The Finance Minister will today launch the country’s first Economic Update that was jointly prepared by the World Bank Sierra Leone Macroeconomics Trade and Investment team and the Social, Urban, Rural, and Resilience Practice team.
The Sierra Leone Economic Update (SLEU), first edition with the topic “Reviving Urban Development: The Importance of Freetown for the National Economy” analyzes recent economic developments and policies within medium-term, regional, and global contexts and analyzes the implications of these developments and policies for the outlook of the economy.
The report notes that there remain a significant downside risks, which could impede growth. The main risks to Sierra Leone’s growth outlook are the persistent fiscal deficit, adverse debt dynamics, weaknesses in the banking sector, and the volatility of economic growth.
The report includes a special feature analyzing more deeply a special topic relevant to promoting inclusive growth and poverty reduction. The target audience for the SLEU includes policy makers, business leaders and organizations, analysts interested in Sierra Leone’s economy, and representatives of civil society.
A special topic in the report, Reviving Urban Development, looks at the urban sector review of Sierra Leone’s capital city, Freetown, focusing on its potential contribution to economic growth. Policy choices made now will determine whether Freetown becomes an engine or an obstacle for economic transformation in Sierra Leone.
The report looked at the country’s economic growth rate, which it said was moderate in 2017 despite a broad upturn in global and regional growth prospects. “After growing at 6.3% in 2016, and recovering from the twin shocks of Ebola and the iron export collapse, economic growth moderated to 3.7% in 2017 reflecting weak recovery of mineral production, particularly iron ore” the report says.
It revealed that agriculture and fisheries continued to show signs of resilience following improved support to farmers, while the service sector benefitted from increased tourist arrivals and a recovery in commerce.
“Inflationary pressures eased in 2017 although the rate remained high, declining to 15.3% from 17.4% in 2016. This reflected the relative stability of the exchange rate, reinforced by the tight monetary policy stance of the Bank of Sierra Leone (BSL),” it adds.
It however affirmed that Monetary policy remained tight throughout 2017 as the Bank of Sierra Leone (BSL) raised the monetary policy rate (MPR) on four consecutive occasions, in March, June, September, and December, respectively, to contain inflationary pressures.
This stance the report says has led to tight liquidity conditions in money markets, with some commercial banks facing increased liquidity constraints.
This action it says reinforces the slowdown in private sector credit growth, which they say worsened due to the general slowdown in economic activities. However, credit to the government remained high, underpinned by the huge borrowing inclination of the government to finance the persistent fiscal deficit.
Economic growth is expected to reach 6.5% in the medium term, driven by increased private sector investments in agriculture and mining coupled with improved spending on road construction and energy, as well by reforms in the investment climate.
ZJ/19/6/18
By Zainab Iyamide Joaque
Wednesday June 20, 2018.
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