base and rationalise the current level of expenditure. The following table summarizes debt during the 2013/14 fiscal year. 16

17 2013/14 Debt Financing (SSP million) Oil Advances BoSS Loans Treasury Bills Other Total July 1, ,925 1,663 1, ,650 New Loans 1,185 4, ,647 Repayments 2,305 2, ,906 Net Financing - 1,120 1, Accrued Unpaid Interest June 30, ,315 1, , Donor Funding The crisis that broke out on 15 December 2013 has a profound impact on the level of aid, its composition and the policies for international assistance. Many of the development initiatives donors and Government had planned are on hold. Responding to the humanitarian emergency is now the top priority: more than 7 million people could suffer from hunger, disease, displacement and disrupted livelihoods. Putting the focus back on development will require peace, accountability and reconciliation. In response to the humanitarian crisis, many donors are increasing their assistance. Already in fiscal year 2012/13, donors had committed a record $1.6 billion (SSP 4.8 billion) in development and humanitarian aid. In 2013/14, humanitarian funding alone has reached $1.6 billion (SSP 4.8 billion) by mid- June In addition, some development aid in particular for agriculture, health and education continues. As a result, combined assistance could rise to at least $2 billion (SSP 6 billion) for 2013/14. For fiscal year 2014/15, the level of aid remains somewhat uncertain. If the emergency continues, humanitarian assistance is likely to stay elevated and development aid reduced. If a lasting political settlement is reached, most donors are likely to increase their development assistance again. Preliminary estimates suggest that total aid in 2014/15 may reach $1.8 billion (SSP 5.4 billion) and more if peace returns. Some key development initiatives continue despite the crisis. For example, some partners decided to maintain basic support to core Government functions to protect past gains in public finance, public service and local administration. A number of donors have also made new development commitments, in particular in areas where such initiatives directly contribute to the humanitarian effort. For example, donors committed at least $200 million (SSP 600 million) to new agricultural development projects since the crisis began. Increased production from farmers in stable regions can help reduce food security elsewhere. 8. Conclusion The Government budget strategy for 2014/15 is to ensure that Government continues functioning and service delivery continues throughout this difficult period, while maintaining economic stability. Going forward it is clear that difficult decisions will have to be made in order to ensure the future fiscal sustainability that will underpin economic growth and development. 17

18 2014/15 Resource Envelope 2013/14 Supplementary Budget 2013/14 Provisional s 2014/15 Estimates Oil Revenue Oil production revenue 10,411 9,965 12,780 Gross oil revenue Gross Oil Revenue 10,411 10,039 12,780 Oil Tariff,Transit Fee and TFA payments to Sudan 3,087 2,589 3,413 2%/3% for oil producing States/Communities Net Oil Revenue 6,972 7,237 8,899 Non- Oil Revenues PIT Sales Tax/VAT Excise Business Profit Tax Customs Other Revenue (fees, licenses, etc) Non- Oil Revenue Total 1, ,654 Grants from Donors New Borrowing 4,914 5,647 3,278 Multilateral Budget Support Loans Bank of South Sudan Loans - 4,038 - Treasury Bills Internal Borrowing 300 External Loans (Commercial) 4,500 1,185 3,000 External Loans (Projects - World Bank/ China) Loan Repayments (Principal) 3,800 4,906 3,711 Bank of South Sudan Loans - 2,413 2,186 Treasury Bills External Loans (Commercial) 3,800 2, Net Financing 1, (433) Total Resources available 10,403 8,929 11,279 Interest Payments on Borrowing Agency Spending Agency Spending (GRSS Resources) 9,344 8,725 9,532 Subsidy to Oil Company (NilePet) Arrears Fund Emergency Contingency Fund Agency Spending (Externally Funded) Unpresented Cheques - (344) - Total Agency Spending 10,233 8,964 11,019 Total Spending 10,403 9,072 11,279 Surplus/Deficit 0 (143) 0 NOTE: Methodological changes in the presentation of the resource envelope cause totals for the 2013/14 budget in this table to differ from the presentation in the 2013/14 Approved Budget Book. The new presentation nets out debt repayments, oil tariff and transit fees, payments for the transitional financial arrangement with Sudan, and payments of the 2% and 3% oil share to oil producing communities on the revenue side. These items have formerly been shown as expenditures. The figure for total expenditure is therefore lower than in previous presentations of the 2013/14 resource envelope. figures are provisional and subject to change. 18

19 Approved Budget Estimates - FY2014/15 Revenue and Expenditure /14 - Approved Budget Spending Agency Source: Government Funds Accountability Anti-Corruption Commission Audit Chamber National Bureau of Statistics Ministry of Finance, Commerce, Investment & Economic Plan Commerce Finance & Economic Planning SS Fiscal & Financial Allocation & Monitoring Commission South Sudan Reconstruction & Development Fund National Revenue Authority Investment Authority National Bureau of Standards Economic Functions Ministry of Petroleum, Mining, and Industry Industry Petroleum and Mining Electricity Cooporation Ministry of Information & Broadcasting Ministry of Telecommunication & Postal Services South Sudan Urban Water Corporation Ministry of Electricity, Dams, Irrigation and Water Resources Electricity & Dams Irrigation and Water Resources Petroleum and Gas Commission Education Ministry of Education, Science & Technology General Education & Instruction Higher Education, Science & Technology Health Ministry of Health HIV/Aids Commission Drug and Food Control Authority Infrastructure Ministry of Lands, Housing & Physical Planning Ministry of Transport, Roads & Bridges Roads & Bridges Transport South Sudan Roads Authority Natural Resources & Rural Devt Ministry of Agriculture, Forestry, Tourism, Animal Resources Agriculture & Forestry Animal Resources & Fisheries Tourism Agricultural Bank Ministry of Environment and Sustainable Development South Sudan Land Commission Public Administration Office of the President Office of the President Ministry of Cabinet Affairs Cabinet Affairs Parliamentary Affairs Ministry of Labour, Public Service & Human Resource Develo Ministry of Foreign Affairs & International Cooperation South Sudan Civil Service Commission South Sudan Local Government Board South Sudan Employees Justice Chamber South Sudan Public Grievances Chamber National Elections Commission National Legislative Assembly Council of States National Constitution Review Commission Rule of Law Wildlife Conservation Judiciary of South Sudan Ministry of Justice South Sudan Law Review Commission Ministry of Interior Police Wages and Salaries Use of Goods and Services Capital Expenditure Transfers Other Expenditure Summary Tables 96,808, ,689,512 57,045,347 2,294, ,837,712 5,354,460 