On March 7th a second reading of the Southern Sudan budget for 2011 began in the Southern Sudan Legislative Assembly (SSLA). The budget is reported to total SP5.7bn (US$2bn) compared with a total of SP5.6bn in 2010 (including the supplementary budget passed mid-year), but has not yet been passed by the parliament. In reviewing the draft budget, the parliamentary Committee of Development, Economy and Finance made a number of recommendations and requests, including:

• for all spending agencies, including the Ministry of Finance and Economic Planning, to submit quarterly reports to the SSLA;
• immediate development of hydroelectric power; and
• revival of a number of agricultural and industrial schemes, including agricultural projects in Mongala and Nzara, cement factories in Kapoeta and Managayat, a sugar factory in Melut, a tannery in Malakal, a rice scheme in Aweil, and a fruit plant, a brewery and an iron factory in Wau.

In the longer term, the development of hydroelectric power and agricultural and industrial schemes is vital for Southern Sudan if its economy is to diversify and become less dependent on oil revenue. In late February GOSS and the World Bank Group launched a private-sector development programme in Southern Sudan. However, speaking at the launch, the vice president of Southern Sudan, Riek Machar, acknowledged that there were many obstacles to private-sector growth, including arbitrary taxation, insecurity, lack of legislation, and severe corruption and dishonesty, which he said deterred foreign investment. Mr Machar reminded the audience about the 2008 grain corruption scandal, which he said had embarrassed GOSS.

Meanwhile the revenue outlook for Southern Sudan this year is positive so far, but not good enough to rule out fiscal difficulties. Sudan's net oil revenue in January were US$461.4m, of which Southern Sudan's share was US$192.8m, including US$47.1m revenue from oil sold on the domestic market. With average oil prices this year set to remain well above the US$50-60/barrel range on which GOSS budgets are usually based, GOSS's total oil revenue is likely to be in the range of US$2.2bn-2.7bn (equivalent to at least SP6bn-7.3bn at the official exchange rate).