The economic outlook for Sierra Leone projects an average annual growth rate of 3.7% during the period 2023-2025, which is below its historical trend. This projection hinges on the implementation of prudent domestic policies. These policies include a rigorous monetary approach to combat inflation and a fiscally conservative stance aimed at reducing debt burdens and reestablishing fiscal flexibility. It is anticipated that headline inflation will gradually decline to 14%, while the fiscal deficit will decrease to 3.9% of GDP by 2025, according to the latest World Bank Sierra Leone Economic Update.
The report underscores the need to address risks related to debt sustainability, emphasising that these risks will persist until fiscal balances show further improvement and the reliance on costly short-term domestic borrowing is mitigated through extending loan maturities and accessing more concessional borrowing.
Abdu Muwonge, the World Bank Country Manager for Sierra Leone, highlighted the challenging economic environment faced by the country. Rising living costs, weak growth, and deteriorating macroeconomic fundamentals threaten to exacerbate poverty levels among the population. Therefore, the government’s priorities should focus on reestablishing macroeconomic stability while safeguarding vulnerable households and maintaining a commitment to long-term reforms that support fiscal and debt sustainability.
In 2022, Sierra Leone’s economy faced several setbacks, including external shocks that worsened domestic macroeconomic vulnerabilities. These challenges resulted in a rapid increase in debt, elevated inflation, and food insecurity. GDP growth decelerated from 4.1% in 2021 to 3.5% in 2022, and inflation surged from 12% in 2021 to over 40% by May 2023, affecting households and intensifying food insecurity and poverty. The fiscal deficit expanded from 7.6% of GDP in 2021 to 9.6% in 2022, driven by a combination of economic challenges and policy lapses. The public debt-to-GDP ratio also increased significantly.
The report emphasises that while external factors will influence the economic outlook, domestic policies remain crucial in restoring macroeconomic stability. Enforcing fiscal discipline and renewing the commitment to fiscal consolidation will be essential for ensuring fiscal and debt sustainability. The active management of debt can also help enhance sustainability and reduce vulnerabilities.
Additionally, the report devotes special attention to food security, examining trends and challenges in three key agricultural value chains: rice, cocoa, and horticulture. It highlights the importance of supporting and empowering the private sector to invest in Sierra Leone’s agricultural sector, particularly in the context of the government’s ‘FEED SALONE’ program aimed at increasing agricultural productivity and achieving food security.
The report reveals significant food security challenges in Sierra Leone, with millions of people experiencing insufficient food consumption, limited access to markets, and food-based coping strategies. Addressing these challenges requires a focus on safety net measures to enhance short-term food availability for the most vulnerable households, as well as structural improvements to boost agricultural productivity, competitiveness, and the livelihoods of smallholder farmers.
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