A miscalculated announcement by South Sudan Minister left the economy in shambles
Oct 14, 2020(Nyamilepedia) — An announcement by the official government spokesman and the minister of information on Friday left the South Sudanese economy in shambles.
With the South Sudanese pound dropping value by minute, prices of imported basic goods hiking overnight and businesses closing down as panic escalates across the city of Juba and slowly into the states.
The announcement came from none other than Hon. Michael Makuei Lueth who has served as the Minister of Information and Broadcasting since July 31, 2013.
“So the cabinet has decided that the currency be changed. The currency should be changed so that anybody who does not take his money to the bank, is left out and will lose his money,” Hon. Makuei said..
Little did the information minister know that what he thought would revitalize the economy was going to be just another nail on the coffin.
Within 24 hours the pound depreciated from 50 – 55 SSP per dollar to 67-71 SSP per dollar and the price of bread increased from 300 SSP, which was already expensive for many residents of Juba – the only population that eat bread-jammed breakfast in the country – to 500 SSP.
The increase in the price of bread, which toppled the Sudanese president Omar Hassan Al-Bashir not more than 2 years ago, sent a strong message to the Presidential Palace and forced president Kiir to call an emergency cabinet meeting to address the issue.
The president came out denying the claims that the cabinet agreed in its last meeting to change currency and blamed Makuei for making a wrong announcement at the wrong time, saying that it was neither discussed nor approved.
“At the beginning of the session, President Salva Kiir questioned the Council of Ministers, why an announcement of currency change was made to the public last Friday yet it was not part of the agenda and resolutions of the previous cabinet meeting.” Read part of a statement released to media by the office of President Kiir.
“President Salva Kiir and some members of the cabinet mentioned that, the change of the country’s currency was brought up in the discussion of previous cabinet meeting as one of the proposed ideas to be subjected for study and discussions as one of the long-term economic measures but it was not agreed and passed by the council that time.” The statement added.
Whether it was discussed or not, the damage has been done, prices have increased and many businesses have shut down and whether these actions would be reversed remain to be seen.
Prior to this announcement, the pound has been depreciating for a few months but the latest spike is the lowest witnessed so far.
Many economic analysts and commentators responded almost immediately with majority of them blaming the cabinet and minister of information for the decision.
Dr. Akim Ajith, an economic analyst, said that the announcement caused insanity in the market as people try to take advantage of the dollar prices.
“When you announce that you are going to change the currency, that caused insanity in the market because people who have dollars are trying to take advantage of the situation by charging the dollar expensively to get profit out of it,” Prof. Ajith told Radio Tamazuj.
“So the best thing that should have been done in the first place was to do it secretly and announce it in the last minute rather than announce it to create panic in the market,” he added.
Ajith said no one among the administrators, the economists, and people with management skills is supporting the introduction of a new currency because that is not going to be the solution.
He said the reason for the spike in inflation is because people are panicking about what might happen in the next few days.
Ajith urged the government to review IMF monetary recommendations, strengthen the taxation system, and also monitor how oil revenues are being spent.
“You cannot introduce a new currency while inflation is high, you are making things worse,” he added
Martin Makuei, a black-market money trader, also reiterated that government’s plan to introduce a new currency is the cause of inflation.
“The US dollar has become a problem, everything increased in the market. Yesterday it was 70,000 SSP per 100 dollars and that was the buying price, while the selling price ranged from 65,000 to 68,000 SSP,” Makuei said.
“The minister just talks sometimes not necessary what was passed in council of ministers. Well the system depends on untouchables where Makuei is one.” Said Dr. Charles Kisanga.