Coordination failures, public mistrust blamed for cash crisis

A lawmaker has attributed the ongoing cash shortage in the country’s banking system to poor coordination between key financial institutions and growing public mistrust in the banking sector.

Justin Joseph Marona said the crisis persists despite the existence of legal frameworks such as the Public Financial Management and Accountability Act, which he noted are poorly implemented.

Speaking on Eye Radio’s Sundown program, the member of the Public Accounts Committee cited a lack of alignment between the Ministry of Finance and the Bank of South Sudan in executing fiscal and monetary policies.

“To be honest, the issue of cash availability is one of the very important elements of monetary and fiscal policy management,” Hon. Justin said. “When the two policies understand each other, it results in a healthy economy and sufficient currency circulation. But currently, there is a misalignment between the two,” he said.

He explained that while fiscal policy is responsible for generating revenue and stimulating economic growth, the monetary policy should manage that wealth through appropriate strategies and reserves.

However, the disconnect between the two institutions has led to a liquidity shortage in commercial banks.

Marona also pointed to a deepening mistrust in the banking system, which he said has pushed many citizens to keep their money at home.

“Due to the mistrust of the people in the banking system, they are now banking in their houses,” he said. “The government and relevant institutions must address this mistrust, build confidence, and encourage people to deposit their money in banks so the economy can operate normally,” he explained.

He urged the government to identify the root causes of the mistrust and ensure the banking sector complies with financial standards to restore public confidence.

Morana revealed that the Public Accounts Committee met with officials from the Central Bank in March to assess the situation and found significant coordination gaps between the bank and the Ministry of Finance.

He added that the committee has received numerous complaints from citizens about inaccessibility of funds during emergencies, unexplained bank charges, and the failure of commercial banks to return transferred funds to the Central Bank.