Dauda A. Kuyateh (PhD)
Senior Economist, Ministry of Finance &
Part-time lecturer: Public Policy Analysis – EBK University
Introduction:
After years of macroeconomic instability in Sierra Leone, caused by external shocks, the Ebola, the COVID-19 pandemic, global supply chain disruption, climate shocks, and policy missteps, the economy is now showing signs of recovery. A combination of rigorous monetary and fiscal policies, along with the implementation of structural reforms, has been crucial in restoring macroeconomic stability—an essential foundation for sustainable, inclusive, and robust growth. Headline inflation has significantly decreased, fiscal and trade deficits have narrowed, and the exchange rate has remained relatively stable. The outlook for macroeconomic fundamentals is promising, creating an environment that is conducive to business and likely to attract international investment and capital in the near future. This transformation will pave the way for a more diversified economy and a sustainable path toward long-term economic growth.
This positive trend is primarily driven by robust performance in the agriculture, services, and industrial sectors, supported by exchange rate reforms, increased food production through the Feed Salone program, and prudent fiscal and monetary management by the Ministry of Finance under the astute and visionary leadership and strategic direction of the Hon Minister of Finance & Team. Such growth reflects the nation’s ongoing efforts in economic diversification, fiscal consolidation, resource management, and its ability to navigate persistent global economic challenges. These encouraging developments have resulted in increased household consumption and a decrease in extreme poverty levels. However, structural challenges and external vulnerabilities continue to affect the country’s economic outlook.
The government’s fiscal strategy aims to enhance fiscal resilience through improved domestic revenue mobilization, which is proving beneficial. With significant priorities set for the financial year of 2026, the government emphasizes its Medium-Term Expenditure Framework (2026-2028), which includes commitments to creating 5,000 jobs for young people, strengthening gender inclusion with a target of 50% female representation, and investing in technology, infrastructure, and public administration. Other priorities encompass promoting a cashless economy, advancing financial deepening and inclusion, expanding energy production, developing road networks and transportation systems, as well as implementing tax policy reforms to modernize revenue collection, with completion mandated by mid-November 2025.
Sierra Leone’s Growth Momentum Amid Global Uncertainty
Sierra Leone’s economy has made notable strides in stabilizing the macroeconomic environment, demonstrating remarkable resilience and steady recovery, with real GDP growth recorded at 4.4% in 2024 and projected to rise to 4.5% by 2025. Inflation has dropped considerably, from 64.5% two years ago to 9.3% in April 2025, and further to 6.45% in July 2025, with monthly inflation now below 1%.
In a crucial moment for Africa and other emerging nations, as development aid and external funding decline, the continent needs an estimated US$1.3 trillion annually to achieve the Sustainable Development Goals (SDGs). This was revealed at the fourth International Conference on Financing for Development (FfD4) in Seville, Spain. However, the high borrowing costs, limited concessional financing, and risk-averse investment patterns continue to constrain progress toward achieving SDGs, AfCFTA implementation, and Agenda 2063. In this context, the mobilization of domestic revenue in Sierra Leone has become vital for fulfilling the government’s broader objectives and ambitious initiatives, particularly the Big Five Game Changers, in line with the Medium-Term National Development Plan (2024-2030). For example, the Medium-Term Revenue Strategy (MTRS) outlines a framework for enhancing domestic revenue mobilization, serving as a key element of the government’s fiscal strategy, to reach a 20% revenue-to-GDP ratio by the end of its implementation phase. Recent studies have indicated a strong and positive correlation between revenue generation and state capacity to deliver basic services. Thus, the significance of increasing and improving in domestic revenue mobilization strategies.
On the mineral resource governance front, recent developments are promising, as new mining legislation has been introduced with the Sierra Leone Mines and Mineral Development and Management Corporation Act (Act 22 of 2023) for establishment of the Sierra Leone Mines and Minerals Development and Management Corporation and Mineral Wealth Fund, granting the government a 10% free carried interest in all mining projects and up to a 30% equity stake in strategic operations. These initiatives are expected to enhance national involvement in resource management and beneficiation, thereby securing sustainable revenue streams for the state. The mandate of this corporation is to provide for the promotion and facilitation of state participation and investment in mines and mineral development, and to provide for other related matters.
