Oil shutdown piles pressure on South Sudanese poundBy MACHEL AMOS in Juba | Friday, June 29 2012 at 15:05
South Sudan's decision to halt oil production continues to pile pressure on the country's currency, with fresh data indicating that it had depreciated by 40 per cent since January.
Finance and Economic Planning minister Kosti Manibe said that the government would not withdraw its tough austerity measures.
In the proposed 2012-2014 budget, which stands at South Sudanese Pound 6.4 billion, the government has cut down monthly spending to SSP500 million from SSP 850 million before the shutdown of oil.
The Central Bank said the depreciation was due to the high demand of goods than their supply due to the scarcity of the foreign exchange to import commodities.
“Without oil, we have nothing to export and therefore we are not receiving any foreign exchange,” Central bank Governor Kornellio Koryom Mayiik said.
“The scarcity of the foreign exchange is the reason why there is a depreciation of the value of our SSP.”
The governor said the hard currency reserves were being depleted through imported goods; health, education and security expenditures.
He also indicated that the country's hard currency reserves would last for over four months, but warned that they would run out in less than a year if there were no more exports.
“The normal requirement of IMF is that at least a country should have four months imports of foreign exchange. This, we have and even more, but we cannot go for more than a year if we do not find other sources,” Mr Koryom said.
At the moment, the dollar rate was at SSP2.963 for government operations and SSP3.17 for commercial and private transactions.
However, in the black market, $1 was trading at SSP5.5.
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