North Sudan launches new currency into economically troubled waters

Published July 25th, 2011 - 07:33 GMT

The Central Bank of Sudan (CBS) launched the new Sudanese Pound throughout North Sudan on Sunday.

The South Sudan Pound began circulation on 18 July, nine days after the country spilt amid fears that North and South Sudan will become engaged in economic warfare.

South Sudan seceded on 9 July after its people voted in a plebiscite in January 2011. The vote came as a stipulation of theComprehensive Peace Agreement (CPA) which ended more than two decades of civil war in 2005.

Fears of economic conflict have been partly allayed by the assurance of governor of the bank, Mohammed Kheir al-Zubair, that they are “ready to negotiate with the Government of South Sudan” over the matter.

Khartoum was on the back foot because with the premature launch of the South Sudan Pound, Juba has a stockpile of the old Sudanese Pound - which could be used to destabilise the North Sudan economy. It is estimated that there is US$700 million worth of old Sudanese Pounds in South Sudan.

With both nations is possession of potentially valueless cash they are keen to speed the transitional process.

Previously, Elijah Malok Aleng, head of the Central Bank of South Sudan (CBSS), said that Khartoum was no longer supplying them with cash, hence the decision to launch the new currencyearly.

The deputy governor of the CBS, Badr Al-Deen Mahmood responded by saying "We do not want to engage in a war of currencies, but if the south wants so then be it."

A date from which the old Sudan Pound will become obsolete has been set by neither side but South Sudan has said it will allow approximately three months for the process.

South Sudan is allowing its citizens to exchange their old currency for new at stations all over the country. South Sudan planned to sell the collected currency back to North Sudan, which did not express willingness, but it is now even less feasible.

The new currency of North Sudan includes an amended map of the country and excludes references to iconography perceived as South Sudanese such as the long-horned cow of the 10 Pond note.

The one pound note, which came with changes to the currency after the signing of the CPA, will bereplaced with a coin.

Key economic stipulations of the CPA are yet to be resolved such as the sharing of oil-wealth; SouthSudan has the vast majority of the oilfields and North Sudan the pipeline and coast through which it is exported.

The economic stiuation in North Sudan is precarious. With the recent uncertainty regarding the future of its currency, its value has plummeted.

President of Sudan, Omar al Bashir announced austerity measures in anticipation of reduced oil revenues and increased commodity prices.

Historically, in Sudan significant rebellelion against centralised government has occurred in economic troughs and with signs of an internal power struggle emerging, these are uncertain times for the Khartoum government.

Before its launch, Mohammed El Hassan El Bahi, the Director General of Sudan Currency Printing Company which produced the new notes, and produces Somalia’s currency said South Sudanesewere amoungst the team who developed the new notes.

He said the changes in the design of the notes are not dramatic but all their colours have been changed and that they are "100 percent cotton", and therefore washable.

He was critical the early launch of South Sudan Pound, which is printed by a British company, saying it "would have been better for them to wait for two years at least until the state gets strong enough to issue its own currency".

Bahi said he expected the South Sudan Pound to "collapse very soon as was the case with Zimbabwe." Hyperinflation in Zimbabwe reached 200 million percent in 2008 and the currency was abandoned in 2009

Copyright © 2003-2022 SudanTribune - All rights reserved.

You may also like