Freetown, SIERRA LEONE – The World Bank Country Manager, Abdu Muwonge, has stressed the urgent need for the government to adopt tough policy priorities aimed at restoring macroeconomic stability. His remarks came during the launch of the sixth edition of the Sierra Leone Economic Update.
Muwonge highlighted the challenging macroeconomic environment that Sierra Leone currently faces. He pointed to the rapid increase in the cost of living, coupled with weak economic growth and a deteriorating macroeconomic foundation, which pose a threat to increasing poverty levels among the population. In response, he emphasized that the government’s policy focus should be on re-establishing macroeconomic stability while safeguarding vulnerable households and maintaining a long-term commitment to fiscal and debt sustainability.
The report underlines that the risks to debt sustainability will persist until fiscal balances improve further and the reliance on costly and short-term domestic borrowings is addressed through lengthening maturities and enhancing access to concessional borrowing.
At the launch event, Alimamy Bangura, the Chief Economist from the Ministry of Finance, acknowledged the economic challenges facing the country and outlined the government’s efforts to address them. He highlighted the government’s commitment to domestic revenue mobilization, citing the recently published Medium-Term Revenue Strategy (MTRS), which outlines revenue and tax policy measures to provide taxpayers and investors with predictability regarding their obligations to the government.
Bangura explained that the MTRS streamlines the introduction of new tax laws, ensuring transparency and predictability for taxpayers. He also acknowledged the compliance issues within tax administration, which have had a negative impact on the economy. To rectify this, the MTRS incorporates a series of compliance measures aimed at improving domestic revenue.
Regarding the country’s debt situation, Bangura indicated that it has been a significant challenge. He shared that the government has recently updated its Medium-Term Debt Management Strategy to assess the policies and actions necessary to reduce the cost and risk associated with the existing debt portfolio.
Bangura further stated that social protection spending is being scaled up, with the government’s top priority being the “Feed Salone” program, dedicated to boosting food production. To support this initiative, 10% of the budget is allocated to agriculture.
The 2023 Economic Update includes a special section on food security, examining recent trends, challenges, and opportunities in key agricultural value chains, including rice, cocoa, and horticulture. The report underscores the importance of empowering the private sector to invest in the country’s agricultural sector.
This report is released as the government launches its flagship program, “FEED SALONE,” aimed at enhancing agricultural productivity and achieving food security and sovereignty.
“Enforcing fiscal discipline and renewing the commitment to consolidation will be crucial in ensuring fiscal and debt sustainability. Active debt management can also support debt sustainability and reduce vulnerabilities,” emphasized Smriti Seth, World Bank Senior Economist and one of the lead authors of the report.
In light of the World Bank’s recommendations, Sierra Leone faces important decisions to steer its economic course towards stability and growth. ZIJ/30/10/2023