Economist Ahmed Morjan speaks to Eye Radio. January 13, 2023. (Photo: Moses Awan).

An Economist says diverging financial policies resulting from a lack of coordination between government institutions are to blame for the rising inflation in the country.

Dr. Ahmed Morjan, who is also a lecturer of economics at the University of Juba says the Central Bank monetary policies and the fiscal policy by the trading authorities are working in a contradicting manner.

“Problems of policies. You know, the Central Bank makes monetary policies and other policies. But again, the other side of policies is fiscal policies,” he said.

“Fiscal policies are supposed to be made by the ministry of finance and the trading authority. Now what is happening in South Sudan is a lack of coordination between these policies.”

Morjan says the Central Bank policies to reduce inflation are not working because the fiscal policies are increasing taxation.

“The central bank can come up with a policy whereby that policy could have been supported by fiscal policy but unfortunately in South Sudan, the fiscal policy is doing the opposite.”

“For instance, the Central Bank is trying to work hard so that the exchange rate comes down, but the fiscal authority is increasing taxes. Now that one will not work and that is a major cause of inflation. ”

Morjan also said the other causes of inflation include administrative costs and the lack of production among others.

He said the Ministry of Commerce and the Central Bank must come together and ensure that the different financial policies are implemented in a way that will not affect the economy.

Dr. Morjan’s remarks come days after the Bank of South Sudan released a statement encouraging commercial banks to increase lending to the private sector to up to 40 percent of their total deposits.

Central Bank governor, Johnny Ohisa Damian said the bank’s Monetary Policy Committee discussed key monetary and banking policies to guide economic activities in the country throughout the year 2023.

The official Bank exchange rate has been steadily rising, and is closing-in on the SSP 700 per 1 US dollar benchmark.