Dauda Alusine Kuyateh (PhD)
Senior Economist, Ministry of Finance,
Lecturer, Public Policy Analysis & Corporate Finance, EBK University, UNIMAK & Njala University
Introduction
As you walk through the bustling markets of Abacha, PZ, ECOWAS Street, and Lumley in Freetown, or the fertile farmlands of Bo, Kono, and Koinadugu, a common question echoes among the people: “When will things improve?” Many Sierra Leoneans find it challenging for small businesses to survive due to high taxes, an unpredictable investment climate, and an unstable business environment. As a result, job opportunities remain limited, and the Leone continues to struggle with its purchasing power. Only 36% of the population has access to electricity, which restricts opportunities for health, education, communication, and economic empowerment.
Amid these daily challenges, however, positive changes are beginning to emerge, marked by improvements in macroeconomic fundamentals and the overall environment. Inflation has significantly decreased to 7.1% in June 2025, down from 54.5% in October 2023 and 13.8% in December 2024. This improvement can be attributed to a stable exchange rate, falling global food and energy prices, increased domestic food production, and an anticipated economic growth rate of 4.5% for 2025, primarily driven by the mining, agriculture, and services sectors. Additionally, the budget deficit has slightly reduced from 3.9% to 3.8% of GDP.
Despite a modest slowdown in economic activity during the second quarter of 2025 and a slight decline in Private Sector Credit—from 3.72% of GDP in March to 3.69% In May—the Leone’s exchange rate against the US Dollar has remained relatively stable. This stability is the result of coordinated monetary and fiscal policies.
The government, with the support of its development partners, continues to implement pro-growth and pro-poor fiscal consolidation measures aimed at enhancing debt sustainability. These efforts support ongoing monetary policy initiatives to maintain macroeconomic stability, rebuild policy space to foster economic resilience, and advance the government’s development agenda to respond to future shocks. These fiscal reforms focus on improving revenue mobilization, increasing spending efficiency, and strengthening public financial and debt management.
The strategic vision in the MTNDP (2024-2030) to transform Sierra Leone into one characterized by inclusive economic growth and a renewed sense of national purpose is present, the intentions are commendable, and the trajectory appears promising. However, there is still a significant need for improved practical policy direction, effective implementation, and service delivery to elevate thousands of Sierra Leoneans from multidimensional poverty, unemployment, and inequality.
After enduring several challenging years marked by the COVID-19 pandemic, the conflict between Russia and Ukraine, and an increasingly complex global environment characterized by economic shocks, geopolitical tensions, climate change disruptions, and fiscal constraints, Sierra Leone has remained steadfast in its recovery efforts. The nation is advancing its evolving development priorities known as the BIG FIVE GAME CHANGERS, outlined in the Sierra Leone Medium Term National Development Strategy (2024-2030). This strategy focuses on mobilizing critical investments and fostering strong partnerships with development partners and the private sector to enhance sustainable growth and development in key areas such as agriculture (Feed Salone program), human capital development, youth employment, infrastructure, technology and innovation, public service infrastructure, and institutional capacity. All of these initiatives are aimed at shaping and propelling the country’s transformative agenda and development pathway toward achieving significant results.
Despite recent growth, the benefits have not been evenly distributed. Over half of the population continues to live in poverty, and young people encounter significant challenges in securing employment. In 2023, inflation, which measures the rate at which prices increase, soared to over 50%, driving up the costs of food, transportation, and essential goods. Although inflation decreased to 13.8% by the end of 2024, many families are still struggling to catch up.
In rural areas, smallholder farmers are diligently working but are hindered by unpredictable rainfall and limited market access. In urban centers, graduates are earning degrees yet frequently find it difficult to secure jobs. Even in the capital, public servants are feeling the strain of rising living costs. Thus, while the country may be growing statistically, tangible improvements are slow to materialize for the average Sierra Leonean.
Nevertheless, there is reason for optimism. Initiatives such as the Feed Salone program, investments in solar energy, and support for digital transformation and skills development, and training are starting to take shape. With the right backing, political will, and transparent leadership, these efforts could create new opportunities for a broader segment of the population.
Our Debt obligations and repayment strategies to minimize the risk of high and rising debt distress
While the country is making significant progress, it also faces a considerable financial burden. Sierra Leone’s national debt, which reflects the government’s obligations to lenders, currently stands at approximately 43% of the nation’s GDP. Although this figure may not appear alarming at first glance, high debt service payments accounted for 50% of domestic revenues in the first half of 2025. This indicates that a large portion of our national budget is allocated to loan repayments, leaving limited resources for essential infrastructure development, including roads, schools, and hospitals.
To tackle this debt challenge, several measures must be undertaken: (i) enhancing public debt management to improve debt sustainability; (ii) reducing public sector borrowing through effective revenue mobilization and expenditure rationalization; (iii) issuing longer-term treasury bonds to replace shorter-term bills; (iv) engaging non-bank institutions such as NASSIT to increase bond uptake; and (v) seeking additional grants and concessional loans from development partners.
In 2023, approximately 2.4% of our total gross national income was allocated exclusively for debt servicing. The government is working closely with partners, such as the IMF and the World Bank, to navigate this challenge by implementing reforms aimed at reducing unnecessary expenditures through stricter cash management and compliance with the Public Financial Management Act of 2016, enhancing tax collection, and optimizing the use of public funds.
