The Ministry of Finance has asked the Audit Service Sierra Leone (ASSL) to perform an audit on a list of arrears of Le10.8 trillion ($1.4 billion USD) accumulated as at March 2018, from Ministries, Departments and Agencies (MDAs), for payment to suppliers for goods and services and contractors for energy, roads amongst others.
This was disclosed by the Minister Jacob Jusu Saffa at the launch of the maiden edition of the Sierra Leone Economic Outlook (SLEU) produced by the World Bank, yesterday June 20 at the Radisson Blu.
He called on the development partners to assist the government in clearing the arrears and stressed that until that is done they will not have adequate space to take care of key strategic programs.
“We are struggling with these arrears as it is quite substantial, we still do not have idea how to go about it but we still have to clear it. That is a critical and serious problem in our economy,” the Minister said.
The current economic growth for 2017 and going into 2018 is around 3.7%, and they are hopeful that it will pick up by 2020. Domestic revenue GDP ratio is said to be the lowest in the region around 11.7%, the inflation rate is around 15% and the external debt GDP ratio is between 56-60%, “overall we have learnt that the economy is not doing well.”
The critical question now is how do they plan to revive the economy and restore macroeconomic growth? The Minister said they will work through rationalizing of duty waivers and off revenue budget spending.
He said that there is currently a committee working on reviewing the legal framework for duty and waivers and escalate the policy into law, which will in turn tightening the framework for exemptions.
Exemptions the Minister says varied from one investor to another depending on the connection. “We will harmonise it. When we do that we will have greater opportunity of mobilising more revenue.”
The Ministry said they will improve the administration of the tax system by unifying the tax laws as well as automating the tax collection processes. The government is about to enact the Extractives Industry Revenue bill, which will broaden the tax base.
They are also looking at the taxes paid by the operators in the telecoms sector. “As of now it is a sector that is shrouded in secrecy. With the support of DFID we are conducting a technical audit, to assess the tax potential of that industry.”
In dealing with the fiscal problem, they will be handling expenditure as the impact of the deficit is quicker with expenditure controls and revenue mobilisation. “So whilst we mobilise revenue we will also try to implement stringent rationalization measures.”
These measures he said included cleaning the payroll increasing, transparency of public procurement, improve efficiency of public investment to ensure value for money and strict management policy.
To ensure debt sustainability and to avoid the risk of high debt distress, government will also implement prudent debt management strategy to contain the growing public debt.
This will be directed towards contracting only highly concessional loans and will not be spending 4% or 5% non-concessional loans for construction of community roads or social services, “those loans with high interest rates will be directed towards investment ventures so that the returns will pay for the loans. We should have mechanisms to finance our strategic infrastructural projects as infrastructure should be able to pay for itself.”
In conclusion he applauded the World Bank’s continued effort for its continued support and appreciate the strategic partnership between them. The SLEU he said is also in support of government’s objective of providing information to the public.
“The SLEU, re-echoes the policies in the New Direction as our diversification strategy will focus on key sectors, fisheries, tourism agriculture, promote growth and export and reduce reliance on mining sector.”
ZJ/20/6/18
By Zainab Iyamide Joaque
Thursday June 21, 2018.
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