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.
JPEG - 20.8 kb
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 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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