With the government’s announcement of an external concessional loan of $ 367.8 million projected to be taken by end of December 2019, this two Civil Society Organisations says “sends a worrying signal of the commitment of government to reduce the external debt burden.” The Budget Advocacy Network (BAN) that works on budgets and budget policies and the Non State Actors (NSA) who are working with Government and Development Partners on Public Financial Management (PFM) reforms shared their findings on the recently read 2020 Budget Statement. It could be recalled that in the first year of the economic management of the New Direction government (April 2018 – April 2019), two external loan agreements totaling US$300 million were cancelled by government due to the risks they posed to debt sustainability. “We strongly recommend that the government should introduce an annual debt ceiling beyond which government cannot borrow, as stated in the New Direction Manifesto, and ensure that loans taken on behalf of the people of Sierra Leone are done in a transparent and accountable manner” they said in their position paper released last evening. Sierra Leone’s external public debt has increased by 7.2% (in dollar terms) and 22.9% (in Leones terms) from June 2018 to June 2019. It is expected to increase by 19% (in dollar terms) and 35.6% (in Leones) by the end of December 2019.
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They went on to note that “government’s debt is a part of the fiscal management, however, we are concerned about the sustainability of rising debt levels and the shift from moderate to high risks of debt distress.” On inflationary pressures, mainly on account of the effect of fuel price increase on essential commodities and the deprecation of the domestic currency, these organisations stated that it remains a concern for Sierra Leoneans; especially so when variations in wages are not at per with current inflation rates. The current inflationary pressures in the country, they said if not reversed, will continue to erode real earnings of average Sierra Leoneans, and making them poorer at the receipt of every wage. “We hope that appropriate fiscal and monetary policy, supported by exchange rate stabilization interventions, would be taken to pull down inflation to the government’s single digit target.” BAN and NSA also highlighted growing increase in the overall budget deficit. As the estimated 2019 overall deficit as a percentage of GDP including grant for the period Jan-Sept 2019 exceeded the 2019 projected figure by 1.2%(Le 1.6 trillion). “Even though we are not clear on the drivers of this increase, we call on government to further deepen its domestic revenue mobilization reforms and expenditure rationalization policies including further controls of the wage bill” they said. Concluding on budget credibility, they noted that actual budget performance remains a serious issue of budget credibility in Sierra Leone – that is, the spending laid out in the budget is not delivered during the year. As public financial management, reforms continue to show modest signs of progress over the years, successive studies on Public Expenditure and Financial Accountability (PEFA) in Sierra Leone continues to highlight the challenges of budget reliability and predictability. Whilst debate and analysis of the budget laid before Parliament is important, they emphasised that it is equally important to monitor the actual spending that takes place during the year. In particular, there have been continuing weaknesses in expenditure composition (high levels of reallocation between budget lines and a lack of adherence to budget policy). These changes made to the budget throughout the year that are not brought back to Parliament. These they observed are often the result of politically directed spending, which can push out the spending plans of MDAs laid out in the budget. Disbursements to MDAs are often late, meaning vital public goods and services are delayed or not delivered at all. “Finally, we recognize many positive aspects of the budget, and we would highlight that implementation is the challenge” they concluded.
By Zainab Iyamide Joaque
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