35 percent devaluation – an economic shock
Following the devaluation of the currency in Khartoum Sudan the day before yesterday, the Central Bank of South Sudan has equally dropped the value of the South Sudan pound by 35 percent, delivering a
Following the devaluation of the currency in Khartoum Sudan the day before yesterday, the Central Bank of South Sudan has equally dropped the value of the South Sudan pound by 35 percent, delivering an inflation boost and economic shock to the economy of this emerging nation. Like in the north where the devaluation was about 23 percent, in the south it also has immediately escalated further down the black market of the US dollar versus the pound, with a source in Juba quoting that the rate now stood at between 5 and 6 pounds to the greenback, due to stabilize after the initial volatility following the wearing off of the devaluation.
Several members of parliament were also quoted to have demanded that the Central Bank in Juba reverse this decision, as the cost of all imports will now correspondingly rise by 35 percent, which is likely to affect the trade with Uganda and Kenya in the short run considerably, as it will affect travel as ticket prices will also rise by more than a third, at least in local currency.
If there were any significant numbers of tourists coming to South Sudan, which there were not, they could in part at least benefit from the devaluation as they now get 4.5 South Sudan pounds for one of their collars as compared to 3.15 Sudanese pounds prior to the announcement.
The South Sudan has undergone an austerity period following the decision last year to stop exporting oil through the north Sudan controlled pipeline to Port Sudan, as allegations flew high and low over the unashamed wholesome theft of oil by the Khartoum regime and outrageous oil transit fees. When eventually oil production and the sale of crude resumed, the regime in the north threatened to halt all exports over their contention that the government in Juba was extending support to rebels in key border states like the Blue Nile and South Kordofan, to compel Juba into submission and to renounce any such support, something the government in the South continues to deny.
The devaluation is, therefore, just the latest blow to the struggling economy of the South Sudan and will lend critics of a fast-tracked ascension of the South Sudan to the East African Community more ammunition, as a free currency regime is a mandatory requirement of harmonization before any country can join the trade bloc made up of Uganda, Kenya, Tanzania, Rwanda, and Burundi.