6,909,843 2,363, ,627,443 13,885,422 3,465,969 4,880, ,231,391 7,512,675 46,377,811 20,005, ,895,693 57,371,338 76,015,599 17,966, ,352,937 6,676, , ,328,580 50,695,058 75,363,299 17,966, ,024, ,813 1,107, ,783,719 1,386,424 1,190, , ,676,495 1,004, ,600 3,000, ,000,000 2,893,462 2,167, , ,170,588 6,724,569 8,459,587 8,621,000 2,294, ,099,446 62,902,792 95,338, ,976,975 24,543, ,761,690 8,126,695 21,068,741 4,591, ,786,800 3,204, , , ,380,338 4,921,957 20,608,741 3,875, ,406,462 12,997,044 25,852,661 2,060, ,910,351 10,999,797 12,703,921 19,950, ,653,718 7,551,192 22,324,976 21,509, ,385,808 9,866,917 2,381,437 9,889, ,137,378 10,361,147 10,006, ,976,301 24,543, ,887,635 2,509,488 2,959, ,077, ,545,640 7,851,659 7,047,745 35,899,301 24,543, ,341,995 3,000,000 1,000,000 1,000, ,000,000 99,663, ,434,111 90,745, ,098, ,941,644 99,663, ,434,111 90,745, ,098, ,941,644 18,029,821 76,911,109 74,533, ,098, ,573,376 81,633,474 67,523,002 16,211, ,368,268 45,868, ,234,245 71,201, ,203, , ,732,552 40,453, ,536,058 65,120, ,203, ,313,215 4,667,770 10,216, , ,000 15,419, ,380 13,481,620 5,771, ,000,000 24,677,402 30,521, ,107, ,306,827 6,458,509 4,692,919 29,385, ,537,249 18,218,893 22,336, ,221, ,777,095 5,120,263 7,237, ,250, ,607,463 13,098,630 15,099,232 66,971, ,169, ,492,483 2,500, ,992,483 31,624,654 37,381, ,280,528 43,021, ,307,578 26,353,394 32,625,966 46,809,849 43,021, ,810,459 17,280,144 19,845,269 32,964,845 36,310, ,401,008 4,957,284 9,574,024 5,500,004 6,710, ,741,812 4,115,966 3,206,673 8,345, ,667,639 1,517, , ,225, ,204,770 3,015,099 3,284,545 1,245, ,545, ,120 1,007, ,747, ,807, ,254, ,195, ,128 9,000,000 1,005,838,631 14,191, ,979,852 7,090, ,000, ,262,738 14,191, ,979,852 7,090, ,000, ,262,738 38,994,124 52,835,669 7,008, ,837,793 36,693,524 51,412,177 5,008, ,113,701 2,300,600 1,423,492 2,000, ,724,092 9,578,474 4,140,787 80, ,799,261 98,654,977 62,593,743 10,000, ,248,720 1,392,070 1,624, ,016,477 1,316,897 40,000 2, ,359,094 1,195, , , ,491, , ,283 30, ,359,440 17,047,513 15,437,555 15,118, ,603, ,399,724 24,503, ,580, ,483,029 12,820,561 14,996,424 3,560, ,377,105 4,400,362 2,873,642 1,725, ,000, ,134, ,445, ,337, ,028, ,273 1,499,367,145 28,096,262 9,395,000 7,776, ,037, ,304,462 60,606,760 10,216,717 8,400, ,273 79,444,750 32,428,899 13,838, ,266,919 1,494,544 2,281, , ,026,408 37,514,546 57,484,768 9,980, , ,180, ,961, ,113,927 93,500, ,572, ,147,712 Total 19

20 Approved Budget Estimates - FY2014/15 Revenue and Expenditure /14 - Approved Budget Spending Agency Prisons Fire Brigade Bureau of Community Security & Small Arms Control South Sudan Human Rights Commission Commission for Refugees Affairs Security Office of the President National Security Service National Mine Action Authority Disarmament, Demoblization & Reintegration Commission Ministry of Defence & Veteran Affairs Social & Humanitarian Affairs Ministry of Gender, Child & Social Welfare Gender, Child & Social Welfare Humanitarian Affairs & Disaster Management Ministry of Culture, Youth & Sport Peace Commission War Disabled, Widows & Orphans Commission South Sudan Relief & Rehabilitation Commission Block Grants Ministry of Finance, Commerce, Investment & Economic Plan Finance & Economic Planning National Financial Management Total Excl. Contingency, Interest and Arrears Block Grants Ministry of Finance, Commerce, Investment & Economic Plan Finance & Economic Planning Arrears Payments Interest Total Contingency Fund, Interest and Arrears Total: Government Funds Source: External Loan