The government of South Sudan has suspended the use of the U.S. dollar and mandated that all transactions must be carried out using the local currency, the South Sudanese Pound (SSP).
The directive toward the de-dollarization of the economy issued by the Bank of South Sudan is one of the recommendations made by a committee appointed by President Salva Kiir to help tackle the economic crisis facing the country by reining in inflation and the high cost of living while locking out dollar speculators.
On October 8, 2020, South Sudan announced that it would be changing its currency in response to the rapid depreciation of the South Sudanese Pound’s exchange rate with the United States dollar.
The Bank of South Sudan has now prohibited the use of the greenback and instructed that all commercial agreements must be denominated in the local currency.
“That is a clear directive from the Central Bank that all the transactions in South Sudan must be done in our currency. So all commercial contracts must be signed in our local currency,” Michael Makuei Lueth, South Sudanese Information minister told CGTN.
Below is the local currency’s performance compared to the US dollar over the last 5 months:
President Salva Kiir had earlier on set up the economic cluster committee to investigate mis-management of non-oil revenue and also to come up with recommendations to revive the falling economy.
The country’s economy was negatively impacted by a seven-year civil war that ended in 2020 which caused a decline in oil production in regions affected by the conflict.
While highly dependent on oil prices, Africa’s youngest nation loses out in fees and debts owed to oil companies, according to the East African publication. Thus, the production of 170,000 barrels of oil per day only results in a net value of 50,000 barrels per day for the country, with the remaining amount being utilized for advance payments or contractual obligations.
Despite the signing of the revitalized peace agreement in Ethiopia by the government and opposition parties in 2018, the economy of South Sudan continues to struggle due to a shortage of foreign currency in the central bank’s reserves.
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