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Tuesday, November 30, 2021

Sierra Leone’s fiscal gains hampered by COVID

– says World Bank Economic Update

August 3, 2020

The COVID-19 pandemic has significantly impacted Sierra Leone’s medium-term growth prospects with the economy projected to contract by 2.3 to 4.0 percent in 2020 due to disruption in global trade, travel restrictions and domestic restrictions on mobility, according to the new World Bank Sierra Leone Economic Update launched on Monday in Freetown. 

The report notes that fiscal and current account deficits are expected to increase due to increased crisis-related spending while inflation is also expected to rise.

The Minister of Finance, Jacob Jusu Saffa, launched the report which analyzes recent economic developments and their implications for the country, as well as presents the medium-term outlook and prospects for the economy.

In his keynote address, Minister Saffa said the government has put in place robust policy measures to protect poor and vulnerable groups as well as maintain macroeconomic and financial stability to mitigate the impact of COVID-19 on the population.

“Through these interventions, the government is providing support to hardest-hit businesses to enable them to continue operations, avert employee lay-offs, and reduce non-performing loans. We are also providing vulnerable groups with safety nets and assistance for local production and processing of staple foods,” he said.

The minister added that in response to the current situation, the government introduced the Quick Action Economic Response Program in addition to the health sector COVID-19 Preparedness and Response Plan to reinforce the crisis response and facilitate economic recovery.

The report shows that COVID-19 has set back the government’s recent fiscal consolidation efforts and recommends in the short-term ramping up investments in public health, protecting the most vulnerable through cash transfers and other preventive measures in the context of limiting fiscal space. In preparation for the long-term recovery, it recommends that policy measures should focus on structural reforms to accelerate inclusive growth and diversify the economy, as well as efforts to strengthen fiscal buffers, improve debt management and transparency, and deepen financial reforms will be key.

World Bank Country Manager, Dr. Gayle Martin, who chaired the virtual launch, noted that the COVID-19 crisis has had a negative impact on the country’s recent fiscal consolidation gains as loss of export earnings and lower foreign direct investment inflows have created a substantial gap in financing the balance of payments.

Dr. Martin welcomed government’s efforts to deal with the crisis and lessen its impact on people’s livelihoods.

The 2020 Economic Update takes a specific look at girls’ education and highlights that similar to the 2014 Ebola crisis, COVID-19 is likely to affect adolescent girls’ education prospects and their human capital potentials. 

Evidence shows that adolescent girls are especially at risk when they are out of school as the risks of being married or having a child too early are magnified. In turn, child marriage and early childbearing make it hard for girls to later return to school, leading to long-lasting negative impacts.

The report identifies the need to prioritize investments in girls. With schools currently closed due to the pandemic, the study recommends as immediate priorities support to students and families to cope with the crisis and ensure that learning continues while they stay at home.

Two panel discussions were held: Panel 1 discussed ‘the Economic Impacts of COVID-19’ and featured Prof. Kelfala M. Kallon – Governor of the Bank of Sierra Leone, Sheku Bangura – Deputy Minister of Finance, Herbert M’Cleod from the International Growth Centre, and Errol Graham, Lead Economist at the World Bank as discussants.

The second panel discussed the topic, ‘Pathways to Scaling up Investment in Girls’ and attracted interventions from Michala Mackay representing the Minister of Education, child-rights activist Chernor Bah and Lead Economist Markus Goldstein from the World Bank.

The discussions were chaired by the Deputy Minister of Information and Communications, Hon. Mamadi Gobeh Kamara.

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