Sudan central bank ceases control over the South’s financial system

July 10, 2011 (KHARTOUM) – The Central Bank of Sudan (CBoS) on Sunday announced a set of measures aimed at breaking off its control over the financial system of the South following its official independence yesterday.

The statement by CBoS said that South Sudan banks should be treated as foreign which means that any wire transfers cannot take place with Southern banks unless collateral is provided in the form of transferrable foreign currency used in the transaction.

CBoS governor also instructed a halt of clearing house with the branches of commercial banks operating in South Sudan as of July 9. He also ordered that checks issued by Southern banks would no longer be collected by Northern banks.

Southern banks will no longer have access to electronic banking network system, the statement said.

In a related issue, a significant drop in the exchange rate of Sudanese pound has been attributed to concerns over the South’s separation and its impact on the economy.

Agence France Presse (AFP) quoted a black market currency trader as saying that the dollar is now sold for 4.20 pound from 3.47 a week ago.

But CBoS said today that the exchange rate has declined after it injected hard currency into the banks and Forex bureaus and will continue to do so in the coming period.

North Sudan — where 80 percent of the 40 million Sudanese live — will lose 75 percent of the African country’s oil production of 500,000 barrels a day located in the South. Oil is the lifeblood for both economies.

The South will need Northern refineries and the country’s only port for the next years to sell its oil, but economists expect Northern oil revenues to gradually fall below the current 50-50 split.

Analysts say the loss of revenues will worsen a scarcity of foreign currency in North Sudan where importers struggle to get their hands on dollars. Sudan depends on foreign imports for food and many other articles, especially technology.

(ST)