VZCZCXRO3177
RR RUEHROV
DE RUEHKH #0146/01 0310418
ZNR UUUUU ZZH
R 310418Z JAN 07
FM AMEMBASSY KHARTOUM
TO RUEHC/SECSTATE WASHDC 5952
INFO RUCNIAD/IGAD COLLECTIVE
RUEHFSC/USOFFICE FSC CHARLESTON 0268
RUEATRS/DEPARTMENT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 KHARTOUM 000146 
 
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E.O. 12958:  N/A 
TAGS: EFIN ECON PGOV AFIN AMGT PREL EAID SU
SUBJECT:  Sudan's New Currency 
 
 
¶1.  Summary:  Commencing January 9, Sudan started phasing in its new 
national currency, the pound, as a major step in implementing the 
North-South Comprehensive Peace Agreement (CPA) and in promoting 
national unity.  The par value is one pound per 100 dinars; the 
pound is subdivided into 100 piasters.  The currency will be phased 
in from January through June 2007, with the dinar no longer a valid 
currency as of September 1, 2007.  The phase-in focuses on Southern 
Sudan, and starts with 1, 5, and 10 pound notes.  Other 
denominations and coinage will follow.  The process seeks to take 
other currencies out of circulation and facilitate economic growth 
in the South.  End summary. 
 
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1 Pound Equals 100 Dinars; 1 Pound Equals 100 Piasters 
--------------------------------------------- --------- 
 
¶2.  Initial denominations released are 1, 5, and 10, with 2, 20, and 
50 pound notes (and coins) to be released later.  One pound equals 
100 dinars, and one pound is subdivided into 100 piasters.  To date, 
however, only about 10 percent of the banknotes have been printed 
despite the initiation of the currency phase-in; IMF guidelines call 
for a 50 percent rate at commencement. 
 
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New Currency Origins in North-South Peace Agreement 
--------------------------------------------- ------ 
 
¶3.  Under the Wealth Sharing Protocol of the CPA, Republican Decree 
No. 275 for 2006, and the approved amendment of Article (19) of the 
Law of the Central Bank of Sudan (CBOS), Dr. Sabir M. Hassan, 
Governor, announced the circulation of the new Sudanese currency, 
the pound, through the official banking channels starting on January 
9, 2007.  The replacement process will focus initially on Southern 
Sudan in an effort to replace the multiple currencies in use there - 
the U.S. dollar, Ethiopian birr, Kenyan shilling, Ugandan shilling, 
Sudanese dinar, and old Sudanese pound.  Replacing these currencies 
is expected to facilitate economic expansion in Sudan's growing 
post-war South.  An extensive public information campaign is 
underway, especially throughout the South, to introduce the new 
currency and encourage currency substitution for the new pound. 
 
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Donor Support Key to Underwrite Associated Costs 
--------------------------------------------- --- 
 
¶4.  The currency conversion will cost an estimated $154 million. 
Although the GNU has used current revenues to cover costs so far, 
donors and grants from the Multi-Donor Trust Fund are expected to 
cover roughly one-half the overall costs.  The approximate cost 
breakdown includes banknote procurement $59 m, currency exchange 
implementation $58 m, coin design and procurement $22 m, 
precautionary contingency reserve $14 m, banknote design and plate 
production $874 k, and accountability $304 k. 
 
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Lengthy Phase-in Anticipated 
---------------------------- 
 
¶5.  The CBOS announced simultaneous circulation of the new and old 
currencies to ensure smooth replacement without congestion or 
crowding during the replacement period, which is expected to take 
six or seven months.  New currency will be phased in from January 9, 
2007 through May 30, 2007, focusing on the Southern states.  During 
the first 90 days, 23 substitution centers will operate in Southern 
states for African currencies and the old Sudanese pound; from June 
1, 2007 through June 30, 2007, dinar substitution centers will 
operate in all states in both the North and South as well as banks. 
These substitution centers will close on June 30, 2007, with 
substitution thereafter through July 31, 2007, permitted only 
through the Central Bank, its branches, and commercial branches. 
From August 1 - 31, 2007, substitution will be limited to the 
Central Bank and its branches; on September 1 the dinar will be null 
and void, with no substitution permitted. 
 
--------------------------------------------- -- 
Many Currencies of Neighboring Countries in Use 
--------------------------------------------- -- 
 
¶6.  Elija Malok, Deputy Governor of the CBOS and Governor of the 
CBOSS, stated that replacement of the currency might take over a 
year and a half to be completed.  The size of currencies circulating 
in the South is estimated at roughly $80 million, according to the 
local survey committee working with the IMF.  A delegation from the 
CBOS and the CBOSS will visit neighboring countries (Ethiopia, 
Kenya, and Uganda) to discuss ways of withdrawing their currencies 
from Southern Sudan.  The conversion rate for foreign currencies in 
 
KHARTOUM 00000146  002 OF 002 
 
 
the South is set at 1 Ethiopian birr equals 0.286 pounds, 1 Kenyan 
shilling equals 0.028 pounds, and 1 Ugandan shilling equals 0.001 
pounds. 
 
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