Country Risk Rating

The highest-risk political and economic situation and the most difficult business environment. Corporate default is likely. - Source: Coface

Business Climate Rating

The highest possible risk in terms of business climate. Due to a lack of available financial information and an unpredictable legal system, doing business in this country is extremely difficult.


  • Untapped agricultural (extensive arable land) and mineral (gold and oil) resources
  • Strategic position between the Middle East and West Africa
  • Gradual easing since 2017 of sanctions imposed by the U.S. in 1997 completed with removal from the U.S. list of state sponsors of terrorism (December 2020), making access to multilateral funding possible again
  • International financial support
  • Successful implementation of an economic reform program in partnership with the IMF between June 2020 and September 2021
  • Accepted into the IMF's Heavily Indebted Poor Countries (HIPC) Initiative in June 2021
  • Improved diplomatic relations with South Sudan (ceasefire signed in 2018); relations resumed with Israel


  • Democratic transition process and economic stabilization severely weakened by the October 2021 coup
  • Dependence on agriculture (peanuts, sesame, cattle, cotton), oil, gold and international aid
  • Persistent human and food insecurity
  • High levels of unemployment (especially among young people) and poverty
  • Numerous rebel groups in several provinces, persistent inter-community conflicts in Darfur
  • Significant deficiencies in business environment and governance; endemic corruption (174th out of 198 in Transparency International's Corruption Perceptions Index 2020)
  • Lack of investment in infrastructure
  • External debt, much of which in arrears, is unsustainable, despite being halved from USD 60 billion to USD 28 billion under the HIPC Initiative
  • Extremely low foreign exchange reserves
  • Sickly banking system and weak central bank independence

Current Trends

A weakened democratic transition

On October 25, 2021, the head of the army, General Abdel Fattah al-Burhan, dissolved the interim government and the transitional Sovereign Council, placed Prime Minister Abdallah Hamdok under house arrest, and declared a state of emergency. He also suspended the constitutional charter organizing civilian-military power-sharing arrangements, put in place following the ouster of dictator Omar al-Bashir in April 2019, until elections scheduled for early 2024. Following nearly a month of street protests, on November 21, General al-Burhan reinstated Prime Minister Hamdok after a new transition agreement was reached, tasking him with forming a technocratic government ahead of elections in July 2023. Despite the prime minister’s return, people continued to protest, criticizing Hamdok for making a deal with the army, seeing his return and a future civilian government as window dressing to satisfy the international community while maintaining control. The international community, led by the United States and multilateral organizations, expressed approval, but made the resumption of its essential financial aid conditional on the formation of a civilian government, the release of people detained since October 25, the lifting of the state of emergency, and an end to violence against peaceful demonstrators. The transition’s sustainability is questionable, especially since, in the face of widespread opposition, in a complex economic environment, and with civilian forces divided, the prime minister resigned on January 2, 2022. Forming a government acceptable to all parties will be challenging, as the Forces for Freedom and Change (FFC) coalition and local Resistance Committees, which spearheaded the 2019 revolution, are demanding the removal of the military from politics. However, military leaders may fear losing their economic interests and being prosecuted for their actions against civilians. 


Economic stabilization subject to conditions

Economic stabilization is closely linked to the financial assistance provided by foreign partners, including the United States, IMF, World Bank, France, Saudi Arabia, United Arab Emirates, and Egypt. This turn aid depends on the partners’ acceptance of the new institutional arrangements. Even if these conditions are met, household consumption (70% of GDP) will remain constrained by sky-high unemployment, violence, and insecurity. Households will continue to face hyperinflation, fuelled by monetization of the deficit, but above all, disruptions in food and fuel supplies due to the protests, which have also affected Red Sea port cities and low agricultural productivity. Private investment will remain limited in the cities. However, foreign investors are expected to continue to back oil field development. In contrast, a fund financed by Saudi Arabia and the United Arab Emirates will continue efforts to develop transport and agriculture, compensating for the failing state. Exports of oil, gold, and agricultural products (80% of the total) will benefit from brisk demand and high prices, despite being slowed by violence in the Red Sea province and hindered by smuggling and poor productivity in the gold sector. Despite increased imports linked to more robust domestic demand, the contribution of net exports to growth is expected to be positive. Furthermore, the future development of the health crisis in a country with low vaccination levels and climatic conditions, which have a critical bearing on a population dependent on agriculture (80% of employment and 30% of GDP), will continue to be significant factors.


Foreign aid is essential to balance the books

Budgetary revenue is expected to increase but will represent only 9% of GDP in 2022. Revenue will benefit from the strong performance in transit fees charged on South Sudan’s oil, as well as from sales of mining licenses. External budgetary aid (notably American, French, British, and multilateral), which was suspended following the coup, could resume in early 2022. Already earmarked for the health sector and the payment of targeted allowances to households to compensate for the phase-out of fuel subsidies, this aid will be especially vital in the lead-up to elections in 2023. The World Bank plans to allocate USD 2 billion to family allowances under the Thamarat program. The deficit may be financed less by money issuance by the central bank and more by aid. Following the country’s acceptance into the IMF’s HIPC Initiative, external debt (80% of total debt), mainly with bilateral and multilateral creditors, 90% of which is in arrears, is expected to be halved, with the remainder gradually canceled by 2024. The signing of an Extended Credit Facility with the IMF should be accompanied by additional foreign financing. All of this is subject to the re-engagement of partners.


The current account deficit should continue to narrow. The trade deficit, which is massive due to imports of consumer goods, will decrease as exports increase. Transit fees paid by South Sudan will go up, as will expatriate remittances, supported by the small gap between the official and parallel exchange rates following the controlled float of the pound since February 2021. Conversely, profit repatriation by foreign oil and gold operators is set to increase. Uncertainty surrounds the resumption of much-needed international aid, as FDI must still be made available to finance the deficit.


Coface (02/2022)