• South Sudan has asked CNPC and ONGC Videsh for $2.5 billion in new oil-backed loans despite already owing $2.2 billion.
• A London court ordered the country to pay Afreximbank $657 million after a default, while BB Energy and Vitol pursue claims for undelivered cargoes.
• The IMF and UN warn that rising oil-collateral debt threatens the sustainability of South Sudan’s $3.7 billion debt stock.

South Sudan has formally requested $2.5 billion in oil-backed loans from two foreign companies: $1 billion from India’s ONGC Videsh and $1.5 billion from China National Petroleum Corporation (CNPC).

The government proposes to secure the loans with future crude shipments and to repay them over 54 months after disbursement. The Oil Ministry says the funds will support official spending.

This new request adds to the more than $2.2 billion in oil-backed debt contracted since independence in 2011. The IMF and the United Nations warn that these loans undermine debt sustainability, with total public debt estimated at $3.7 billion at the end of 2023.

A London court ordered South Sudan to pay $657 million to Afreximbank after a default. Other creditors, including BB Energy and Vitol, have launched legal proceedings for nondelivery of crude.

The new borrowing request comes as external pressure intensifies and as creditors seek to enforce contractual obligations.

An October 2025 report from the Sudd Institute says the country’s reliance on oil-collateralised loans reflects the failure to implement the 2013 Petroleum Act. The law required the creation of a stabilisation account and a future-generations fund to absorb oil-market shocks.

The government never established these mechanisms. Their absence enabled a parallel system in which oil advances became a de facto budget instrument.

Economist Bec George Anyak says the deterioration stems not from external shocks but from “a collapse of governance.” Oil revenues account for more than 90% of public income, and debt-service obligations and off-budget spending absorb a growing share of these flows.

The United Nations adds that corruption in the management of oil revenues helped fuel political violence, including the 2013–2018 civil war that killed an estimated 400,000 people.

South Sudan produced only 72,000 barrels per day in 2024. The decline weakens its ability to meet debt commitments and finance public expenditure.

Analysts warn that, without deep reforms, Juba risks another severe financial crisis. The Sudd Institute recommends a moratorium on oil-backed loans, the creation of a public debt registry and full enforcement of the Petroleum Act.

By continuing to trade oil for credit, South Sudan endangers its budget stability. The crude that was meant to fund reconstruction now risks driving a new economic breakdown.

This article was initially published in French by Olivier de Souza

Adapted in English by Ange Jason Quenum