Aug. 23 (Bloomberg) -- Southern Sudan, a semi-autonomous region that pumps most of Sudan’s crude, accused the government in Khartoum of switching payments of oil revenue to domestic currency from dollars in violation of a 2005 peace accord.
“As a result of this action, the foreign-exchange reserves of the Bank of Southern Sudan have been seriously depleted,” Southern Sudan Finance Minister David Deng Athorbei said in a statement today in the capital, Juba. “The Bank of Southern Sudan is unable to supply banks and foreign-exchange bureaus with foreign currency, and meet the foreign-exchange needs of the government of Southern Sudan.”
The move resulted in the exchange rate in Southern Sudan weakening to 3.10 Sudanese pounds per U.S. dollar from 2.43 “in recent days,” Athorbei said. The Central Bank of Sudan’s website quotes the exchange rate at 2.3725 per dollar.
Oil revenue accounts for 98 percent of the Southern Sudan government’s total budget. Last month, Sudan introduced restrictions on foreign-currency sales to prevent shortages. The country, under U.S. economic sanctions, is sub-Saharan Africa’s third-biggest oil producer. Sudan’s foreign-exchange reserves totaled $956.2 million in January, according to data compiled by Bloomberg.
“There will be a further fall of the Sudanese currency in the south if the situation is not reversed,” Athorbei said. Unless the policy is changed, the damage to the economy will be “great,” he said.
Southern Sudanese President Salva Kiir, who also serves as first deputy president in Sudan’s government, has written a letter asking for the changes to be reversed, according to the statement.
Southern Sudan’s economy is recovering from a 21-year civil war that ended in 2005 with a peace accord granting the southern region of Sudan semi-autonomy. Voters will decide in a January referendum whether to secede and form an independent state.
Under the peace deal, the authorities in Southern Sudan and Khartoum split revenue from oil pumped in the south. The crude is exported through a pipeline running north and ending in Port Sudan on the Red Sea. The two sides haven’t reached agreement on a revenue-sharing arrangement after the referendum.
Athorbei said that under the peace accord, the government of Southern Sudan’s 50 percent share of oil revenues should be paid in hard currency into accounts managed by the Bank of Southern Sudan.
Khaled Mohamed Adam, an information officer at Sudan’s central bank, said officials are awaiting a delegation from the south to discuss the issue before commenting to the media. No one at Sudan’s Finance Ministry in Khartoum answered the phone when Bloomberg News called seeking comment today.
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