In Juba on Friday, the Cabinet decision to change currency came to the public. This is happening after several of attempts and changes in Ministry of Finance. However, none has lasted or made a difference. Therefore, the Transitional Government of National Unity (TGoNU) have decided to drop the South Sudanese Pound and create another one.
Nevertheless, economics and financial policies aren’t that simple. There are some key components missing to create the balances in order. First, the state can and is allowed to change their currencies. That is up to the sovereign. Is that advisable?
Most like not, because you have to build a foundation and have the balance sheets in order. The grander public got to understand the change. The markets have to invest in the futures of the currency and it has to trusted.
It can be a financial trick, a juxtaposition to just to get you out of a hurdle. You move from one account to another. But, then again… you get the same value for practically nothing. Maybe, even the currency has no value, as nobody trades on a value that nobody trusts. That is why its key to build trust and monetary policies around what you already have.
Unless, you want a Bond-Note bonanza and erupting inflation out of spiral. Making the pennies and dimes worthless anyway. If that is the trick, the Bank of South Sudan and Ministry of Finance should just go ahead. Instead of securing the measures, the trade policies and the monetary instruments of the Republic.
They are instead re-issuing a new currency. They are dropping the SSP for something else. There have to be a transition period. A time and opportunity to change the currencies. As the time goes for the switch, the public and businesses can go from SSP to whatever it will be. If not, then they are draining the system and emptying the coffers of people. Which in the end, will also ensure there is less money in circulation.
The saga of the SSP will haunt the new currency. Because, this is just changing the name, but not changing the elements. They are taking away the history and the namesake. However, the same lack of trust and monetary instruments are still there. If they had these and ensured the markets and safeguarded the currency. Then the public could have some trust and if there was measures in place. It wouldn’t be necessary to switch and ditch the old one.
This here is a sign of weakness, lack of process and just sudden change. In hope that this is the remedy. This sort of action is the quick fix and hope it can miraculously save the day. However, it is never that easy. Especially, when your not only building market dynamics, but also on trust. When you need several of components to work in tandem and be at each others side. If they are not. Then one will beat the other and in the end the citizen or consumer is the loser. As the currency gets devalued since the authorities cannot contain the brutal assessment of currency.
This is short-sighted. It really is and the next one will have the same remaining issues. Your folding one chapter, but your just starting where the other left off. It will be just a matter of time before this stinks too. Since, the same fella’s are running the shop and their game is to earn a quick buck. Peace.