FREETOWN, October 29 2023 – The World Bank’s latest economic update on Sierra Leone, launched in Freetown on Friday 27 October 2023, reveals that the nation’s economy is expected to grow at an average rate of 3.7% between 2023 and 2025, albeit below its historical growth trajectory.
The projection is dependent on prudent domestic policies, encompassing a tight monetary strategy to combat inflation and a conservative fiscal approach to alleviate debt burdens and reestablish fiscal flexibility.
The report anticipates a gradual moderation of headline inflation to 14%, with the fiscal deficit declining to 3.9% of GDP by 2025. However, the report cautions that risks to debt sustainability will persist until further improvement in fiscal balances and the reduction of expensive, short-term domestic borrowing through extended maturities and increased access to concessional borrowing.
Abdu Muwonge, the World Bank Country Manager for Sierra Leone, emphasized the nation’s challenging macroeconomic circumstances and the potential for rising poverty due to a surge in living costs, feeble growth, and deteriorating macroeconomic fundamentals.
Muwonge called for a government focus on macroeconomic stability, safeguarding vulnerable households, and sustained dedication to long-term reforms aimed at fiscal and debt sustainability.
In 2022, Sierra Leone’s economy grappled with a series of setbacks, including external shocks exacerbating domestic macroeconomic vulnerabilities. This resulted in a rapid escalation of debt, soaring inflation, and food insecurity. GDP growth dwindled from 4.1% in 2021 to 3.5% in 2022, while inflation skyrocketed from 12% in 2021 to 27% in 2022, peaking at over 40% by May 2023. The fiscal deficit swelled from 7.6% of GDP in 2021 to 9.6% in 2022, partly due to macroeconomic challenges and policy lapses. Public debt-to-GDP ratio surged from 84.7% at the end of 2021 to 96.3% by the close of 2022.
The report underscores that domestic policies will be pivotal in shaping the nation’s economic outlook.
Smriti Seth, World Bank Senior Economist and lead author of the report, emphasized the significance of enforcing fiscal discipline and renewing the commitment to consolidation to ensure fiscal and debt sustainability. Active debt management was also highlighted as a means to enhance sustainability and reduce vulnerabilities.
Furthermore, the 2023 Economic Update includes a special section on food security, examining recent trends and challenges in key agricultural value chains such as rice, cocoa, and horticulture.
The report underscores the importance of supporting the private sector to drive essential investments in Sierra Leone’s agricultural sector, aligning with the government’s ‘FEED SALONE’ flagship program aimed at bolstering agricultural productivity and achieving food security.
The report underscores that a substantial portion of the population faces food insecurity challenges.
Approximately 55% of Sierra Leone’s population, equivalent to 4.5 million people, have inadequate food consumption. Moreover, 3.9 million individuals (48% of the population) resort to crisis-level or higher coping strategies based on food, while 3.22 million (38% of the population) encounter obstacles in accessing markets.
The report suggests focusing on safety net measures to enhance short-term food availability and access for the most food-insecure and vulnerable households.
It also calls for addressing structural issues to enhance agricultural productivity, competitiveness, and the livelihoods of smallholder farmers in the medium term.
