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The Bank of South Sudan (BoSS) has announced the removal of the SSP10 million ($2,567) cash withdrawal limit for commercial banks in a bid to address the country’s deepening liquidity crisis and restore public confidence in the banking sector. This move forms part of a broader effort to stabilize South Sudan’s fragile economy and encourage savings.
Strengthening Public Trust in Banking
In a statement issued on December 13, the newly appointed central bank governor, Johnny Ohisa Damian, emphasized the importance of rebuilding trust in the banking system. He noted that public mistrust of commercial lenders has led to widespread cash hoarding, undermining the financial ecosystem.
“To further strengthen public confidence in the banking sector, the central bank has resolved to encourage commercial banks to offer interest on savings accounts. This initiative aims to incentivize customers to deposit more into their savings accounts,” Mr. Damian stated.
The decision was reached during a crisis meeting on December 12, where the BoSS leadership and executives of commercial banks deliberated on measures to resolve liquidity challenges and tackle broader macroeconomic issues.
Collaborative Efforts to Boost Liquidity
Mr. Damian directed that the SSP10 million cash withdrawal limit, initially imposed to encourage digital transactions, be lifted. He highlighted the importance of collaboration between the central bank, commercial banks, and the public to rebuild trust and enhance financial sector stability.
“This new collaborative approach is expected to strengthen working relationships among the country’s banking and financial sectors,” he added.
Economic Pressures and Leadership Changes
The announcement comes shortly after President Salva Kiir dismissed the former central bank governor Alic Garang, along with other top officials, as part of a shake-up in South Sudan’s economic and security institutions. Johnny Ohisa Damian, who previously served as governor, has been reinstated to lead the central bank, with Yeni Samuel Costa appointed as first deputy governor.
The SSP10 million cash withdrawal limit, introduced in September 2024, was originally aimed at promoting electronic transactions, reducing the cost of printing banknotes, and fostering financial digitalization. Despite the intention, it exacerbated liquidity challenges in the economy.
Broader Economic Challenges
South Sudan’s economic woes have been compounded by the conflict in neighboring Sudan. Damage to a vital oil pipeline, which transports 70% of South Sudan’s oil through Sudan, has led to a sharp decline in exports and foreign exchange inflows. This has caused a steep fiscal revenue drop, sharp exchange rate depreciation, high inflation, and salary arrears.
The International Monetary Fund (IMF) reports that these challenges, combined with the massive influx of over 800,000 refugees and disruptions in the supply of essential goods, have placed additional strain on the economy. More than 7.1 million people—over half of the population—are currently facing acute food insecurity.
Steps Toward Economic Recovery
In September, South Sudan and Sudan reached an agreement to resume oil production and exports, signaling a potential recovery for a critical pillar of their economies. This agreement followed discussions between President Salva Kiir and Sudanese military leader Abdel Fattah al-Burhan, marking a significant step toward regional cooperation.
The BoSS’s recent policy adjustments reflect the urgency of addressing liquidity constraints while laying the groundwork for a more robust and resilient financial system in South Sudan. By fostering trust in banks and encouraging digital transactions, the central bank aims to stabilize the economy and create an environment conducive to long-term growth.
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