Gov’t agencies ordered to close accounts in commercial banks

Gov’t agencies ordered to close accounts in commercial banks
Johnny Ohisa Damien, newly appointed South Sudan Central Bank Governor. [Photo: courtesy]

The Bank of South Sudan (BoSS) has ordered for immediate closure of all accounts maintained by public entities in commercial banks.

The central bank in a directive issued on Monday, said institutions belonging to the central government such as ministries and commissions operate accounts with commercial banks without due authorization.

BoSS also said state governments also operate accounts with private financial institutions contrary to the directives of the finance and planning ministry.

“The Ministry of Finance and Planning noted that some government institutions have opened accounts with commercial banks either through an authorization from the ministry of finance and planning or directly without authorization from the bank of South Sudan,” BoSS said in a statement seen by City Review.

The national lender described the move as the best decision by economists.

The treasury said all accounts accredited to both national and state governments must be closed with immediate effect. Only accounts opened for donor projects will be exempted.

“In light of the above, the BoSS is hereby directing all commercial banks to close all bank accounts of central government institutions (ministries and commissions) and state governments except donor (IMF, World Bank, African Development Banks and UN agencies) funded project accounts of these institutions,” the BoSS said, demanding that names of these exempted banks should be submitted not later Friday, January 27, 2023.

The bank also ordered the transfer of balance for the affected operators to a ‘suspense account’ awaiting further directives.

“Additionally, all account balances of all central government institutions (ministries and commissions) and state governments affected by this directive, should be transferred to a suspense account for further directives to be communicated at a later date,” the bank said.

The move comes days after the bank ordered all pricing in the local currency the South Sudanese Pounds (SSP) which has been losing value since 2014 when it abandoned the fixed exchange rate.

The decision has been described as one of the best decisions the bank has taken in bringing billions of pounds under government control amid biting inflation and devaluation.

Dr Abraham Maliet Mamer, an economic analyst with the Economic Cluster, said closing public entity accounts with commercial banks will reduce operating costs such as deposits and withdrawal charges incurred by the account operators.

“All the government institutions are not profit-making, they may charge fees but that is not profitmaking, therefore, their bank accounts should always be placed in the central banks because the centre is the custodian of all government money.

“They should bank with the centre so that they don’t pay commercial charges; you know in the commercial sector when you deposit you pay charges and when you withdraw, you also pay,” Dr Mamer added.

National Revenue Authority (NRA), for example, is said to have more than 10 accounts with several commercial banks.

He said once all government institutions have accounts with the central bank, it will be easy to control how these entities utilise their budget allocations.

“It will reduce bureaucracy and cost (of operating accounts with commercial banks) and gives the state control over what these institutions do with the money.

Dr Mamer said the Bank of South Sudan (BoSS) should now find agencies in the states where it has no branches to be keeping money on behalf of state governments.

He said these agencies should sign an agreement with the BoSS to ensure financial discipline measures are observed strictly.

“In the state where there is no branch of the central bank, the Boss will find an agent in these areas and sign an agreement with them to be keeping the money for the state governments. For example, if Ivory Bank is in Warrap State, the central bank will sign an agreement with the bank to keep the money for the state government,” he said.