The ECOWAS Commission, West African Monetary Agency (WAMA) and West African Monetary Institute (WAMI) conducted a joint multilateral surveillance mission to Sierra Leone from March 31 April 7, 2014 to assess the performance of the country during 2013 in line with the macroeconomic convergence criteria for ECOWAS and West African Monetary Zone (WAMZ). The team which was led by Dr. Abu Bakarr Tarawalie paid a courtesy call on the Honourable Governor of the Bank of Sierra Leone (BSL), Mr. Sheku Sambadeen Sesay and held technical discussions with Senior Officials of the Bank of Sierra Leone, Ministry of Finance and Economic Development (MoFED), other Ministries, Departments and Agencies (MDAs), and the Sierra Leone Bankers’ Association.
At the end of the mission, Dr. Tarawalie issued the following statement in Freetown:
The mission’s assessment of the Sierra Leone economy showed significant positive developments during 2013 underpinned by increased domestic food production, sound macroeconomic management and favourable international prices of the country’s key exports including iron ore and diamond. Economic growth remained robust as real GDP grew by 20.1 percent mainly on account of the expansion in mining activities while consumer price inflation declined to 8.2 percent at end-December 2013 (the lowest level since December 2009) from 11.4 percent in December 2012. Monetary policy remained prudent in pursuance of price stability. The monetary policy rate (MPR) was reduced four times in 2013, from 20.0 percent in January to 17.0 percent in April, 15.0 percent in June, 12.0 percent in August and 10.0 percent in November. Key money market interest rates generally declined, partly on account of a reduction in Government’s demand for loans due to its strategy of reduced domestic borrowing. Developments in the financial sector also remained healthy during 2013 as the banking industry continue to record remarkable improvements. Fiscal outcomes improved significantly in 2013 due to the Government’s fiscal consolidation efforts reflected by the restrain on expenditures as well as increased revenue mobilisation. External sector performance remained bullish as the current account deficit narrowed while the surplus in the balance of payment increased due to the rise in export earnings (particularly from mining activities). The exchange rate also remained stable while gross external reserves rose to US$ 474.6 million, largely due to increased foreign exchange inflows especially in the mining, tourism and agricultural sectors.
The developments in 2013 showed significant improvements in macroeconomic performance. The country achieved all the four WAMZ primary convergence criteria for the first time since the inception of the WAMZ programme in 2001. As at end December 2013, the country attained a single digit inflation of 8.2 percent, fiscal deficit to GDP ratio of 4.0 percent, zero central bank financing of fiscal deficit as a percentage of the previous year’s tax revenue, and gross external reserves equivalent to 3.2 months of import.
The outlook of the economy in 2014 remains encouraging on the backdrop of sustained and robust economic growth, low inflation, higher tax revenues, increased exports and foreign exchange reserves and a stable exchange rate. Real GDP (excluding iron ore) is expected to grow by 11.6 percent in 2014 driven mainly by mining, agriculture and services. The continuation of Government’s fiscal consolidation efforts as well as sustained improvements in revenue generation could keep deficits (excluding grants) below 4.0 percent of GDP in 2014. In addition, increased domestic food production, stability in the exchange rate and international commodity prices and prudent monetary policy are expected to push inflation downwards to 7.5 percent in 2014. On the whole, the country is expected to continue to satisfy all four WAMZ primary macroeconomic convergence criteria in 2014.
While the country made significant progress in the implementation of the WAMZ Payments System Development Project, challenges remain in the implementation of key structural benchmarks including privatisation of earmarked institutions, effective participation in the ECOWAS Trade Liberalisation Scheme (ETLS), ECOWAS Common External Tariff (CET), Convention on Inter-State Road Transit (ISRT) and the Automated System of Customs Data (ASYCUDA)++ among others. The mission and the Sierra Leonean authorities agreed that enhancing the implementation of structural benchmarks would be critical in consolidating the gains made in strengthening macroeconomic stability and promoting broad-based inclusive growth. The Sierra Leone authorities reaffirmed their commitment to both the ECOWAS and WAMZ programmes and agreed to sustain the attainment of all the four WAMZ primary criteria in the medium term.
The Mission expresses gratitude and appreciation to the Sierra Leonean Authorities for the warm hospitality and cooperation it enjoyed.
Friday April 11, 2014