South Sudan asks donors to pay for a third of national budget

JUBA, July 7 (Reuters) - War-ravaged South Sudan needs donors to fund more than a third of its next budget, the finance minister said, but countries are reluctant due to corruption and conflict.

Finance Minister Stephen Dhieu Dau presented a 46.5 billion South Sudan Pound (SSP) ($300 million) budget for 2017-2018 to ambassadors on Thursday, ahead of a presentation to parliament this month.

“The budget is expected to exceed available resources by SSP 16.8 billion ... to be provided by donor countries,” Dhieu said. The financial year ends on July 31.

South Sudan is riven by civil war and ore than a quarter of its 12 million population have fled their homes. Civil servants and soldiers go unpaid for months and hyperinflation renders the money almost worthless.

South Sudan’s leaders and their families have amassed great wealth during the conflict, according to a report by U.S. advocacy group The Sentry, which was co-founded by actor George Clooney. The government denied the findings.

The United Nations has said ethnic cleansing in the conflict could lead to genocide, and international rights groups have documented the torture, rape and murder of civilians by soldiers or government-allied forces. The rebels have also been accused of severe rights violations.

Those concerns mean Western donors are unlikely to step forward.

“We will do our best to support you, but as I said, we are constrained by the ongoing conflict,” said U.S. Ambassador Mary Catherine Phee, according to audio of the presentation.

Dau said the government wanted to avoid borrowing from the Central Bank to halt the plunge of the pound, which has declined in value to around 155 to the dollar. In 2011, when South Sudan became independent from Sudan, the exchange rate was just below 3 SSP to the dollar.

South Sudan’s oil production has been crippled and the young country must pay hefty fees to Sudan to use its infrastructure for export.

Production will fall to around 110,000 barrels per day this year, Dau said, down from 130,000. But the price is predicted to be around $45 per barrel, up from $30.

Dau said oil revenues are projected to increase to SSP 127.2 billion in 2017-2018. But only SSP 25.5 billion will remain after South Sudan pays Sudan and disburses subsidies to the national oil company, Nilepet.

Non-oil revenue has increased, but the fall of the pound has devalued it in dollar terms, Dau said.

Donors already pay for almost all health and education expenditure in South Sudan. Japanese Ambassador Kiya Masahiko said they wanted to see more accountability and good financial management.

“Public finance management: if you do it, we can support you. If you don’t do it, no one can support you,” Masahiko said. (Editing by Robin Pomeroy)