Better controls needed for South Sudan cash – minister

January 3, 2008 (JUBA, Sudan) — Better financial systems are needed to manage south Sudan’s rising oil revenues and to stop massive over and under-spending by government institutions, south Sudan’s finance minister said in an interview.

Oil-rich south Sudan gained semi-autonomous status from Khartoum under a 2005 peace deal that ended Africa’s longest-running civil war and gave the south the right to choose whether or not to formally secede in a referendum due by 2011.

Before passing the south’s 2008 budget — planned on predicted oil revenues of $1.7 billion — parliament said cash had flowed out of budget lines, had not been released on time and that spending had not been reported properly.

The Presidential Affairs Ministry overspent its budget by five times, while the Telecommunications ministry spent only 7 percent of its allotted funds and the Ministry of Health around 30 percent.

“The problem is that budget was not well managed,” Finance Minister Kuol Athian said. “We need systems in such a way that we can control the proper management of budget lines.”

He added that his predecessor had not adequately checked spending: “He was just paying and paying.”

Athian said the southern government was still facing a lack of accounting systems and know-how, but that systems for ministries to report monthly on spending and to check that cash requests followed budget lines were being developed. New accounting software will also be introduced to all ministries.

South Sudan had monthly revenues of $172.4 million in October, a year high, and even higher revenues were expected for November and December due to increased production and higher international oil prices, he said.

Half of all revenues from southern oil wells — south of an uncertain north-south border — were promised to the south after the 2005 peace deal.

Two million people were killed in the north-south war, separate from continuing violence in the Darfur region.

CASH MANAGEMENT

Athian took the job in August after his predecessor came under investigation in an appropriations case in which cars were bought for the government at twice the market cost, investigators say.

International flights, health care and expensive hotel accommodation ran up other ministry budgets, parliament member Peter Bendi said. Underspending was often because officials did not get large projects on line, an international donor said.

“There was no system for recording what payments had been made,” the donor said, speaking on condition of anonymity. He said that became especially clear after low oil revenues led to a cash crisis earlier in the year.

“They then really realised how bad the cash management was and how many contracts they didn’t know about,” he added, saying that some ministries had been forced to take in more demobilised ex-rebels as police or wildlife rangers than budgeted for.

Athian said fluctuating oil revenues and delays threw the already weak accounting system further out of place. “We gave priority according to what was available,” Athian said. Ministers who lobbied hardest got cash, while others made do.

Southerners are still lobbying for increased transparency for Sudan’s oil revenues, controlled by their former foes in Khartoum, and complain they have not received $1 billion from one contested oil area alone.

“(Projected southern oil revenues) are highly disputed by southern Sudan because some of the wells are still considered to be part of the north,” said the parliament’s finance committee head Barri Wanji.

Meanwhile, the south is still trying for a multi-billion dollar loan from the African Development Bank, and smaller ones from private banks to boost development projects, Athian said.

(Reuters)