South Sudan's main opposition leader called for the dominant ruling party to pare down the country's huge government and said it had not done enough to plan for a rapid decline of oil revenues in coming years.

South Sudan seceded from Sudan in July under a 2005 peace deal that ended decades of civil war with the north, and the new nation now faces a raft of challenges including multiple armed insurgencies and an economy battered by conflict.

The ruling Sudan People's Liberation Movement (SPLM) dominates government, and analysts say power is overwhelmingly concentrated in the executive branch . Some are concerned South Sudan will follow regional examples of one-party rule.

Lam Akol, head of the main opposition party Sudan People's Liberation Movement for Democratic Change (SPLM-DC), said the SPLM should allow a national dialogue that gives church leaders, civil society groups and others more say in governance.

There are a lot of challenges that need a collective approach by all. One party will not do it, or a number of few parties cannot do it. These are national issues that concern all, must be taken by all, he told Reuters in an interview.

The SPLM thinks that they can do things alone. Two minds are better than one, and when it comes to the nation, we need all.

He said the ruling party had bloated the government to an unnecessary size to accommodate its cadres, adding far more ministers, members of parliament and other officials than the country's population of 8 million justified.

At independence, the government added 96 seats to parliament to absorb politicians returning from the north, 66 seats for other political parties and 50 more for the council of states, bring the total to around 382 seats.

With the meagre resources that we have now, we have a very huge government, Akol said. The axe must fall on this huge government. We don't need it.

South Sudan officials often dismiss concerns that the country's interim constitution and power structure are not democratic, saying the nation is in a transitional process.

President Salva Kiir in his independence day speech said a democratic, inclusive and accountable government was critical to the future of our people.

THE ECONOMY IS STAGNANT

Sudan's decades-long civil conflict devastated the south's economy and infrastructure, apart from oil. South Sudan, which is nearly as big as France, has only about 100 km (60 miles) of paved roads.

The International Monetary Fund said last month South Sudan's oil output, which accounts for about 98 percent of government revenues, will halve by 2020 without new finds.

Akol said not enough had been done to plan for that. They are not even thinking about what happens when the oil runs out.

We must set in place fiscal and monetary policies that will ensure that the economy expands. The economy is stagnant now. We don't have any growth at all because there is no production, we are only consuming, Akol said.

Akol said Western powers the country depends on for aid money had not put enough pressure on the SPLM to govern inclusively. On the contrary, they just turn the other way.

Journalists have also raised worries about freedom of speech. Two weeks ago, online newspaper Sudan Tribune said one of its journalists had been arrested over an article in a Juba-based newspaper that criticised Kiir.

I, as a leader, may be given the opportunity to talk and say something, but if this is not inclusive of everybody then it is a favour. It doesn't look like a right, Akol said.

He said the interim constitution, which will last for about five years, gives too much power to Kiir and not enough to the country's 10 states.

The president has a lot of executive powers. He can dissolve an elected government or dismiss an elected governor.

(Editing by Jon Hemming)