South Sudan limits dollar sales as oil exports fall
Fri Nov 28, 2014 2:18pm GMT
By Carl Odera
JUBA Nov 28 (Reuters) - South Sudan has issued new rules banning the trade
of dollars in the black market and restricting the sale of hard currency at
foreign exchange bureaus, as the country struggles with a shortage of
dollars due to falling oil exports.
South Sudan's oil exports have fallen by more than a third since fighting
between ethnic groups erupted last December, leaving the country, which
seceded from Sudan in 2011, short of dollars and struggling to pay for the
food and other imports that it depends upon.
Plummeting oil prices, which have lost more than a third of their value
since June, are aggravating the situation.
The governor of the central bank, Kornelio Koriom Mayik, said in a notice
published in newspapers on Thursday, that companies, organisations and
individuals were now banned from buying or selling hard currencies in a
parallel or black market, and that those found doing so would be breaking
the law.
He did not say what the penalties would be.
Under the new rules, forex bureaus can only sell dollars to companies or
individuals that can produce documents showing they require medical
treatment, need to pay school fees or require cash for foreign travel, or
have family living abroad in need of financial support. Dollar sales must
only be in bulks of at least $2,000, Mayik said, but did not elaborate.
The new rules took effect on Thursday.
Central bank officials were not available for comment.
South Sudan has had a currency problem since independence in 2011 as oil
exports have been disrupted, initially by disputes with Sudan.
Only a fraction of the population has a bank account so most people buy
foreign currency from foreign exchange bureaus or the black market.
"It is now difficult to trade openly because of the central bank's directive
yesterday," a black market trader, who wished only to be identified as Puoth
told Reuters.
Black market trade had surged as dollars became scarce. While the official
exchange rate is 2.95 South Sudan pounds to the dollar, the cost of a dollar
on the black market has risen from around 3.50 pounds before the fighting
began to around 5.90 pounds now.
Land-locked South Sudan relies heavily on imports from neighbours such as
Kenya and Uganda and one of the biggest challenges for banks and businesses
is securing dollars to pay for purchases abroad.
South Sudan's oil fields have been damaged by months of fighting, slashing
output to about 160,000 barrels per day, from 245,000 barrels per day in
December 2013.
The conflict has killed more than 10,000 people, driven 1 million from their
homes and raised the spectre of famine. (Writing by James Macharia; Editing
by Susan Fenton)