July 7, 2020 / 2:39 PM / a month ago

UPDATE 1-South Sudan's central bank cuts benchmark interest rate to 10%

(Adds details, quotes)

By Denis Dumo

JUBA, July 7 (Reuters) - South Sudan’s central bank said it cut its benchmark interest rate to 10% from 13%, as part of efforts to mitigate the effects of the coronavirus outbreak on the economy.

This is the second time the central bank has slashed its rate since April, when it cut by 200 basis points to 13%.

The downward revision was geared towards reducing the cost of financing to the private sector by commercial banks, Governor Gamal Abdalla Wani said.

“Affordable loans will benefit business and South Sudanese citizens alike at this time of crisis,” Wani told reporters on Tuesday, announcing the cut.

Policy makers also reduced the cash reserve ratio to 10% from 15% to release “additional liquidity to commercial banks to further inject it to support economic activities and especially the sectors hardest hit by the pandemic.”

“The Bank of South Sudan is monitoring the developments in the exchange rate and remains committed to exploring all the avenues to support the economy at these tough times,” Wani said.

The central bank also said it was encouraging banks to work with borrowers to restructure loans as the oil-producing economy is struggling due to the coronavirus crisis.

“Restructuring these loans will mean making lower repayment each month ... freeing up cash for operating capital thereby avoiding business closure,” Wani said.

South Sudan has confirmed nearly 2,100 cases of the coronavirus, with 40 deaths, according to the World Health Organization.

The country’s economy is still reeling from the devastation caused by years of civil war between government forces under President Salva Kiir and those allied with vice president Riek Machar. (Reporting by Denis Dumo; writing by Omar Mohammed; editing by John Stonestreet and Giles Elgood)

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