South Sudan finance ministry assures stability of local currency
October 2, 2010 (JUBA) — The ministry of finance and economic planning in the government of southern Sudan on Saturday assured stability of the local currency.
Salvatore Garang Mabiordit, undersecretary in the ministry of finance told Sudan Tribune that private financial institutions in collaboration with government institutions are working closely to maintain stability of the Sudanese Pound from falling.
“Financial institutions and establishments are adequately prepared to avert the depreciation of the local currency against the US Dollar. Restrict regulations and circulations have been adopted to avert the situation from getting out of control, said Mabiordit.
“Rigorous steps are being undertaken. Restrict procedures will have to be followed while involving in financial transaction as part of implementation of what he termed as single spine salary structure,” he added
Asked what he meant by single spine salary structure, the official explained that single spine salary structure is the economic term used in the strict financial transaction to regulate expenditures of both the government and private institutions.
The senior financial official said his government intends to design proper system to generate more none oil revenues to ward off depreciation in local currency.
Revealing plans and proposal of the regional government to also use sale of crude from the country’s oil fields to revamp status of the Sudanese pound, the official explained that bank of south Sudan has budgeted adequate resources to mop up the excess liquidity in the economy which might come about as a result of the Single Spine Salary Structure, oil and local revenues.
He further reiterated that south Sudan Bank in collaboration with ministry of finance and other financial establishments in the region will continue to employ certain fiscal tools such as the open market operations, the issuance, buying and selling of bonds and bills to avoid the free fall of the local currency and the runaway inflation resulting from the upsurge in money supply in the economy.
He explained that since developments on the markets are a reflection of the economic conditions in the country, the increase in money supply which does not match the corresponding appreciation in the supply of goods and services will have a concomitant and devastating effect on the stability of the pounds and the rate of inflation.
Asked to comment on what necessitated the continuous decline in the Base Rate of local currency over a period of time, Mabiordit said the situation had resulted from a number of factors, including controlling fiscal deficits, less borrowing by the government and the decline into the rate of inflation.
He said over the period, the finance ministry in close collaboration with other finance establishments under bank of South Sudan has worked hard to ensure that the payment of salaries of workers which kept increasing with the passage of time, the payments to contractors and the high demand for goods and services do not get more money into circulation to result in an increase in the rate of inflation.
He, however, said the recent increase in the base rate has led to a positive response by Commercial Banks in the whole region to reduce lending rates to ensure that the new manufacturing, industrial and commercial sectors contracted loans at favorable rates to expand their operations.
Commenting on the inability of the Commercial Banks to immediately adjust their lending rates whenever central bank of Sudan announces changes in the base rate, he explained that interest rates of Commercial Banks are fixed over a period of time, which must elapse before they are reviewed.
He gave the assurance that the bank of south Sudan in collaboration with central bank of Sudan will continue to exercise their functions to promote growth of the economy to attract the needed investment for the material and social development of the country
(ST)