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Central Bank to increase the interest rate to 15% to save the economy

Nov 06, 2020(Nyamilepedia) — The newly reappointed central bank governor Dier Tong has increased the bank’s interest rates to 15% as a way to control the ongoing inflation in the country.

President Salva Kiir Mayardit with his newly reappointed Governor of the Bank of South Sudan, Hon. Dier Tong Ngor(Photo credit: Courtesy image/Nyamilepedia)
President Salva Kiir Mayardit with his newly reappointed Governor of the Bank of South Sudan, Hon. Dier Tong Ngor(Photo credit: Courtesy image/Nyamilepedia)

The governor chaired an extra-ordinary meeting with the bank’s monetary policy committee in which it discussed measures that will help control further devaluation of the South Sudan pound.

“To impose these new policies, we will raise the policy rate that is the interest rate of the central bank, the rate which we use when we are lending to the government or commercial banks. We will raise that rate immediately to 15 percent,” the central bank governor said.

“Also we will increase the reserve requirement ratio that is by law imposed on the deposit of commercial banks to 20 percent.”

He said that the bank will increase the cash ratio to 20% explaining that this is the ratio of cash liquidity that needs to be kept by banks in their vaults to meet the demands of their depositors.

The governor said that the bank will introduce its treasury bills as a tool of liquidity management

According to Mr. Tong, the bank will step up its supervisory role by continuously monitoring the cash involved of the commercial banks. 

“We know that commercial banks also keep cash in their vaults and the cash has to be used in a way that supports the economy,” he said. 

“These are the immediate measures that we are taking as a monetary policy but we will also work very closely with the ministry of finance and other partners to ensure that we address the broader macroeconomic situations.”

Since October when the minister of information announced that the government was planning to change the currency, South Sudan’s pound has lost its value at a high rate.

President Kiir reappointed Dier Tog, who had previously served as the governor of the same institution from May 2018 to January of this year with the hopes he will help salvage the economy.

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