Freetown, SIERRA LEONE – Sierra Leone’s import cover reached a notable milestone, standing at 3.0 months in October 2023, signalling a positive uptick from the previously reported 2.8 months in the third quarter Monetary Policy Statement of the Central Bank. This surge in import cover is attributed to the commendable rise in forex reserves, now totalling US$432.9 million as of the end of October 2023, as disclosed in the 2024 Budget Speech.
Import cover, a critical trade-based indicator of reserve adequacy, has improved in tandem with the surge in forex reserves, underscoring the nation’s economic resilience. The depreciation of the Leone has also witnessed moderation, recording 17.2 per cent between January and October 2023, a significant improvement compared to the 39.1 per cent reported in 2022.
The Minister of Finance, in the Budget Speech, highlighted key policy actions taken by the Central Bank to stabilize the exchange rate. These include the removal of administrative barriers in the foreign exchange market, amendments to the BSL Act, 2019 to permit the use of currencies other than the Leone in selected transactions in Sierra Leone, and the decision to allow lending in foreign currency by commercial banks on a case-by-case basis.
Additionally, Sierra Leone’s exports exhibited robust growth, surging by 16.1 per cent to US$659.2 million in the first half of 2023 compared to the same period in 2022. Notably, mineral exports accounted for a substantial portion, reaching US$584.7 million, with iron ore exports witnessing an impressive 54.7 per cent increase, totalling US$391.0 million.
Despite this export growth, the import bill saw a marginal decrease of 0.4 per cent to US$968.6 million in the first half of 2023 compared to the same period in 2022. Key contributors to the import bill were rice and petroleum imports, amounting to US$92.1 million and US$305.7 million, respectively. The combined value of rice and petroleum imports constituted 41 per cent of the total import bill for the review period.
Remarkably, the trade deficit narrowed significantly to US$309.4 million in the first half of 2023 from US$404.9 million in the corresponding period in 2022, primarily driven by the robust growth in mineral exports. Sierra Leone’s economic landscape reflects positive strides, with strengthened forex reserves, improved import cover, and a narrowed trade deficit contributing to overall economic resilience. ZIJ/24/11/2023