Finance Minister launches Sierra Leone Economic Update

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June 21, 2018

By Hassan Gbassay Koroma

finance
From L-R: Mayor Aki-Sawyer, Minister Jacob Saffa, and World Bank Boss Gayle H. Martin and other dignitaries

Sierra Leone’s Minister of Finance and Economic Development, Jacob  Jusu Saffa, yesterday launched the first edition of World Bank Sierra Leone Economic Update (SLEU) titled ‘Reviving Urban Development, the Importance of Freetown for the National Economy’.

SLEU reports on and analyses recent economic developments and policies within medium-term, regional and global contexts as well as the implications of such developments and policies on the outlook of the economy.

The report includes a special feature analysing the relevance of promoting inclusive growth and poverty reduction. The target audience for the SLEU includes policy makers, business leaders and organisations, analysts interested in Sierra Leone’s economy, and representatives of civil society.

Delivering his keynote address during the launch at Radisson Blu Mammy Yoko Hotel, Aberdeen, in Freetown, Mr. Saffa thanked the World Bank for putting the report together, adding that it was timely for President Julius Maada Bio’s led New Direction administration.

He applauded World Bank for their support to Sierra Leone in promoting development.

He revealed that since March this year, the total arrears accumulated by the government of Sierra Leone amounted to Le10.8 trillion, equivalent to US$1.4 billion, adding that they include payment of suppliers of goods and services and road construction companies and energy supply.

He said the economic update is akin to the New Direction, adding that it gave an insight into what is needed to be done, including diversification of the economy and job creation, consolidation of government fiscal position, promoting microeconomic stability, implementing debt management strategy, managing policy and preventing financial inflation stability by addressing the challenges faced by state-owned banks.

He said the government would implement a comprehensive policy at microeconomic level to promote stability through poverty reduction.

The Finance Minister said the diversification strategy would focus on key sectors, including tourism, agriculture and fisheries, adding that it would also promote growth in export and reduce reliance on the mining sector.

He said the government has already started implementation their economic blueprint by issuing Executive Order No.1, which called for expenditure rationalisation, among a host of others.

He disclosed that a certain committee is currently working on a legal framework for the current policy and that a draft policy would be formulated, followed by enacting it into law.

He revealed that the new administration has formulated an efficient tax system by unifying tax administration of different revenue laws and automating the tax collection process, noting that the government was about to enact the extractive industry bill to consolidate the mining and extractive industry.

Minister Saffa further revealed that government was working to ensure debt sustainability and avoid the risk of high debt, adding that they would also implement prudent debt management to control the nation’s debt burden.

Welcoming guests earlier, World Bank Country Manager, Dr. Gayle H. Martin, said her institution was contributing to development growth across the world, but conceded that in Africa the relationship of her institution on economic development was weak.

She expressed hope that the insight coming from the report would work in Freetown and that Sierra Leone would generally benefit fully from it.

She said diversification was also a key feature of economic growth in Sierra Leone.

In his presentation, World Bank Senior Economist, Kemoh Mansaray,  said Sierra Leone’s economic growth rate moderated in 2017 despite a broad upturn in global and regional growth prospects.

He said after growing at 6.3 percent in 2016, and recovering from the twin shocks of Ebola and the iron export collapse, economic growth moderated to 3.7 percent in 2017, reflecting weak recovery of mineral production, particularly iron ore.

Mansaray said the industry, dominated by iron ore mining, was subdued by persisting low commodity prices, higher domestic prices of energy (fuel and electricity), and lower investment, excluding iron ore.

He said the economy grew by only 3.6 percent in 2017, compared to 4.3 percent in 2016, due largely to a slowdown in construction following the reduction of public investment in infrastructure.

He said agriculture and fisheries continued to show signs of resilience following improved support to farmers, while the service sector benefitted from increased tourist arrivals and a recovery in commerce.

The World Bank expert said inflationary pressures eased in 2017, although the rate remained high, declining to 15.3 percent from 17.4 percent in 2016.

He further revealed that the above percentage was reflective of the relative stability of the exchange rate reinforced by the tight monetary policy stance of the Bank of Sierra Leone (BSL).

He said the monetary policy remained tight throughout 2017, as the BSL raised the monetary policy rate (MPR) on four consecutive occasions – in March, June, September and December – to contain inflationary pressures.