March 23, 2010 / 8:04 PM / 9 years ago

Independent south Sudan "could keep old currency"

JUBA, Sudan (Reuters) - South Sudan could keep using the national Sudanese currency for up to a year after a looming referendum on independence if its people vote “yes”, the head of the region’s central bank said on Tuesday.

Southerners are widely expected to vote to split away from Sudan’s north in the referendum, due to take place in January 2011 under a peace deal that ended more than two decades of north-south civil war.

The governor of the Bank of South Sudan Elijah Malong told Reuters officials were still deciding what to do with the currency of the oil-producing region after the vote.

Asked to name the most viable option, he said: “If it is a peaceful separation of the south from the north there will be no reason why we would not use the present currency until further notice ... say six months or a year.”

Senior northern and southern officials have been holding faltering talks on “post-referendum” issues, including the management of oil reserves. Most of Sudan’s oil lies in the south but the only pipeline passes through the north.

Any agreement on the continued use of the Sudanese pound south of the border would mean “the southern economy will still be tied to the national economy”, said Malong.

He said two other options on the table were the quick creation of a new currency or temporary use of the U.S. dollar.

“(One option) would be to use dollars for the time being if people decide not to use Sudanese pounds as soon as there is independence. Then there would be a dollarisation of the economy,” he said.

Malong declined to comment on the current state of the reserves of the Bank of South Sudan. “I will not tell you that. It is not your problem.”

But he said they would not be an obstacle to the creation of a new currency.

“We are not an economy ... like the British economy that has been there for millions of years. We are an economy that has started with oil money so if we save oil for three months we will have a lot of reserves,” he said.

“We are potentially capable of producing a new currency within six months,” the governor added.

South Sudan’s currently semi-autonomous government gets up to 98 per cent of its revenues from its share of Sudan’s oil wealth, set out in the 2005 Comprehensive Peace Agreement.

Analysts have warned there is a risk of a return to conflict after the vote. Distrust between the sides remains deep and parts of their shared border have not been agreed.

The north-south civil war killed an estimated 2 million people and forced 4 million to flee their homes.

Reporting by Ed Cropley and Skye Wheeler; editing by Andrew Heavens

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