Funds Accountability Ministry of Finance, Commerce, Investment & Economic Plan Finance & Economic Planning Infrastructure Ministry of Transport, Roads & Bridges Transport Public Administration South Sudan Local Government Board Block Grants Ministry of Finance, Commerce, Investment & Economic Plan Finance & Economic Planning Total: External Loan Funds Source: External Grant Funds Accountability Ministry of Finance, Commerce, Investment & Economic Plan Finance & Economic Planning Total: External Grant Funds Wages and Salaries Use of Goods and Services Capital Expenditure Transfers Other Expenditure Summary Tables 27,522,047 54,302,267 1,384, ,728, ,937,004 13,993,193 4,653, ,248, ,894,668 1,353, , , ,133,864 2,790,992 2,240, ,031,236 4,372,397 8,581,248 2,046, ,000,000 2,526,376, ,476,568 20,670,000 5,041, ,141,564, ,273,760 42,060, , ,833, ,273,760 42,060, , ,833,760 2,250, , , ,000,561 6,031,749 2,459, ,041, ,532,971 2,377,821, ,376,334 20,000, ,942,197,486 30,667,383 53,528,830 9,869, ,496,349 96,561,995 7,162,389 21,222,842 4,145, ,531,044 3,810,361 6,611, ,421,607 3,352,028 14,611,596 4,145, ,109,437 6,931,424 14,447,214 2,803, ,181,922 3,256,254 4,359, , ,234,051 2,922,795 3,382,662 1,217, ,496,349 10,019,306 10,394,521 10,116,315 1,084, ,595, ,992, ,992, ,992, ,992, ,992, ,992, ,992, ,992,831 3,567,532,457 1,927,305,271 1,791,429,342 2,264,803,691 12,142,622 9,563,213, ,000, ,000, ,000, ,000, ,000, ,000, ,000, ,000, ,000, ,000, ,000, ,000, ,000, ,000, ,000, ,000, ,000, ,000, ,000, ,000, ,000,000 3,567,532,457 2,177,305,271 2,041,429,342 2,264,803, ,142,622 10,233,213, ,677,520 2,725, ,403, ,677,520 2,725, ,403, ,677,520 2,725, ,403, ,000, ,000, ,000, ,000, ,000, ,000, ,628, ,628, ,628, ,628, ,943, ,943, ,943, ,943, ,943, ,943, ,305, ,725,800 5,943, ,974, , , , , , , , ,000 Overall Total 3,567,532,457 2,188,920,791 2,194,155,142 2,270,747, ,142,622 10,403,498,295 Total Note: Oil transit fees, oil processing fees, transitional financial arrangement payments to Sudan, payments to oil producing states and communities, and debt principal repayments have been shown as expenditure items in the Approved Budget Book 2013/14. In the summary tables in this book these items have been excluded, since they are now represented as items deducted on the revenue side of the resource envelope (see page 1). 20

21 Approved Budget Estimates - FY2014/15 Revenue and Expenditure /14 - Supplementary Budget Spending Agency Source: Government Funds Accountability Anti-Corruption Commission Audit Chamber National Bureau of Statistics Ministry of Finance, Commerce, Investment & Economic Plan Commerce Finance & Economic Planning SS Fiscal & Financial Allocation & Monitoring Commission South Sudan Reconstruction & Development Fund National Revenue Authority Investment Authority National Bureau of Standards Economic Functions Ministry of Petroleum, Mining, and Industry Industry Petroleum and Mining Electricity Cooporation Ministry of Information & Broadcasting Ministry of Telecommunication & Postal Services South Sudan Urban Water Corporation Ministry of Electricity, Dams, Irrigation and Water Resources Electricity & Dams Irrigation and Water Resources Petroleum and Gas Commission Education Ministry of Education, Science & Technology General Education & Instruction Higher Education, Science & Technology Health Ministry of Health HIV/Aids Commission Drug and Food Control Authority Infrastructure Ministry of Lands, Housing & Physical Planning Ministry of Transport, Roads & Bridges