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South Sudan's central bank prints more money to shore up fragile economy

Xinhua, November 26, 2016 Adjust font size:

South Sudan on Friday said it has printed more money in a bid to fill scarcity of the local South Sudanese Pound (SSP) that has been battered due to hyper inflation closing in at 800 percent.

The Bank of South Sudan Governor Kornelio Koryom told journalists in Juba that they will be receiving additional stock of SSP to ease and expedite an effective payment process for all government agencies.

"We are receiving new notes which are similar to those in circulation. The ones we are receiving are to meet the scarcity," he said.

Koryom disclosed that in 2011 they first printed 5 billion SSP, and in 2014 another 5 billion SSP was printed and the latest is within the same region.

"The presence of the money printed will not affect the economy unless you release it into the economy. And if you release it into the economy and back up with foreign currency or goods and services it will not affect the economy," he explained.

South Sudan since outbreak of conflict in December, 2013 has experienced hyper inflation driven by devaluation of the SSP and shrinking of oil revenue after production fell from 350,000 barrels a day to less than 160,000 bpd.

Besides, the share of non-oil revenue has dwindled due to conflict reducing volume of business and mismanagement that has led to huge deficit-financing.

"We have been quarreling many times with different agencies of the government on how to fill the (deficit) gap between revenue and expenditure. It's what has created high inflation in South Sudan," Koryom added.

"A lot of local SSP has been withdrawn from the bank. The estimate that has been made by the central bank is that only 12 percent of money is in the banking sector. But the rest of it is being kept outside the banking sector," he said.

The International Monetary Fund (IMF) cautioned in its June report that South Sudan should desist from massive borrowing from the Central bank and accumulation of arrears that would drive inflation.

"The deficit in 2016/2017 could top 1.1 billion U.S. dollars or 25 percent of GDP which, if again financed through borrowing from the central bank or accumulation of arrears, would continue to fuel inflation and put further downward pressure on the exchange rate," IMF noted in its June report.

The South Sudanese pound is currently trading at as high as 100 SSP to the dollar in November, up from 32 in April.

Meanwhile, South Sudan's inflation rate has reached 835.7 percent over the past year, the country's Bureau of Statistics announced on Friday. Endit