The sustained improvement in Sierra Leone’s economic and financial performance reflects the country’s ongoing commitment to strengthening macroeconomic management and stimulating domestic demand. The growth in services, agriculture, and industry, and a moderation in inflation, have all contributed to this positive trajectory. Moving forward, it will be imperative to address structural bottlenecks and mitigate external risks to ensure that growth remains inclusive, resilient, and sustainable.
In 2024, inflationary pressures continued to moderate, decreasing from a peak of 54.5% in October 2023 to 13.8% by December 2024. This reduction can be attributed to a firm monetary policy and ongoing fiscal consolidation efforts.
The decline in headline inflation also reflects relative stability in the exchange rate, increased food production, and easing international energy prices. Additionally, both food and non-food inflation fell to 13.89% and 13.69%, respectively, from the elevated levels experienced in 2023. Meanwhile, stronger domestic revenue mobilization in 2024 resulted in actual revenue reaching 8.8% of GDP, which has contributed to a gradual decline in public debt. However, the debt-to-GDP ratio in 2024 remains at 46%. This reduction highlights the critical need for maintaining fiscal discipline and improving debt management to ensure economic stability and promote sustained growth. Credit to the private sector by the banking system grew significantly by 41.3 per cent in 2024, as banks became less risk-averse, and the post-pandemic recovery gained momentum. The banking system remains stable, adequately capitalized, and profitable. Non–performing loans declined as banks implemented a combination of loan write–offs and robust loan recoveries. The latest World Bank report indicates that financial inclusion increased from 20% in 2017 to 39% in 2024.
It is essential to recognize that GDP alone no longer adequately reflects the complexities of people’s lives in the realm of basic and real economics. We need to develop and integrate indicators that capture vulnerability, resilience, and inequality, ensuring that eligibility is determined by needs rather than merely by numerical values.
High Debt Levels and Fiscal Space Conundrum
Across Africa, and particularly in Sierra Leone, debt is not merely a macroeconomic statistic but a lived reality that determines access to education, healthcare, social safety nets, and opportunities. When governments are compelled to prioritize debt servicing over social investments, it is often women and young people who disproportionately bear the burden—caring for ill family members, withdrawing children from school, and compensating for the decline in public services. However, achieving these goals is possible only if we create the fiscal space necessary to pursue them. Debt relief must be designed in ways that create fiscal space for developing nations to sustain critical social programs, while also avoiding moral hazards and protecting continued access to capital markets. This means embedding fiscal accountability, transparency, and governance reform as part of restructuring efforts.
Dwindling global support, rising debt costs, and shrinking fiscal space leave Africa with only one option: to rely on internal reforms, domestic revenue growth, and private sector-led investment. There is no doubt that Africa is faced with the convergence of elevated debt servicing obligations, constrained revenues, and growing social demands.
Conclusion
As development aid shrinks and debt burdens mount, Sierra Leone must prioritize strengthening its revenue base through ambitious reforms. This entails a comprehensive digitalization of tax administration to enhance compliance and reduce leakage, broadening the tax base with improved enforcement against evasion, and making strategic investments in infrastructure and energy to promote sustainable long-term revenue generation.
Sierra Leone’s ongoing economic recovery represents a commendable demonstration of resilience, transformation, and improvement. To sustain this positive momentum, it is important to further enhance public debt management. By maintaining debt at sustainable levels through prudent fiscal policies, public borrowing and concessional lending can effectively support development priorities without compromising long-term economic stability.
Looking ahead, Sierra Leone’s medium-term outlook remains positive. This growth is anticipated to be driven by a diverse array of robust sectoral activities, including iron ore production, agriculture, construction, light manufacturing, and services, alongside a continued emphasis on fiscal and macroeconomic stability. To ensure this favorable trajectory continues, it is vital to build on recent progress by addressing existing structural challenges and improving resilience to external shocks. This development underscores the importance of inclusive growth, particularly through targeted pro-poor initiatives aimed at enhancing the well-being and quality of life for the population, as well as expanding access to essential services and infrastructure for the most vulnerable groups.
