South Sudan is currently facing a serious economic crisis occasioned by: i. the oil shutdown which began at the beginning of 2012; ii. the civil conflict which erupted in December 2013; iii. declining international crude oil prices which went down by almost 62% (from USD 104 per barrel in 2013 to USD 40 in 2016); iv. drastic decline in the daily oil production as a result of partial closure of Upper Nile oil fields and; v. total shutdown of Unity State oil fields as a result of the war. All these factors have a significant negative impact on the South Sudan's economy. On the other hand, South Sudan has abundant and mostly untapped natural resources. It has great agricultural potential given that the country is very fertile and blessed with land, water and mineral resource which are substantial in relation to the relatively small population of 10 million plus. Effective management and development of these resources will therefore offer the prospect of sustained strong economic growth. Hence, the key research questions for this study are: Why some countries experience sustained levels of steady economic growth much faster while others stagnate? What can to improve the role of economic and political institutions in economic performance? There is extensive evidence that institutions matter a great deal in determining the level of economic development of a country. They strongly affect the economic performance of countries and act in society at all levels by determining the frameworks in which economic exchange occurs. Many Economists have shown that differences in institutions, as deep determinants of economic growth, account for much of the differences in income and productivity per head observed between countries (Acemoglu et al., 2005 ). Institutions shape the policy and governance setting in a given country, which in turn characterize the rule of law, risk of expropriation, political stability and ease of doing business. This study ends by suggesting the most importing mechanisms to strengthen the political and economic institutions that will create public trust in the government and its institutions and lead to sustainable development and prosperity. With that in mind, the institutions should support the public and private sector, capability, social infrastructure, good governance, rules of laws in order to achieve sustainable economic growth and financial stability. In this context, the main objectives of this study is to analyze the economic and political structure in South Sudan to ensure its role in achieving sustainable Economic Development and to analyze the effectiveness of macroeconomic policies in responding to economic shocks. It is also opted to examine the structural soundness of the South Sudan economy and the efficiency of its key institutions in addressing the challenges. In particular, the role of a strong and healthy financial sector in weathering shocks and sustaining growth. In light of the above, this study focuses on the greater role institutions have played in the economic development of several East Asian countries as well as Africa. Though, it is argued that the institutions can be weaker and ineffective simply because of administrative, institutional, ethnic, social and political challenges including poor enforcement of the rule of law, corruption, mismanagement, lack of strong civil society and political interference. However, the strength of an institution determines whether a country will be poor or wealthy, whether or not its people are free or oppressed and if its people will suffer from poverty or benefit from prosperity. Therefore, the main recommendations of this study can be summarized as follows: - developing effective, accountable and transparent institutions at all levels; - building a variety of healthy institutions that can accelerate and spearhead growth; - building strong political and governmental institutions that enhance the governance - reforming the institutions with an aim to move from situations of stagnation to rapid growth or a better development paths; The study embraces a multi-pronged methodology, pursuing a combination of relevant methods and approaches of data collection, including both primary and secondary information sources. This study is organized as follows: Chapter 1 discusses the institutions, financial stability and sustainable Economic Development, theoretical framework in which we explore in the empirical analysis. Chapter 2 presents the historical background of institutions in South Sudan Chapter 3 focuses on institutions and financial stability where we discuss the institutional policies and approach for financial stability as well as issues of globalization, transparency, accountability and its impact on financial stability. In chapter 4, I discuss institutions and sustainable economic growth. It focuses on fundamentals and strategies of sustainable economic development and the role of good governance and institutions in long-term economic growth. In chapter 5, we discuss the prospects of strong institutions, financial stability and sustainable Economic Development in South Sudan. It discusses how efficiency and soundness of South Sudan's key institutions can be extremely valuable in process of building a sustainable economic growth and what can South Sudan learn from others countries. The last chapter is the conclusions and recommendations of research. The major findings of this study are as follows: - Conflicts affect economic outcomes mainly through the destruction of human and physical capital, shifts in public spending and private investment, as well as the disruption of economic activities and social life. - Building effective, efficient and accountable institutions in fragile state like South Sudan can be problematic and challenging. Most importantly, good political and economic governance, based on transparency and accountability, should be the key for building a politically and economically viable state capable of articulating a common vision for national unity, and providing stability and dividends of peace to its aspiring citizens. - Strictly, from economic point of view, a political resolution of the current crisis is urgently needed in order for South Sudan to restore the confident of investors, put socio-economic development as one of its priorities and regain its place as the world's newest investment destination. - Social, political and economic stability in South Sudan will depend on core institutions performing their functions sufficiently well to manage public resources effectively and distribute them equitably