South Sudan’s Central Bank introduces monetary changes to revive growth

In South Sudan, the Central Bank has announced plans to implement new monetary policies to address the rapid depreciation of the South Sudanese pound against the US dollar. The Director of Economic Development and Regional Integration at the International Conference on the Great Lakes Region, Parek Maduot, discussed the current economic situation in the country in a recent interview with CNBC Africa. Maduot highlighted that the South Sudanese pound experienced a significant decline in value due to misinformation regarding a potential currency change towards the end of October. However, the government clarified that there were no plans to introduce a new currency, which helped stabilize the market to some extent. While the South Sudanese pound is still weaker than it was a few months ago, the situation has improved compared to October's instability. The Central Bank aims to address the currency depreciation through tightening the money supply, increasing interest rates to 15%, and raising reserve requirements for commercial banks. Additionally, new central bank bills will be issued to absorb excess liquidity in the market. These measures are expected to bring stability and improve economic conditions in the country. Despite concerns about the lack of consistency in leadership at the Central Bank, with four changes in governors over the past three years, Maduot emphasized the importance of long-term solutions and policy continuity to address South Sudan's economic challenges effectively. He noted that the country's heavy reliance on oil revenue and lack of economic diversification are key structural issues that need to be addressed. Furthermore, given the impact of the COVID-19 pandemic and ongoing political uncertainties, a comprehensive approach involving both fiscal and monetary policies is needed to stabilize the economy. While there were discussions about changing the currency to strengthen the local currency, the Cabinet clarified that there was no decision to proceed with this plan. Instead, the focus will be on stabilizing the economy through traditional monetary tools and promoting banking sector participation. Maduot emphasized the importance of sustained commitment from the leadership to implement and uphold these new policies for long-term economic growth. By maintaining stability in key government positions and adhering to consistent economic strategies, South Sudan can potentially experience positive economic transformations in the years to come.