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North Sudan launches new currency into economically troubled waters

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by Toby Collins

July 24, 2011 (LONDON) – The Central Bank of Sudan (CBS) launched the new Sudanese Pound throughout North Sudan on Sunday.

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A Sudanese man shows freshly-minted notes of the new Sudanese pound in Khartoum on July 24, 2011 (Getty)

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 the Comprehensive 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 currency early.

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 [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 be replaced with a coin.

Key economic stipulations of the CPA are yet to be resolved such as the sharing of oil-wealth; South Sudan 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 Sudanese were 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 of 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.

(ST)

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  • 25 July 2011 07:01, by Mi diit

    well, decades if not centuries of distrust between north and south sudanese have caused the unnecessary rush to print different currencies, now full of errors and misjudgements.

    some print it with bad designs and missing dates while others look towards sliding back to islamization of the currency. too bad.

    now the currency war will begin and some money will end up burned to ashes if not sneaked into others territory to wound their economies.

    and worst of all, others may print too much notes and hide them in thier private coffers, pour them into the market carelessly and cause inflation.

    repondre message

    • 25 July 2011 07:16, by Jay

      The so called El Bahi, claimed that South Sudan pound will collapse soon due to the inflation, really?
      Well, time will tell which one of the two Sudan will have its currency collapse.
      Why rush to judgement, lets just wait and see!

      repondre message

      • 25 July 2011 08:04, by Ahmed Chol

        The old sudanese pound started out at 2 pound per a US dollar in 2007. Now it is almost 4 pound per a US dollar just after 4 years. What do you think the exchange rate would have been in the next 10 years? Did inflation take place? What caused it? If those who were in charge of the economy and the banks don’t have answers to these questions, then surely, it will happen again not only in the south but also in the north.

        Our economy in the south needs good people [economists] to regulate it. Proper pricing of items moderate taxations sometime salvage the situation from repeating itself. Pumping more money out into the hands of citizens while depending on products from other countries like North Sudan, Uganda and Kenya can cripple our pound very soon.
        The only way to avoid it is by creating our own industries to produce basic commodities like sugar, salt, soft drinks etc. Failing to do so will invite that situation of Zimbabwe or that of Uganda where everybody is a millionaire and yet still a poor person. Most citizens of Zimbabwe are millionaires because everybody has to carry their money in a bag just to buy onion, meat or vegetables in a nearby local market.

        We will not be free if we are not economically independent. It will be even worst if Khartoum controls our economic destiny especially if we keep on buying from them. They can stop everything like they did last month before July 9.
        Khartoum can even study our buying habits and take the opportunity to crash our economy since they always wish us harm.

        Only our government can bring in industries and other factories that we need so that a kilo of sugar should not cost 30 pound when the roads to neighbouring countries are impassible or blocked deliberately.

        Only our government is strong enough to build factories because regular citizens don’t have money to do it.

        Allowing foreigners to own all factories in the South is like allowing your home to be managed by other people for you and that will not be freedom at all.

        Ahmed Chol, Whatever begins in anger, ends in shame

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    • 25 July 2011 09:51, by John Gum

      Dear Arab

      why do u worry of our money collapse?let them collapse we will not come & begg u coward.

      Gum

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  • 25 July 2011 07:04, by George Bol

    The South Sudan has nothing to lose because we are paying attention with our economy. The South will dump the old pound after we exchange them with the New pound.

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  • 25 July 2011 07:08, by Khartoum92

    If the South Sudan pound doesn’t surpass the Zimbabwean dollar as the least desired bank note in the world within 3 years they are one lucky country..

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    • 25 July 2011 07:28, by Jay

      Please set your clock now for three and after three years, can you please give us an update of our two nation currencies status!
      That should be the wise thing to do, Other than Just making noise without facts behind it.

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    • 25 July 2011 19:47, by Mading Makuac

      Dear Khartoum92
      Don’t worry ,whether our money will be like Zimbabwean dollars
      there will be no time that we will ask help from you Arabs.

