MDTF N OC Meeting Khartoum, December 17, 2006 Sudan: New Unified National Currency

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MDTF- N OC MeetingKhartoum, December 17,
2006SudanNew Unified NationalCurrency
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• 1- Why the introduction of the new national
  currency?
  
• A new unified currency required by the CPA to
  represent an important symbol of national unity.
  
• The design will carry important messages
  necessary for peace and unity.
  
• . It is a joint project between southern and
  northern Sudan.

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• 2 - Article 14-9 of the Wealth Sharing
• Agreement
• Provided for the introduction of a new currency
  during the interim period.
  
• The design of the currency should reflect the
  diversity of the country.
  
• Recognized the foreign currencies in southern
  Sudan beside the old Sudanese pound as legal
  tender until the introduction of the new
  currency.

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• 3- Article 5 of the Implementation Modalities of
  the Wealth Sharing Agreement of the CPA stated
  that
  
• the source of finance is jointly by the
  Government of National Unity and the
  International Donor Community
  
• the responsibility of CBOS is the issuance of the
  new currency.

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• 4- Currency system in the southern Sudan
• Multiple currencies co-circulating
• - Kenyan Shilling zone mainly south east
• - Ugandan Shilling zone mainly south west
  
  
• - Ethiopian Birr zone east
• - Pre-1992 Sudanese Pound zone
• - Sudanese Dinar zone
• - U.S. dollar in all of the south.
• Currency zones sometimes overlap.

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5- Effects of the Multiple Currency
System in southern Sudan Now in Sudan, there
are six currencies recognized as legal tender.
In the South, prices in the same town and village
markets sometimes expressed in more than one
currency as a medium of exchange.
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Very complex exchange rate system dominated by
cross-rates facing normal people.
Different functions of money are performed by
different currencies. Daily economic activities
and exchange rendered difficult and expensive.
Development of the south is impeded.
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Economic integration of all of Sudan is also
impeded. Banknotes in circulation are highly mu
tilated. Market size squeezed. Counterfeitin
g of currency is a real threat.
Confusion is mounting in peoples mind.
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6- Steps taken since signing the CPA
Establishment of two Technical Committee one
for the Design of the New Currency and the other
for the assessment of currencies in the South.
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Currency workshop in Nairobi
attended by the two Parties, IMF staff, and a
Norwegian government representative. A Plan
prepared by the workshop for the launching of the
new currency in October 2005 delayed because of
lack of funding. Assessing of the currencies
co-circulating in the Southern Sudan completed in
two phases.
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• Artistic design of the six denominations of the
  banknotes with World Bank funding and production
  of printing plates and films by Government
  financing.
• Design and production of dies for five coin
  denominations by Government financing.
  
• Procurement of paper and coin blanks done
  according to World Bank procedures.

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• 7- The ten principles for the design of the new
  currency
  
• Reflect hope and aspirations of the people of
  Sudan.
  
• (ii) Reflect the peace vision.
• (iii) Reflect the Sudanese cultural background.
• (iv) Reflect the unity of the country in its
  diversity.

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(v) Reflect the countrys industrial
advancement. (vi) Reflect the countrys diverse n
ational natural resources. (vii) Avoid showing re
ligious symbols. (viii) Avoid showing ethnic symb
ols. (ix) Avoid showing associations to state-of-
war and conflict. (x) Avoid showing any human fig
ures.
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8- Budget Estimates Estimation is U.S.155 mil
lion confirmed by the IMF technical assistance
mission.

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Budgetary estimates cover - Designing
- Printing and minting - Transportation, st
orage, distribution etc - Information campai
gn and - Other logistic expenses.
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• The estimated foreign component of the budget
  (US80 million) expected to be met by donors.
  
• The estimated local component of the budget
  (US75 million) expected to be met by the
  Sudanese government.
  
• The procurement of paper and coin blanks through
  international tender cost 42 M.

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9- The plan for the currency conversion Sta
rts in January 9, 2007. Distribution will be a
ll over the country with the bulk of the first
batch to go to southern Sudan.
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Conversion of foreign currencies and the old
Sudanese Pound will be in 8 weeks then it will
seize to be legal tender.
The new Sudanese Pound will co-circulate with
the Dinar for a suitable period during 2007 to
guarantee a smooth conversion.
To start the conversion 3 denominations of ban
knotes will be launched in Jan 2007.
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• Three coin denominations will be launched in Jan
  2006 mainly for the South.
  
• A five-tiered structure of management is used
  for the conversion process.
  
• Legislation steps finalized by the parliament.
• Procurement of domestic requirements is in the
  process.

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10- The importance of the project and the need
for urgent funding Maintain the integrity
of the CPA. Reform the distorted monetary syst
em in the country. Restore normal economic acti
vity in the Southern Sudan.
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Enhance the economic integration and devel
opment in the Southern Sudan and the country as a
whole.
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That is why we are keenly requesting the
international donors to honor their commitments
made at the time of signing the CPA as the real
challenge is in the implementation of the CPA on
the ground.
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