Currency Management Committee, composed of senior Central Bank officials, now convene to address a key billion dollar question: How to maintain price stability and build a strong, credible financial system
By William Madouk
The Bank of South Sudan (BoSS) announced, Monday, that it is embarking on a new roadmap to reform the South Sudanese Pound amid inflation and lack of cash liquidity.
In a press statement, the banking regulator said its Governor, Dr. Addis Ababa Othow led a high-level meeting focused on fixing and managing the country’s national currency, the South Sudanese Pound.
According to the bank, the meeting brought together the First and Second Deputy Governors, Directors General, among others, to begin work on a new roadmap for currency reform and broader economic stability.
“This meeting sends a strong message. We have started the journey of fixing and managing our currency. It is an inclusive process that will leave no one behind,” said Othow.
The critical meeting come after the formation of the Currency Management Committee by Governor Othow.
The committee was tasked to review the structure of the South Sudanese Pound (SSP), study past efforts, and recommend changes that match the country’s economic needs and regional standards.
“During the discussion, the team focused on several key areas including improving the current monetary policy, addressing cash flow and liquidity challenges, expanding digital banking, and strengthening the currency’s security features,” statement added.
Besides, the Governor added that the overall goal was to support the BoSS vision of maintaining price stability and building a strong and credible financial system.
The Currency Management Committee will be chaired by First Deputy Governor, Samuel Yanga Mikaya, who reaffirmed the group’s commitment to developing concrete solutions.
“The committee will study the current situation and recommend tangible solutions to address liquidity challenges,” Mikaya stated.
Meanwhile, the Second Deputy Governor, Rita Nyankiir Akoon termed the meeting an “eye-opener” and praised the Dr. Othow’s bold leadership on a matter of great importance to the nation.
Last week, the Minister of Finance and Planning, Dr. Marial Dongrin Ater revealed that his ministry has been paying salaries without cash due to a liquidity constraint.
“We have been able to pay for the past seven months’ salaries without fail, but that money goes into the accounts without cash. So, getting cash is the biggest problem,” he made these remarks during the swearing-in ceremony of the new Bank of South Sudan governor, Dr. Addis Ababa Othow.
Lowering the lending rates
Among the major steps taken last week, the BoSS reduced its lending rate to commercial banks from 15 percent to 13 percent, in an bid to ease the cash crunch and spur economic growth. Governor of the bankig regulator, Dr. Othow, said they had lowered the rate by 200 percentage points, after a unanimous decision by the MPC.
By lowering the lending rate or the bank rate to commercial banks, Bank of South Sudan aims to make it cheaper for these banks to borrow money. This, therefore, will encourage banks to lend more to businesses and individuals, stimulating economic growth- and ultimately releasing cash to the economy.
“To achieve these measures, MPC revised key policy instruments and unanimously agreed to reduce the central bank rate by 200 percentage points from 15 percent to 13 percent, spur and stimulate credit to the private sector and support robust economic growth,” BoSS said in a statement.
Additionally, the bank reviewed the Reserve Requirement Ration (RRR),a key tool that enables the central bank manage money supply and influence economic activity. BoSS increased the reserve ratio for deposits held in foreign currencies such as the US dollars, euros and sterling pounds from 20% to 25%.
Away from the banks, money stashed under mattresses
In December last year (2024), then BoSS Governor, Johny Ohisa, lifted the SSP10million cash withdrawal limit for commercial banks and encouraged lenders to offer interest on savings as a key measure to address liquity crisis in the market.
Ohisa said the growing public mistrust against the commercial lenders had discouraged bank deposits, leaving the public to keep money in their homes.
Renowned economist Dr. Kimo Aban Adiebo seems to agree with the former Central Bank Governor. According to Kimo, when commercial banks fail to meet their obligations to their depositors, the latter become hesitant to bank their money and either keep it underground or find other ways of keeping it.
“The amount of money taken to banks will gradually decline, and the commercial banks will automatically take the same measures of getting their money from the central bank or find other ways of keeping their money away from the central bank,” the economist told Radio Tamazuj, adding: “It gradually becomes a pattern, and money will be pulled from circulation, and this is why you have cash shortages.”
Kimo says there has to be assurance to the customers (depositors) that they can deposit their money and withdraw it when they need it. On the same breath, commercial banks have to be guaranteed that they can give money to the central bank and get it when they need it.