December 2, 2016 / 4:06 PM / a year ago

South Sudan budget has 40 percent funding gap, wants donor help

JUBA, Dec 2 (Reuters) - South Sudan’s parliament passed a 38-billion-pound budget on Friday but about 40 percent of that is unfunded and the government will ask foreign donors for the money, the finance minister said.

Three years of conflict and tumbling crude production and prices have hammered oil-producing South Sudan’s economy. Inflation has shot to 835 percent in the year to October, while the official value of the pound has plummeted to 70 to the dollar. Black market rates are even higher.

“We will be approaching our friends, partners and the donors to fill the gaps, this is what I am expecting because we are talking to the IMF,” Finance Minister Stephen Dhieu Dau told reporters after a parliamentary session in Juba.

The draft budget figures for 2016/17 had forecast spending of 29.6 billion pounds.

The budget approved by parliament saw that rise to 38 billion pounds, with nearly 220 million dollars unfunded.

Parliament directed the government to hike the wages of civil servants to keep pace with price increases.

But the warm relations South Sudan enjoyed with Western donors after it gained independence from Sudan in 2011 have cooled. The United States has led international condemnation of the government for failing to halt corruption and violence.

The world’s newest country has been ravaged by war since December 2013 when soldiers loyal to President Salva Kiir clashed in the capital Juba with troops loyal to his former deputy Riek Machar.

A shaky peace deal was agreed a year ago, but it is frequently violated and on Thursday the U.N. said ethnic cleansing in the conflict could lead to genocide.

Washington has pushed for U.N. sanctions and an arms embargo, but has not secured enough votes at the U.N. Security Council.

Previously, the aid-reliant nation has turned to Chinese companies to help fund budget shortfalls, offering to pay for them with future oil proceeds.

In August, the government announced it was seeking a $1.9 billion loan from China but there was no public response. (Writing by Edmund Blair and Katharine Houreld; Editing by Janet Lawrence)

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