Central Bank (SL) officials Wednesday disclosed that some 39.7 million dollars have been pumped into the economy since 1st
January 2009 to help stabilize the country’s financial system.
This comes against the backdrop of serious concerns raised by members of the public over the value of the Leone against
foreign currencies like the dollar and pound sterling.
Responding, Central Bank Governor Sheku Sambadeen Sesay who was speaking to the local press for the first time since he was
appointed, honestly admitted that “the continued depreciation of the Leone is likely to engender loss of confidence in the
Leone and exacerbate the poverty situation by increasing inflationary pressures.”
He explained that “Sierra Leone is a small and import based economy that operates on a flexible exchange rate system in which
demand and supply determine the rate.”
On the supply side he said “the global financial crisis has seriously affected the world market price of our main export –
diamonds, reduced trade credits, and significantly reduced the demand for Sierra Leones main exports … diamonds, bauxite,
rutile etc.”
Further he said “foreign remittances have also dropped by almost 35%, commodity prices have also declined in the world
market, the demand for our exports therefore, have fallen with a corresponding fall in prices. There has been a drop in
diamond prices which represents almost about 80% of our exports. Bauxite mining and Koidu holdings have also ceased
operations.”
On the demand side he said “the cost of Sierra Leone’s imports has increased especially food and fuel and this has created
pressure on the foreign exchange.”
As a result he said “the government has put in place policies such as moves to facilitate the resumption of mining activities
mainly iron ore.”
“There is a seasonal aspect of this demand side also” he went on “this is usually the lean period for foreign currency inflow
since the Antwerp diamond market goes on recess during the months of July to September and also most project activities are
scaled down during the rainy season.”
He added “We are expecting some improvement towards the end of the year and projects to resume operations after the rains.”
The Bank he said has “been trying to cushion the effect through its weekly foreign exchange auction by gradually increasing
its supply (in foreign exchange) from one million to two million within the past four months and this actually represents a
100% increase.”
This he said followed consultative meetings between the Central Bank, Trade and Finance Ministries, and major rice and fuel
importers along with the Chief Executives of the commercial banks.
As a result he said “a special window was opened for rice and fuel importers in the auction and since the 19th August 2009
the rice importers have been receiving about $600,000 and oil importers about $800,000 weekly at the auction. The other
merchandise window – that is other eligible imports, they were receiving $300,000 weekly and we have increased that to
$600,000 weekly.”
“So far with this intervention we have seen a slower depreciation of the exchange rate at the auction and we hope that as the
economy picks up things will improve” he said.
In general the bank Governor said “the performance of the economy has been mixed.” He said “we have witnessed a depreciation
of the Leone but the depreciation has been lower than experienced in several countries.”
The year on year inflation rate “as at July 2009 has been in the single digit about 9.13% “ he disclosed, adding that “the
central bank gross reserves are fairly healthy we can intervene at any time” As far as critical imports are concerned (fuel
and rice) he said “we can adequately absorb what is required.”
Director of the Financial Markets department I.K Lamin that there are “Over 7 months of import cover” and since January 1st
to now $39.7 million dollars have been pumped into the financial system.
By Kelvin Lewis
January 2009 to help stabilize the country’s financial system.
This comes against the backdrop of serious concerns raised by members of the public over the value of the Leone against
foreign currencies like the dollar and pound sterling.
Responding, Central Bank Governor Sheku Sambadeen Sesay who was speaking to the local press for the first time since he was
appointed, honestly admitted that “the continued depreciation of the Leone is likely to engender loss of confidence in the
Leone and exacerbate the poverty situation by increasing inflationary pressures.”
He explained that “Sierra Leone is a small and import based economy that operates on a flexible exchange rate system in which
demand and supply determine the rate.”
On the supply side he said “the global financial crisis has seriously affected the world market price of our main export –
diamonds, reduced trade credits, and significantly reduced the demand for Sierra Leones main exports … diamonds, bauxite,
rutile etc.”
Further he said “foreign remittances have also dropped by almost 35%, commodity prices have also declined in the world
market, the demand for our exports therefore, have fallen with a corresponding fall in prices. There has been a drop in
diamond prices which represents almost about 80% of our exports. Bauxite mining and Koidu holdings have also ceased
operations.”
On the demand side he said “the cost of Sierra Leone’s imports has increased especially food and fuel and this has created
pressure on the foreign exchange.”
As a result he said “the government has put in place policies such as moves to facilitate the resumption of mining activities
mainly iron ore.”
“There is a seasonal aspect of this demand side also” he went on “this is usually the lean period for foreign currency inflow
since the Antwerp diamond market goes on recess during the months of July to September and also most project activities are
scaled down during the rainy season.”
He added “We are expecting some improvement towards the end of the year and projects to resume operations after the rains.”
The Bank he said has “been trying to cushion the effect through its weekly foreign exchange auction by gradually increasing
its supply (in foreign exchange) from one million to two million within the past four months and this actually represents a
100% increase.”
This he said followed consultative meetings between the Central Bank, Trade and Finance Ministries, and major rice and fuel
importers along with the Chief Executives of the commercial banks.
As a result he said “a special window was opened for rice and fuel importers in the auction and since the 19th August 2009
the rice importers have been receiving about $600,000 and oil importers about $800,000 weekly at the auction. The other
merchandise window – that is other eligible imports, they were receiving $300,000 weekly and we have increased that to
$600,000 weekly.”
“So far with this intervention we have seen a slower depreciation of the exchange rate at the auction and we hope that as the
economy picks up things will improve” he said.
In general the bank Governor said “the performance of the economy has been mixed.” He said “we have witnessed a depreciation
of the Leone but the depreciation has been lower than experienced in several countries.”
The year on year inflation rate “as at July 2009 has been in the single digit about 9.13% “ he disclosed, adding that “the
central bank gross reserves are fairly healthy we can intervene at any time” As far as critical imports are concerned (fuel
and rice) he said “we can adequately absorb what is required.”
Director of the Financial Markets department I.K Lamin that there are “Over 7 months of import cover” and since January 1st
to now $39.7 million dollars have been pumped into the financial system.
By Kelvin Lewis