Discussant: Fiscal side of exchange rate reform – Peter Biar Ajak

Approximately 600 million SSP is injected into the market every month. Most of the resources are going into the security sector. Even before the crisis, the majority of the budget was being funnelled towards the security sector. Expenditures are not driven by the budget but by revenues. South Sudan has become accustomed to supplementary budgets. Most of the current resources are going to paying salaries. However, quite a substantial portion of those people receiving salaries do not exist. For any exchange rate change, the fiscal situation needs to be reformed to institute discipline on the budget in particular.  Currently, even when revenue collection is low, the government is still spending highly. Therefore, the government has to adjust to the revenue situation. Spending is set to increase due to the creation of the 28 states and this will lead to increase in staffing. Political will is needed to keep the budget in line. The end of the war should be the time to discuss what level of expenditures is sustainable.