South Sudan needs a lasting peace with Sudan and to meet major challenges such as weak state institutions and a lack of infrastructure to unlock its economic potential, the International Monetary Fund (IMF) said on Friday.Last month, South Sudan signed several agreements with Sudan to end hostilities and resume oil exports through the north after the African neighbours came close to war in April.But both nations still need to end other conflicts left over from South Sudan’s secession in July 2011 such as finding a solution for Abyei and other disputed border areas.In its latest outlook, the IMF said South Sudan had sizeable economic potential due to oil, livestock, fishery, agricultural and forestry reserves."Major challenges will need to be overcome if this potential is to be realised. These challenge include institutional weaknesses, limited physical infrastructure and a weak human capital base,” the IMF said in its report.It urged the government in Juba to invest oil revenues into infrastructure and development in a country with only 300 kilometers of paved roads and few schools.South Sudan split away from Sudan in July last year, taking with it three-quarters of 500,000 barrel per day oil production. Oil exports, accounting for 98 percent of state revenues, were shut down when tensions with Sudan escalated in January.Despite receiving billions of dollars since a 2005 peace agreement with Sudan, the government has achieved little to kickstart development, build up efficient state institutions and end tribal and rebel violence.