South Sudan’s cabinet on Friday suggested changing the country’s currency to better the economy. The country’s economy worsens each day, and their pound continues to depreciate against the U.S dollar. Information and Broadcasting Minister Michael Makuei Lueth spoke to a news conference in the capital Juba. His report concerned the cabinet’s decision to change the currency. The minister said the decision was because they realized that majority of the population were holding onto the South Sudanese Pound (SSP) in their homes instead of the bank.
Reason for South Sudan’s Cash Shortage
South Sudan’s currency is the Sudanese pound adopted in 2011 when the country gained independence from Sudan after a long civil war. Since independence, most Sudanese citizens have been keeping their money in their homes because they fear that it will be confiscated if they take their money to the banks.
A report prepared by the Central Bank revealed that banks’ cash shortage was because of some corrupt politicians and military generals. These said corrupt politicians and generals, the report claimed, bury money in their compounds, making it impossible to pay servants on time.
Due to this, South Sudan has run out of foreign exchange reserves and cannot stop the pound’s depreciation. Additionally, the nation’s economy remains weak due to a shortage of hard currency circulating in the market amid skyrocketing commodities prices. This year, $100 has been selling at between 70,000 to 73,000 South Sudanese pounds (SSP).
Cabinet Decision to Change Currency
So during a weekly meeting, South Sudan’s cabinet decided the currency should be changed. Anybody who did not take money to the bank would be left out and will lose it. When the current currency would be changed, and the process ends, any money left in the house would become just mere paper. The cabinet saw this action as a means to make those holding local currency in their homes to hurry it to the banks to avoid losing it when the process ended.
South Sudan’s Minister of Information disclosed that currency change was aimed at reviving the country’s economy. Oil-dependent South Sudan’s economy has deteriorated because of more than seven years of conflict, which affected oil production. Disruptions caused by the COVID-19 pandemic caused a drop in oil prices; hence the country’s revenues dropped. Oil production is the major source of hard currency in South Sudan.
Mr. Lueth also revealed that a select committee was formed. It was tasked with delivering recommendations to the cabinet concerning ways to revive the failing economy. The select committee consisted of the minister of cabinet affairs, Governor of Central Bank, minister of finance, and commercial bank representatives. However, the minister of Information and Broadcasting did not give a date on when the new currency will be introduced.
No Change of Currency
Dissimilar to the information announced by the minister of information last week. South Sudan’s President Salva Kiir said his government has no plans to change the country’s currency. The head of state said the change of currency was only a suggestion meant to be studied by economists. Additionally, the move at the time was suggested as a measure to force hoarders to release cash. South Sudan’s government mentioned that the change was brought up as one of the long-term economic measures. The government however stated the change was not agreed on.