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  • 25 July 2011 07:22, by George Bol

    Mr Khartoum2,

    The North has been waiting the South Sudan to introduce their new currencies thinking that they can afford to devalue the South Sudanese pound,but they will not afford that because we have considered our exchange rate.

    We have scrutinized the values of our currencies before being put into circulation in the South Sudan.We are not going to have inflation because we have never have more money then at the moment,and you need to know that we will not have the rise in prices(inflation) but the North Sudan who have been exploring the money for the whole Sudan for many years and these make your people have more money in hands in which they can afford anything with the cheapest price.

    I think should be worry for your gas prices and food because not everyone from the North will have enough money this time because the supply will be limited and indeed rare.You have now shown me that you were focusing to devalue our value but that is not the case because we separate countries with difference currencies that will have various exchange rate. So, you need to stay and relax and let us watched you glancing the South.

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    • 25 July 2011 08:07, by Michael Angelo

      North Sudan should think about the future of their economy before riskingly compete with South Sudan who has nothing to loss after all. South Sudan economy will increase due to the availability of huge oil reserves while the future of north Sudan’s economy seem uncertain because of the 75% oil revenue they lost due to the secession of the South Sudan.
      Needless to say, I suggest that both countries should stop playing such ugly games and start building a better relationship so that the citizens of both countries will enjoys better life and lives in harmony with each other as well. In addition, both presidents i.e Kiir & Bashir should live up with their promises to protect the citizens living from both within North and South.

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  • 25 July 2011 08:13, by Nhomlawda

    There will be little inflation in South Sudan in the short run because there is high circulation of dollars in the economy.

    There are a lot of dollars from Petroleum and other sources such as development assistance and huge NGOs budgets.

    There are also a few businessmen demanding huge sum of dollars for import of goods and services and this is also a good news to reduce inflation in the economy.

    South Sudan just need to shutdown Somalia Foreign Exchanges, Kenya Foreign Exchanges, and North Sudan Foreign Exchanges to avoid these countries extracting hard currency from South Sudan for their economies. These foreign exchanges drain dollars from South Sudan economy and sell them in their respective countries for higher returns.

    Production of local food will be a priority too in South Sudan. So food prices will be control to minimum by high supply, therefore, controlling inflation too.

    Ensure that North Sudan doesn’t dump its old currency into South Sudan economy and South Sudan should dump it old money to North Sudan as soon as possible. North Sudan is the cause for this and must shoulder responsibility.

    repondre message

    • 25 July 2011 08:28, by Mi diit

      nhomlawda,

      don’t lie of lack of inflation. dollars do not prevent inflation when not used as local currency unless you are ignorant in economics.

      besides, there are no sufficient dollars in circulation in south sudan as i hear it vividly. commercial banks do not issue dollars to their customers now due to the lack of dollars.

      those dollars comiing from oil or ngos will not even meet the highest demand ever of imports by our new republic. thinnk big!

      and our current messy currency is near four to one dollar exchange as we speak.

      again, given the disapproval of the currency itself is too bad. i even hear of many people doing rituals first before exchanging their money with new currency and puting them in their pockets. people urinate on the face of john garang in the image before putting the money in their pockets. that is a very high degree of dissent to the money designed without the knowledge of the masses.

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      • 25 July 2011 10:59, by Nhomlawda

        Mi Diit

        Urinating on John Garang face in South Sudan currency and put it again in their pockets as narrated by you, is a defeat by itself.

        Even if they defecate on the currency, those enemies have no option but to swallow their prides and follow the most powerful ones.

        They can only avoid keeping John Garang in their pockets by going deep into the thick forests of South Sudan and farm there without mixing with external world in their neighborhood.

        Otherwise, staying with others will require them to pay tax with John Garang face currency.

        Enemies of John Garang and Dinka people have no room in South Sudan, now and in the future.

