Freetown, SIERRA LEONE – Sierra Leone is grappling with a burgeoning public debt crisis as the total debt reached a staggering NLe63.5 billion by the end of the second quarter of 2023. Disturbingly, this translates to a per capita debt of NLe8.4 million for each Sierra Leonean, according to the latest debt statistics unveiled on Thursday, January 25, 2024.
The per capita measure, known as net debt per capita, is a critical indicator reflecting the amount of debt held by the government per citizen. The calculation involves dividing the total public debts by the population at the last census.
The Public Debt Management Division (PDMD) at the Ministry of Finance disclosed that this substantial increase of 22.9% to NLe63.5 billion is compared to NLe51.1 billion recorded at the close of December 2022. The PDMD attributes this surge primarily to the depreciation of the Leone concerning external debt.
The inaugural Semi-Annual (First Half) 2023 Public Debt Statistical Bulletin provides a comprehensive overview of the combined domestic and external debts during the period. The report indicates a 13.4% increase in domestic debt, reaching NLe18.2 billion, while external debt experienced a significant 27% surge, climbing to NLe45.3 billion due to the depreciation of the Leone.
Comparing the debt figures to the end of June 2022, there was an alarming annual increase of 63.3%. The PDMD clarifies that this surge is predominantly driven by the impact of Leone depreciation on external debt and new domestic borrowing to implement the national budget.
Breaking down the numbers, the external debt stood at NLe45.32 billion by the end of June 2023, marking a 27.1% increase from December 2022, primarily due to the depreciation effect. Meanwhile, domestic debt reached NLe18.20 billion by the same period, reflecting a 13.38% increase from December 2022.
The PDMD points out that Sierra Leone’s public debt has been on a steady incline since benefiting from debt stock cancellation after reaching the HIPC Completion Point in 2006. From NLe6.6 billion at the end of 2013, the total public debt skyrocketed to NLe63.5 billion by the end of June 2023.
While expressing concern about the escalating debt burden, the PDMD notes that the growth, when measured as a percentage of GDP, has been relatively moderate over the period. The debt-to-GDP ratio, which was below 40% at the end of 2013, surged to 93.3% by the end of 2022. However, there is a slight drop to 84.9% at the end of June 2023, considering the projected GDP for 2023 from documents published by the IMF.
Despite a consistent growth in external debt volume, the depreciation of the Leone against major loan currencies remains a significant factor contributing to the surge in the public debt when reported in Leones. The economic landscape of Sierra Leone now faces the challenge of managing this escalating debt crisis. ZIJ/29/1/2024