Economy shrinks as hopes for remedies hang in air

By Bida Elly David

The economy of South Sudan is swimming in the pool as the Central Bank and the Ministry of Finance still battle with options seeking to rescue the ailing economy to life.

The Central Bank has since been employing several monetary policies including continuous currency auctioning, issuing interest rates and selling securities to commercial banks as instruments to balance the market but their efforts are not yielding desired results.

In a statement extended to No.1 Citizen Daily Newspaper, Johnny Ohisa the governor of Central Bank said that despite mechanisms put to control commercial banks amid random speculation of money in the exchange rate market, the local currency remains weak against the US dollars and the market prices skyrocket uncontrollably.

He revealed that dollars is challenging the market because South Sudan business sector is 90% dominated by foreign traders who execute immediate cash outflow to their countries and continue with their monopoly.

Ohisa said depending on oil as the income generating resource for the Country is not enough rather working to increase other sectors of production would help the economy gain strength.

The Central bank boss said despite the fact that the bank in collaboration with the Ministry of Finance tried to use centralized system economy, external factors such as domination of the market by monopolists who at the same time involve in black market exchange rate market jeopardizes the economy.

The Governor said they have been granting credit facilities such as loans to local private sectors to boost local production as a mechanism to overcome international business barriers.

Mr. Ohisa stated that restoration of the current fluctuating economy can only happen if the government and the citizens join hands to boost production to fight external factors to reduce the high import dependency.

 “The private sector credit growth was gradually picking up with total amount of loans in December 2022 recorded on average about SSP 43 Billion compared to SSP 22 Billion in 2021 supported by increased lending to domestic trade, restaurants and hotel industries,” he said. 

Ohisa stated that fishing the market speculators will be hard for now since they are yet to put measures to bring to an end the market forces that have impacted both market prices and the depreciation of the market.

The bank governor further said the volatility of the local currency in relation to the on-going inflation was caused by the high demand for dollars by traders for importing goods.

“The demand for United States dollars by traders is very high since they claim buying goods from the international market using the same currency. With the downfall of the global economy, most traders across Africa are affected with the changes in the market forces,” he noted.

Ohisa added that despite the exchange rate volatility, headline inflation remains elevated but at lower double digits on average of 14.4% and 13.4% in the Months of January and February 2023 close to policy rate.

 Last week, economic analysts said the on-going rise in commodity prices would impact consumers with less earning especially civil servants whose disposable income are less to meet their demand.

Economist, Abraham Matoch said that citizens will be in danger if the economy continuous to recess as most families will be struggling to place food on their tables,

He called on the government to quickly find measures to address the deadly saga as prices shoot at an alarming speed.

Matoch said the continuous insecurity in the bushes have discouraged farmers from farming amid to fight food insecurity thus the availability of the holdout groups is another factor that has contributed to the downfall of the economy.

He however called on citizens to take risk and embark on agriculture noting that nobody will think of money if there is food to eat produced by individuals.

Matoch concluded that with the ongoing economic recession, the pounds will continue depreciating and government will be forced to print more money where citizens will use lamp sum to purchase small quantity of goods.

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