JUBA — Two financial experts have called on South Sudan’s Ministry of Finance to repay outstanding funds borrowed from the Bank of South Sudan, saying the repayments could help ease liquidity shortages affecting commercial banks.
Dr. Ting Mayai, a researcher, and Stephen Omir, a certified accountant and chief executive officer of Eye Media, made the remarks during the Eye Radio Podcast’s Around South Sudan discussion on the country’s liquidity crisis.
Dr. Mayai, who discussed his recent research findings on the crisis, said the Ministry of Finance had taken funds held by the central bank without returning them, raising concerns about the availability of reserves for commercial banks.
“The Central Bank should hold the reserves, but the Ministry of Finance takes the money and does not return it,” Dr. Mayai said.
He added that South Sudan’s reserves were stronger when the country gained independence, although he could not establish how much remained at present. He said commercial banks were supposed to keep their reserves at the central bank but appeared to be struggling to access their funds.
Dr. Mayai also said the central bank had indicated that some of the reserves it held had been borrowed by the Ministry of Finance and not repaid.
Meanwhile, Omir said addressing the liquidity crisis required the government to settle its outstanding obligations to the central bank.
“To address liquidity shortages in South Sudan’s commercial banks, the Ministry of Finance must repay the funds it owes the Bank of South Sudan through outstanding overdrafts,” Omir said.
The experts’ remarks highlight concerns about the relationship between government borrowing and the availability of funds within the banking system.
Repayment of outstanding overdrafts could help restore funds to the central bank, although the extent to which this would ease liquidity pressures would depend on the amounts owed and the wider conditions affecting the banking sector.
The Ministry of Finance and the Bank of South Sudan were not quoted responding to the experts’ claims in the information provided for this report.
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