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1,000 pound bill is not solution to bad economy – economist

 

Trucks at Nimule border, bringing in market commodities from Uganda and Kenya, the two neighbors South Sudan rely on | File photo

An economist has welcomed the introduction of 1000-pound banknote, but warned that it is not a solution to the currency depreciation.

The Bank of South Sudan launched and introduced the bill on Tuesday, saying it will minimize the printing costs and end storage space problems.

“It can help people in business by reducing the burden of paper load. Instead of carrying ten papers, you will be carrying one paper. In economics term, it is a good step,” argues Ahmed Morgan, lecturer of Economics at the University of Juba.

The introduction of the 1,000 paper money comes three years after the bank printed the 500 note.

Since then, the inflation has persisted.

According to Morgan, the move by the central bank does not provide a permanent solution to the economic crunch.

He thinks that in the short run, the decision will subsequently lead to the disappearance of the smaller notes.

This, he says, is because the smaller notes will lose their values in the market – something he worries might worsen the current inflation due to what he calls market adjustments.

Morgan emphases on the need for South Sudan to diversify the economy to minimize over reliance on importations in order to strengthen the country’s currency against the US dollar…

“Mostly, inflation is coming through the exchange rate; but we are massive importers. So we need to produce massively. And as such, we may up the economy and it can adjust itself,” he told Eye Radio.

But he added that productivity can only pick up when peace and stability is fully restored in the country.

South Sudan solely depends on oil money which accounts to 98 percent of the country’s revenues generated annually.

However, the price of South Sudan’s’ oil has dropped to a negative record level following the outbreak of the coronavirus pandemic in 2020.

VIA Eyeradio

 

Written by THEJUBAMIRROR

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