One notable achievement has been the fiscal performance and improvement in 2024, supported mainly by an increase in domestic revenue collection. Domestic revenue increased to 8.8% of GDP in 2024 from 7.9% of GDP in 2023. As a result, the overall fiscal deficit, including grants, narrowed to 4.8% of GDP in 2024 from 5.3% in 2023.
Additionally, the external sector’s performance improved significantly in 2024, with the trade deficit narrowing to USD 499.1 million from USD 588.9 million in 2023, reflecting strong growth from USD 1.333 billion in 2023. Total mineral exports, which account for 76.8% of total exports, increased by 27.4% to USD 1.143 billion, with iron ore exports increasing by 10% to USD 830.0 million.
The total value of merchandized imports increased by 6.6 % to USD 2.0 billion in 2024, of which food imports amounted to USD 446.2 million; rice, USD 175.6 million; and petroleum products, USD 476.0 million. Rice and petroleum imports accounted for 38.1 % of total imports in 2024.
Gross international reserves of the Bank of Sierra Leone amounted to USD410.95 million (2.4 months of imports) as at end of December 2024 from USD468.35 million (2.6 months of imports) in December 2023. The decline in reserves was to support the importation of essential commodities, including rice, medical supplies, and petroleum products, and the payment of external debt.
The depreciation of the exchange rate moderated in the second half of 2023 and continued throughout 2024; hence, the exchange rate remained relatively stable in 2024, reflecting the improvement of the trade balance and recent policy support by the Bank of Sierra Leone, including measures to repatriate export receipts and the removal of restrictions in the foreign exchange market. According to data from the Bank of Sierra Leone, the Leone/ US$ exchange rate appreciated slightly by 0.67% from NLe 22.8466 in January to NLe 22.6920 in December 2024.
Consistent with the fiscal consolidation drive, monetary conditions also remained approximately tight, amid ongoing efforts by BSL to rein in persistently high inflationary pressures, anchor inflation expectations and preserve macroeconomic and financial stability.
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.
Nonetheless, there are grounds for optimism. The government’s revised economic plan aims to generate employment through investments in agriculture, mining, and small businesses. There is also a focus on fostering partnerships in renewable and sustainable energy, natural resource management, and information and communication technology (ICT)—sectors with significant potential to engage the youth and create sustainable livelihoods.
The 2025 Supplementary Budget Critical to Enhance and Consolidate the Country’s Economic Gains
The revised budget, in contrast to the original 2025 budget approved on December 20, 2024, is significant for three key reasons: improved economic fundamentals, global economic uncertainty, and revenue shortfalls. With a particular focus on domestic revenue projections, which are expected to fall short by NLe 117.9 billion for 2025, it is crucial to implement proactive measures to address tax evasion. This includes enforcing the Minimum Alternate Tax, deploying 5,000 electronic cash registers, and conducting audits of the ASYCUDA system to resolve reconciliation issues and prevent fraud.
furthermore, the enactment of the supplementary budget is essential, as it would reinforce the fiscal discipline exhibited in the first half of 2025, a period characterized by single-digit inflation, a stable Leone, and reduced treasury bill rates (from 34.4% to 14.8%). This move would further solidify macroeconomic stability, enhance investor and donor confidence, and create fiscal space for priority sectors.
Progress On the Public Financial Management Reforms -2024
The ongoing implementation of the PFM Reforms Strategy and Plan (2023-2027), which encompasses the entire budget cycle over the next five years, continues to yield improvements albeit with some challenges across the five thematic areas: Strategic planning and macro-fiscal framework; budget preparation and execution; fiscal decentralization for improved service delivery; accounting and reporting through IFMIS and, external audit and legislative scrutiny.
Closing Thoughts
Sierra Leone is charting a course for economic advancement, demonstrating remarkable resilience and determination. While significant progress has been achieved, there remains a long way to go, with various challenges still requiring attention. The nation’s potential is evident, yet it faces obstacles on the path to a more prosperous, inclusive, and sustainable future. Although the journey may be arduous, sustained effort and innovation can help Sierra Leone forge a route toward continuous growth and development.
In spite of global economic challenges, Sierra Leone’s domestic macroeconomic environment and fiscal position are showing signs of recovery and strengthening, thanks to prudent fiscal and monetary policies. Notably, inflation—a key variable for monetary policy—has experienced considerable declines. The Bank of Sierra Leone continues to monitor both global and domestic developments to ensure economic and price stability.
The resilience of the Sierra Leone economy is apparent, and projections for the external sector remain optimistic. There is a growing sense of hope for economic rejuvenation, with initiatives aimed at modernizing agriculture, enhancing clean energy governance, developing skills, creating jobs, improving healthcare, and promoting sustainable management of natural resources. This progress is propelled by the government’s steadfast commitment to achieving transformed, inclusive, and stable economic growth while enhancing service delivery. Additionally, efforts toward fiscal consolidation must persist, emphasizing effective expenditure controls and improved budgeting processes. This focus will help ensure fiscal and debt sustainability, support and protect vulnerable households, and encourage long-term growth.
