South Sudan’s Central Bank on Friday raised its interest rate to 15% from 10%, as part of the government’s attempt to halt the rapidly depreciating local currency (SSP)
Tong Dier Ngor, the Central Bank governor told reporters that an extraordinary meeting of the bank’s monetary policy committee devised five resolutions aimed at tackling currency devaluation.
Among the policies, he said, is increasing the interest rate to 15%.
“The monetary policy committee noted that the economy is severely battered by shocks brought about by the Covid-19 pandemic, low oil prices, which has led to considerable fiscal imbalances and constrained financial performance, particularly the banking sector,” said Ngor.
The bank, he added, also increased its cash reserve ratio to 20% from 10%.
Also to be introduced are treasury bills to manage liquidity aspect.
The South Sudanese currency has drastically depreciated following the drop in oil revenues and irregularities in collection of non-oil revenues.
Oil-rich South Sudan is struggling to increase oil production, months after the signing of the revitalized peace accord in September 2018.
About 90% of the South Sudan government’s revenue comes from oil resources, while the rest is collected in the form of customs taxes, market taxes, road taxes, income tax, and permits, among others.