Bank of South Sudan increases CBR by 300 bps

The Bank of South Sudan recently held a press conference to address the growing concerns around rising inflation and the depreciation of the South Sudanese pound against the US dollar. The Central Bank unveiled a series of new measures aimed at stabilizing the economy and maintaining the value of the local currency. One of the key announcements made during the conference was the decision to increase the Central Bank Interest Rate (CBR) by 300 basis points, from 12% to 15%. This move is intended to address the surge in the US dollar to SSP exchange rate, which has led to a black market rate of 910 SSP to 1 USD. The Central Bank's decision to raise the CBR is part of a broader strategy to inject more US dollars into the market, support trade finance, and build trust with consumers and investors. By auctioning more dollars and offering cash injections, the Central Bank aims to ensure that the currency remains stable and prevent further depreciation of the South Sudanese pound. In addition to increasing the CBR, the Central Bank plans to provide more funds for traders to import essential commodities and incentivize local production to reduce reliance on imports. These initiatives are all geared towards stimulating economic activity and boosting lending within the market. The Bank of South Sudan recognizes that while the immediate measures are crucial for addressing the current currency challenges, a long-term sustainable approach is needed to shift economic behavior and reduce the demand for the US dollar. The focus on agriculture, local production, and investment in key industries such as refineries and factories are seen as critical steps towards achieving economic stability and prosperity. The GDP growth target of 3% is considered attainable, with room for further improvement if the right policies and investments are implemented. South Sudan, as a recovering and developing economy, has the potential to achieve higher growth rates by empowering the private sector, investing in strategic industries, and ensuring financial support for key sectors like agriculture, mining, and energy. By fostering a conducive environment for economic growth and innovation, South Sudan can pave the way for sustained development and prosperity in the years to come.