The new national currency – the Sudanese Pound – was launched on the 9th of January 2007.This represented an important event in the implementation of the CPA. First and foremost, it is an important symbolic measure of change, but it also corrects the current situation where as many as six currencies are legal tender. Particularly in the Southern Sudan the new currency will benefit economic development. Norway has taken the lead among donors to mobilize international support. The IMF is providing technical assistance.
23/07/2007 :: The CPA stipulates that the design of the new currency shall reflect the cultural diversity of the Sudan. The new currency will be issued in six denominations; the first three (1, 10 and 50 Pounds) have been issued and the rest (2, 5 and 20 Pounds) will follow suit. Each pound equals 100 piastres, and new coins will be struck for various piaster denominations. While the currency has been launched, the process of replacing the currencies that at present circulate will take many months.
Introduction phase
In the first phase of the currency the emphasis is on replacing the African currencies that are circulating in the Southern Sudan. According to the current plan, the replacement of these currencies, as well as the ‘Old Sudanese Pound’ (which has survived as legal tender in some parts of the South) should be finished by the 9th of March. After this date, only the Sudanese Pound (the Sudanese Dinar for a limited period) will be legal tender. The Central Bank is also putting the new currency into circulation in the Northern States, initially through the regular banking system, but in June also through designated substitution centres. From the 1st of July, both the exchange and circulation of the Dinar will be illegal and substitution will only be through the banking system. The Central Bank of Sudan will stop substituting the Dinar on the 1st of September.
From pounds to dinars to pounds again
The reason the Parties agreed to introduce a new national currency was that the SPLM expressed strong objections to the Sudanese Dinar, which they felt had been introduced as part of the (previous) government’s policy of Islamization. This view was rejected by the government delegation, but even so the SPLM threatened to issue a separate currency in the Southern Sudan. The co-existence of two separate currencies, and by implication two monetary policies, would have created an impossible situation. As a mutually acceptable compromise, the Parties agreed that the Sudanese Dinar should be replaced with a new national currency. Interestingly, to use the name Sudanese Pound for the new currency is a return to the situation as it was prior to the introduction of the Dinar (in 1992), when the currency also was called Sudanese Pound. Moreover, most people have continued to use ‘pounds’ (Ar: ‘jinneh’) whenever they talk about money, automatically adding one zero to prices, etc.
Pro-poor measure and national symbol
The fact that the people in their everyday lives use an ‘imaginary currency’ creates special problems in the conversion process. For instance, the official Sudanese Dinar equals 0.1 (New) Sudanese Pound, i.e. two zeros are ‘knocked off’ the 100 SD bill. But since most people talk about pounds, and most stores list prices in (old) Sudanese pounds, in reality people need to delete three digits from listed prices, i.e. 1.000 ‘Old’ Pounds equals 1 ‘New’ Pound. The problem is even greater in parts of the Southern Sudan where the ‘Old Sudanese Pound’ has continued to circulate, and where exchange rates differ between several currency zones.
Establishing a new currency in Sudan will assist in improving and stabilizing the economy in the South. Especially the poor suffer from the chaotic currency situation in the Southern Sudan, and the introduction of the new currency is therefore also a pro-poor measure. The introduction of the new currency will also serve as a significant national symbol, with a design that carries important unifying messages.
NORAMB/Endre Stiansen