The government of South Sudan banned the use of the dollar in the economy as part of the conditions towards building a track record for future IMF supported financing programme.
The EastAfrican understands that the dollar bans which was effected in February was part of the conditions under the nine-month Programme Monitoring with Board Involvement (PMB) that sought to achieve the international reserve targets.
The IMF staff team led by Niko Hobdari which visited South Sudan from May 3-12 lauded the country’s authorities for implementing prudent fiscal and monetary policies and meeting all but one end-March 2023 quantitative targets under the PMB.
Amongst the targets which were met by South Sudan at the end of March 2023 included quantitative targets on international reserves, Bank of South Sudan (BoSS) net credit to the government, the payment of salaries to central government workers and the non-contracting and non-guaranteeing of new non-concessional debt by the central government.
“The authorities are implementing prudent fiscal and monetary policies. All but one End-March 2023 quantitative targets under the PMB were met. In particular, the BoSS has continued to refrain from monetary financing of the budget since August 2022,” said Mr Hobdari.
“As a result, the level of reserve money has remained broadly unchanged since End-August 2022, which will stabilise the economy.
The authorities have also met the end-March 2023 quantitative targets on international reserves, BoSS net credit to the government, the payment of salaries to central government workers and the non-contracting and non-guaranteeing of new non-concessional debt by the government.”
In February, the government suspended use of the dollar and directed all transactions to be executed in the local currency, the South Sudan Pound (SSP), in a move it is feared would stifle economic activities in the war-ravaged economy.
Most transactions in the world’s newest nation were initially carried out in the dollar largely due to hyperinflation and the volatility of the local currency.
However, the Government through the BoSS banned the use of the greenback and directed that all commercial contracts be signed in SSP.
The IMF backed the move to restrict the dollar in local transactions and contracts arguing the South Sudanese authorities’ efforts to ensure that the existing legal framework regarding the legal tender for domestic transactions should be respected.
Read More in The EastAfrican
