South Sudan Pound Weakens Further Against US Dollar
The South Sudanese pound has weakened further against the US dollar as the war-torn country’s economy continues to deteriorate.
A new rise in the exchange rate has widened the gap between the two currencies, while a shortage of US dollars in South Sudan’s commercial banks is causing a drastic price hike on the black market, where US dollars can be bought illegally.
South Sudan’s ‘economic crisis’
South Sudan’s continued slide against dollar prices is a symptom of the country’s economic plight. The International Monetary Fund (IMF) stated earlier this month that South Sudan is in “economic crisis,” urging fiscal restraint as inflation continues to soar in the world’s youngest nation.
Jan Mikkelsen, the IMF Mission Chief for South Sudan said inflation is fast approaching 300 percent, and the deficit next year could top $1.1 billion US or 25 percent of GDP.
The oil-rich country has been torn apart by civil war for more than two years. A gradual peace process that was signed in August last year only started making progress over the last couple of months – and painfully slow progress at that.
Meanwhile, essential services have all but been shut down in the country with hospitals receiving no power due to a lack of fuel.
Questions for the international community
South Sudan’s economic situation poses a genuine threat to the country’s peace process. Government intervention needs to happen now, according to the IMF and other industry leaders, but even that may not be enough. If South Sudan can’t tame its economy alone, this leaves the international community with something to think about.
For the sake of peace, some argue the East African nation needs economic support. Others insist the country doesn’t deserve aid following continuous failures to end conflict and human rights violations. Either way, it seems the actions of South Sudan’s rival leaders will determine whether international aid will arrive to stem the country’s economic crisis. Meanwhile, the hospitals continue to run without power.
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