South Sudan's English Daily Newspaper
"We Dare where others fear"
By Denis Ejulu
The South Sudan pound (SSP) on Tuesday gained strength against the U.S. dollar trading at 1700 from the previous 2500 SSP last week.
The development comes in the aftermath of the Bank of South Sudan ordering security agencies to crackdown on illicit currency traders, whom it ordered at the beginning of January to register and formalize their business.
“We have said last time that by April 1, we are going to ask anybody in the country that has ability to sell and buy (dollars) to do so within the confines of our laws, that means anybody selling dollars in the streets, houses or shops or any corner anywhere will be asked by law enforcement to show their license,” James Alic Garang, the governor of the central bank told The Dawn in an interview in Juba on Saturday.
He said that the government is making life easier for currency traders because when they have the license they can operate officially with limited risks.
Law enforcement agencies have since last week been clamping down on unregistered currency traders.
Alic said that the government has managed to secure some loan following the recent visit by a high-level delegation that included the central bank governor and the minister of finance and planning Awow Daniel Chuang outside the country.
“The central bank has taken initiative to intervene in the market, part of it has to do with our visit outside and also the government has made some efforts in the last few weeks, to mobilize some resources and that’s why the government is able to pay some salaries. Some of these resources will be used to intervene in the market, so we hope in the next few weeks that all these two actions the one on increasing money supply and the one of sterilizing or converting from the side of the bank will maintain the rate relatively stable,” Alic said.
Sterilization is a form of monetary action in which a central bank seeks to limit the effect of inflows and outflows of capital on the money supply. Sterilization most frequently involves the purchase or sale of financial assets by a central bank and is designed to offset the effect of foreign exchange intervention.
The dollar is currently exchanging with the South Sudan pound at 1600 SSP at the central bank.
Alic also noted that the oil shutdown caused by the destruction of part of the pipeline transporting crude to Port Sudan amid conflict in neighboring Sudan, is putting pressure on the already dire economic situation.
“We cannot promise roses or heaven on earth, there are challenges that are even beyond South Sudan, because of that our people also must be mindful that things are tough externally beyond the borders of South Sudan but ours are a bit tough because of the oil that has been shut down,” he disclosed.
Alic said that there is need to wean off dependence on oil which finances 95 percent of the fiscal budget, adding that diversification of the economy by investing in agriculture, Gum Arabic and other productive sectors such as fruits and vegetables and livestock will help fetch hard currency.
“This is not a task that the government can do alone, local production whether in Bor, Aweil it is something that can be done by everyone, now that the farming season is approaching let us go and produce because that is when we can bring stability to our economy,” he said.
“When people produce more, there are two options they can consume more and sell more abroad to bring in more hard currency which is needed for them to go and bring in goods that are needed in other parts of the country,” Alic disclosed.
He also noted that the economy will bounce back when the upcoming elections scheduled for December 2024 conclude.
“As the country is gearing up for elections, this is a good message that we are seeing from our people they are preparing and are very happy and we encourage them to do it peacefully because having political stability is something that augurs well for economic stability,” Alic said.
Awow Daniel Chuang, minister of finance and planning, during a press conference in Juba, last week said they are working to diversify the economy following the oil blockade on the Red Sea, which has cut off oil revenue flows.
“The most important thing is that we are taking action toward trying to diversify our economy through other activities like agriculture, livestock, fisheries and the rest. We are also trying to open up some corridors that will help us encourage our people to work because through production we can sustain our economy,” Chuang said.
From November 2023 to January 2024, South Sudan exported about 150,000 barrels per day of crude oil to international markets. Its oil exports, however, have been disrupted due to a blockade imposed on the Red Sea by Houthi militants, who have been attacking cargo ships since January.
“The pound is losing value. We know South Sudan’s economy depends on oil, and for us to depend on oil for a long time will not help us,” Chuang said.
Chuang said they have secured some funds to help pay the salaries of civil servants who have gone for over six months without pay amid the prevailing economic hardship.
“People have not been receiving salaries for six months now, and the market has gone very high, so it is very difficult for us,” he said.
The situation has forced traders to hike prices of essential commodities such as food and other basic needs, leaving the majority of the population angered.
Chuang said his ministry is working collectively with the central bank to reverse the situation before it worsens.