JUBA, South Sudan — Hit by falling oil revenues, South Sudan's economy is also troubled by a violent conflict that looks set to continue.
It could get worse in this young country, with the U.N. warning that South Sudan's economy is now threatened by rampant inflation as the central bank is allegedly printing money to meet a budget shortfall.
Since December South Sudan's government has resorted to the "old trick" of printing money, said Toby Lanzer, the U.N.'s top humanitarian official in South Sudan, at a news conference on Tuesday.
"Printing money when there is nothing to back the value of that currency usually leads to hyperinflation," Lanzer said in the capital Juba.
South Sudan's economy has suffered since the outbreak in December 2013 of fighting between supporters of President Salva Kiir and renegade troops loyal to his former deputy. Several peace agreements have collapsed. Oil production facilities have been damaged in the fighting and some have fallen under rebel control.
Oil production has been cut by 60 percent, Finance Ministry Director General Philip Ajack Boldit told The Associated Press.
Boldit denied the government is printing money, saying doing so requires approval by parliament, but he acknowledged that inflation is underway and that the government does not have enough dollar reserves to bring it under control.
Already, the downturn has forced the government to delay salaries of civil servants.
President Salva Kiir last week acknowledged South Sudan's economic woes in a public rally in Juba.
"Even if we were to sign peace today, the economic conditions in our country would not improve automatically because it will take some time to reach the level of oil production before the war and the oil prices are likely to remain low for some time as the supply of oil in the world is high and demand is low," he said.