        Kou aye kol kou (thorn is removed with thorn), their enmity will be responded to with the same level of enmity in the near future. Let them continue despising the system; we will get them soon and give them the solution they require.

        repondre message

        • 25 July 2011 14:01, by Mi diit

          nhomlawda,

          sorry, i didn’t imagine john garang’s image in the money as a sort of victory by the new converts to self determination on independence which garang fought against.

          in the same way i don’t see the insertion of buffalo’s image as a sort of victory by animals either.

          even if you put a rat’s image, that would be all fine.

          idiots like idi amin dada had the privillege to have their images appear in uganda, but that did not mean they were real people.

          you can put john garang’s image today and tomorrow replace it with another one, that doesn’t matter. i was just narrating the clear indication of high degree of disrespect to john garang by the people of south sudan who urinated on his image showing that they didn’t understand why john garang’s image appeared in indepndent south sudan, which is not new united sudan.

          repondre message

  • 25 July 2011 08:30, by George Bol

    Dear all,

    The low oil supply in the North Sudan will cause them high demand for everything. They should be worry for high gas/fuel prices, food prices, and other demands. We will be supplying high gas and our demand for the fuel will be less than the North because our demand will be less. You will noticed that the less oil they will export to the market will create inflation because their prices will be escalating very seriously.

    In fact, inflation and deflation has noting to our South Sudanese pounds because the supply will be reasonable as well as the demand and that will make us balance the weak side of our economy. Notice! when supply is low the demand is high and therefore everything will be very expensive to hell and this situation will be experience in the North.

    But the point of them introducing their currency concurrently with our money is that they want to compete with our money and then they were hoping to create competitive devaluation in the South. That is their point!

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    • 25 July 2011 09:19, by wiseman

      Dear Reader’s

      We as south Sudan have just launches our new currency and still we have so many things we are expecting in the nearest future.
      So we have nothing to loss at the main time and we will assure Khartoum that we have plane of raising our economic not only on the oil but........

      God Bless
      Republic of
      South Sudan

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  • 25 July 2011 10:33, by Lokorai

    Mr. Elijah,

    This is how the money should look like not your SS Pound that looks like playing cards.

    Mr. Governor, when are you going to retire? In Rumbek you misled our people and the Movement by bogus notes and today you are it again, what do you want Mr. Elijah Malok really in the earth?

    Shame to Dinka and this old man!!!

    Lokorai

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    • 25 July 2011 14:09, by Mi diit

      lokorai,

      you are very correct. this money of elijah malok look like playing cards. i don’t know if they had run out of money printing papers and had to resort to economizing whatever little they had to produce such very light small sized money. or did they pay less for such small papers? you can’t bend it otherwise it can slip away. i hope this money will be amended soon to correct all of its messes. and i pray it doesn’t cause inflation which looks more likely.

      repondre message

      • 25 July 2011 15:46, by John Gum

        Dear Idiots
        no appreciation even those who lebrqte u from Arbais coward/dog

        repondre message

        • 25 July 2011 17:26, by dakin

          John Gum,

          Not bad brother,I hope we shall have the face of Makur Aleyo in our pound too to appreciate him!!

          repondre message

      • 25 July 2011 19:14, by Nhomlawda

        Mi Diit

        Inflation is not caused by physical appearance of money but mainly by a lot of money supply in the economy and scarcity of goods and services in a country.

        Inflation in South Sudan is expected to rise significantly within the next five years because of dependence on foreign goods and labor.

        GOSS should gear its economic policies towards meeting demand for goods, services and labor in South Sudan through internal supply mechanisms by minimizing current high dependence on external sources.

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        • 25 July 2011 21:26, by Mapuor

          Quasi Arabs are lying guys,their currency is the one that will be valueless.American sanctions,wars in Dar fur,Nuba mountains,Blue Nile & Eastern Sudan will surely make Sudan curreny valueless.

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        • 26 July 2011 06:32, by Mr. Truthteller

          Nhomlawda,

          I think you did not read the first comment of Mi diit there at the top of every one. He said it clearly that by pouring billions of stolen money carelessly into our market, that would cause inflation. He did not say the physical appearance of the money would cause the inflation. I think you very well know that when alot of money is injected into the market without the supply of commodies that match the demand, inflation is not avoidable.

          repondre message

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