JUBA, July 6: South Sudan's decision to halt oil production in a bitter row with old enemies Khartoum has left the fledgling nation's economy at risk of collapse, as it prepares to mark its first year of independence.

Landlocked South Sudan, which relies on the infrastructure of the North to export its oil, decided to stop pumping crude barely six months after becoming a state despite it almost being its only source of revenue.

Juba, still reeling from over half a century of civil war, was angered to see Khartoum siphoning off its crude after a row over pipeline fees.

Yet as early as March, confidential World Bank memos were painting a bleak picture of the future of South Sudan's economy, predicting it would collapse in the short- or medium-term unless oil production resumes.

However, the ex-rebel army commanders-turned-government remains defiant.

“We're not going to collapse, we're going to survive until the problem of oil is resolved,” said Atem Yaak Atem, a government spokesman, claiming that money is still coming in, but without saying where from. However, talks with the rump state of Sudan over oil pipeline export fees — that would allow production to resume — have made little progress since the rivals fought bitter border battles in March and April. Donors estimate inflation to be 80per cent year-on-year in May, but in the absence of reliable and public statistics, it is difficult to get an accurate idea of the state of the economy, said Samson Wassara, Dean of Social and Economic Sciences at the University of Juba. Go to a market in the capital however and the problems are clear.

“Since January things have slowed down ... there is no more money coming in,”said Manot Gop, a businessman with a general store in Juba.—AFP