Roads & Bridges Transport South Sudan Roads Authority Natural Resources & Rural Devt Ministry of Agriculture, Forestry, Tourism, Animal Resources Agriculture & Forestry Animal Resources & Fisheries Tourism Agricultural Bank Ministry of Environment and Sustainable Development South Sudan Land Commission Public Administration Office of the President Office of the President Ministry of Cabinet Affairs Cabinet Affairs Parliamentary Affairs Ministry of Labour, Public Service & Human Resource Develo Ministry of Foreign Affairs & International Cooperation South Sudan Civil Service Commission South Sudan Local Government Board South Sudan Employees Justice Chamber South Sudan Public Grievances Chamber National Elections Commission National Legislative Assembly Council of States National Constitution Review Commission Rule of Law Wildlife Conservation Judiciary of South Sudan Ministry of Justice South Sudan Law Review Commission Ministry of Interior Police Wages and Salaries Use of Goods and Services Capital Expenditure Transfers Other Expenditure Summary Tables 96,808, ,893,912 46,045,347 2,294, ,042,112 5,354,460 6,909,843 2,363, ,627,443 13,885,422 3,465,969 4,880, ,231,391 7,512,675 46,377,811 20,005, ,895,693 57,371,338 76,015,599 15,966, ,352,937 6,676, , ,328,580 50,695,058 75,363,299 15,966, ,024, ,813 1,107, ,783,719 1,386,424 1,190, , ,676,495 1,004, ,004,400 2,893,462 1,367, , ,370,588 6,724,569 2,459,587 2,621,000 2,294, ,099,446 62,902,792 91,338, ,976,975 24,543, ,761,690 8,126,695 21,068,741 4,591, ,786,800 3,204, , , ,380,338 4,921,957 20,608,741 3,875, ,406,462 12,997,044 25,852,661 2,060, ,910,351 10,999,797 12,703,921 9,950, ,653,718 7,551,192 22,324,976 21,509, ,385,808 9,866,917 2,381,437 4,889, ,137,378 10,361,147 6,006, ,976,301 24,543, ,887,635 2,509,488 1,776,307 96,045, ,330,804 7,851,659 4,230,590 13,931,292 24,543, ,556,831 3,000,000 1,000,000 1,000, ,000,000 99,663, ,434,111 40,745, ,098, ,941,644 99,663, ,434,111 40,745, ,098, ,941,644 18,029,821 76,911,109 33,466, ,098, ,505,919 81,633,474 67,523,002 7,279, ,435,725 45,868, ,234,245 51,201, ,203, , ,732,552 40,453, ,536,058 45,120, ,203, ,313,215 4,667,770 6,216, , ,000 11,419, ,380 7,481,620 5,771, ,000,000 24,677,402 17,521, ,107, ,306,827 6,458,509 2,692,919 2,385, ,537,249 18,218,893 12,336, ,221, ,777,095 5,120,263 3,997, ,815, ,932,529 13,098,630 8,339,320 47,406, ,844, ,492,483 2,500, ,992,483 31,624,654 27,381,146 61,280,528 43,021, ,307,578 26,353,394 22,625,966 6,809,849 43,021, ,810,459 17,280,144 13,762,608 4,795,692 36,310, ,149,194 4,957,284 6,639, ,135 6,710, ,107,463 4,115,966 2,223,814 1,214, ,553,802 1,517, ,729 53,225, ,204,770 3,015,099 3,284,545 1,245, ,545, ,120 1,007, ,747, ,807, ,055, ,195, ,128 9,000,000 1,016,638,749 14,191, ,979,852 7,090, ,000, ,219,215 14,191, ,979,852 7,090, ,000, ,219,215 38,994,124 37,835,669 3,008, ,837,793 36,693,524 36,816,305 2,149, ,659,382 2,300,600 1,019, , ,178,411 9,578,474 4,140,787 80, ,799,261 98,654,977 62,593,743 10,000, ,248,720 1,392,070 1,624, ,016,477 1,316,897 40,000 2, ,359,094 1,195, , , ,491, , ,283 30, ,359,440 17,047,513 15,437,555 15,118, ,603, ,399,724 54,303, ,580, ,283,144 12,820,561 14,996,424 3,560, ,377,105 4,400,362 2,873,642 1,725, ,000, ,134, ,445,404 69,337, ,028, ,273 1,437,367,145 28,096,262 9,395,000 3,776, ,037, ,304,462 60,606,760 6,216,717 2,400, ,273 69,444,750 32,428,899 9,838, ,266,919 1,494,544 2,281, , ,026,408 37,514,546 57,484,768 9,980, , ,180, ,961, ,113,927 49,500, ,572, ,147,712 Total 21