Sudan: Currency Crunch Bites in the South
By Eric Sande
Southern Sudan has accused the north of making Khartoum remit the South’s share of oil revenue in local currency as opposed to US dollars, which is in violation of their peace accord.
The Regional minister of Finance and Economic Planning for the semi-autonomous region of Southern Sudan David Deng Athorbei who made the disclosure said that the government there is running short of foreign currency. He said it was a calculated move by the ruling National Congress Party (NCP) to have that happen.
“This is a clear and complete violation of the Comprehensive Peace Agreement (CPA). It is one of the most serious violations of the CPA because it has dire consequences,” said Athorbei.
According to the 2005 CPA that ended decades of civil war between the North and South, oil revenues were to be shared equally. The agreement further stated that the Government of Southern Sudan’s 50 per cent share of revenues generated from oil within its territory should be paid in hard currency into accounts managed by the Bank of Southern Sudan.
The North last month introduced restrictions on foreign currency sales to prevent shortages, and began transferring oil revenue payments to the Bank of Southern Sudan in Sudanese Pounds.
Sudan is sub-Saharan Africa's third biggest oil producer. Oil revenues account for 98 per cent of the South Sudan’s budget estimated at US$1.9 billion. Despite the bulk of the oil wells lying in the South, the North controls the refineries, the ports and the payments. This leaves the southerners to struggle to afford key imports upon which it depends without the hard currency.
Athorbei stressed that the NCP and the Sudan People’s Liberation Movement (SPLM) need to give the situation immediate attention because it was affecting the implementation of developmental projects whose materials and equipments are imported from foreign countries to the region.
A report released by the International Monetary Fund (IMF) earlier this month showed a sharp decline in reserves held by the Sudan Central Bank from US$1.58 billion in 2006 to US$390 million in 2009 which is estimated to cover a little over two weeks of imports.
Salvatore Garang Mabiordit, undersecretary in the Finance ministry said that the change in the disbursement of the currency has not only affected the government institutions but also the private sector.
“Everybody is now affected because the Bank of Southern Sudan cannot supply other banks in the South let alone foreign transactions in dollars,” said Mabiordit
Mabiordit said that he spent many days in Khartoum last July discussing financial issues including remitting oil revenues in local currency with authorities from the Central Ministry of Finance and the Central Bank.
“I spent days discussing it with relevant authorities while in Khartoum but it appears that little attention has been paid,” he said.
The conflict is also another worrying sign of the latent hostility that remains between North and South even as they try to work towards negotiating a new revenue-sharing agreement to take over after the referendum, in which southerners are expected to vote to secede.