Author: Madrama James | Published: 36 minutes ago
Michael Ayuen, the Chairperson of the Finance Committee at the Parliament. (Photo: Awan Moses/Eye Radio).
The Chairperson of the Committee for Finance and Planning at the Transitional National Legislative Assembly says a lack of trust between commercial banks and the central bank is contributing to the ongoing liquidity crisis in South Sudan.
Lawmaker Michael Ayuen said findings from parliamentary research indicate that some commercial banks are hesitant to keep their reserves with the central bank, fearing their funds may not be accessible when needed — a situation that has also driven individuals to hoard cash.
Speaking to Eye Radio during the Sundown Show, MP Ayuen explained the impact of this trust deficit on the economy.
“Well, per the data that we have collected as parliament through the Committee on Finance, we discovered that the shortage of liquidity in the market was caused by deficit of trust between the bankers and the commercial banks and then commercial bank and the central bank,” he said.
“So commercial banks to them, they are saying they are not trusting central bank because they keep their money with the central bank and their money is exhausted. When they need it for business transactions, they don’t get it. And so, does the business sector and the public.
“So, we have seen a clear line that must have attracted behavior by individuals to keep money in their own custody as a result of a deficit of trust,” he explained.
The parliamentarian urged the public to boost local production, particularly in agriculture, as a way to ease the country’s demand for foreign currency and help stabilize the liquidity situation.
“Another way is to embark on local production. When we have our food produced in the country, it will reduce on the demands of import. And therefore, the demand for money will go down. Now as we speak, dollar has become the number one commodity in the market.
“Why? Because everyone wants to at least import something. And if you want to import something, then you have to hunt for dollar. And if you have to hunt for dollar, you have to have these big notes, 1000 and 500. Because these are the notes that people with dollars like, all right? So, it is even contributing to the absence of liquidity in the market,” he said.
Last week, the Ministry of Finance and Planning, together with the Central Bank, encouraged citizens to embrace digital payment systems as part of efforts to address the liquidity crisis.
