Real GDP is projected to furthercontract by 3.5 percent in FY2018, following the contractionof about 6.9 percent in FY 2017. Monetization of the fiscaldeficit led to strong money growth and high inflation,although there are indications that borrowing from the Bankof South Sudan had been limited in the second half of 2017.The spread between the official and the parallel marketexchange rates remains wide, despite the recent exchangerate appreciation. 82 percent of South Sudanese were livingunder the international poverty line in 2016. Highinflation, disrupted trade flows, and conflict continue toexpose many households to food insecurity and displacement.South Sudan's cabinet approved the general budget forfiscal year 2018/19, which increased by about 60 percent toreach 584 million USD up from 366 million USD in FY17/18. Itremains unclear how South Sudan will finance the budget,given its struggling economy amidst the ever-risinginflation and conflict. Spending continues to be skewedtoward defense at the expense of poverty reduction.
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