By Okech Francis
A high drop in inflation rate in South Sudan in 2021 failed to tame economic crisis and equally reducing prices of commodities in the market.
The nation’s local current gained strength against the US dollars by mid-2021 leading to high expectations of economic gains but by the end of the year, prices remained high.
According to the Central Bank Governor Moses Makur Deng, there has been a significant decline in annual inflation since the beginning of 2021.
“The annual headline for December 2021 is 13.2 percent compared to 58 percent in December 2020,” he announced this week to the press, promising to bring it down further to a single digit by the end of this year.
Localized corruption by tax officials worsened the situation as businesses were unceremoniously demanded week in, week out to cough money or risks the closure of their enterprises.
The currency exchange is at around 410 for a dollar at the Central Bank. A year ago, it was 600 for a dollar.
Fuel, the driver of an economy shot up from around 240 SSP a year ago to 400 SSP now.
“There has been no set plan to cushion the market prices that the country and rely on,” Patrick Atem, a trader at Konyo Konyo market told Juba Echo.
“To enable prices, reduce subsequently, the government must also limit and harmonise its taxation policy, aligning it to the new exchange rate and that way, it will guarantee reduction in prices,” Atem said.
Mohamed Hassan who sells clothes in Konyo Konyo market alattributed the stagnant ceiling on commodities to demands from those unscrupulous taxmen.
“I have to make ends meet and as they demand heavily from me, I also have to transfer it on the commodities that I sell out,” Hassan told Juba Echo in an interview.
“If I am to lower my prices, I will then have to run out of business and the best way is to balance the loses to the many taxes on the consumers.”
Governor Deng also announced a revision has been made on the Central Bank Rate to 12 percent for 2022 from 15 percent in 2021, subject to regular review during the course of the year 2022 intended to reduce the overall cost of financing extended to private sector by banks and other financial institutions.
“A reduction of the CBR signals an easing of monetary policy and a desire for market interest rates to move downwards. Lower interest rates encourage economic activities and thus growth,” Deng said.
“The year 2022 will come with its own challenges especially as the cases of COVID-19 are increasing almost on a daily basis and the economic impact are expected to be severe, however the Bank of South Sudan would like to assure the public that it is prepared to intervene at any moment should there be an apparent market volatility with a view to stabilize the market and thus curb inflation,” Deng said.
He said the new steps will “support the achievement of the 1 percent projected growth of real GDP in fiscal year 2021/22.”
