By Alusine Sesay
The stock of Sierra Leone’s external debt stood at US$1.9 billion and domestic debt at NLe24.5 billion (about US$1.0 billion), as of June 2024, the Minister of Finance said on Friday when delivering the ‘Government Budget and Statement of Economic And Financial Policies’ for 2025 in Parliament.
Sheku Ahmed Fantamadi Bangura said the country’s public debt is assessed to be sustainable though at a high risk of distress, adding that the overall debt-to-GDP ratio has dropped from 94 to 54 percent of GDP in 2022, and further down to 53.4 in 2023 following the rebasing of our GDP. “This notwithstanding, the ratio of debt service to revenues remains high and constitutes the greatest challenge to fiscal management. Debt service to domestic revenue, which was about 50 percent in 2023, is projected to increase to 59 percent in 2025,” the Finance Minister said.
“The high debt service payments are also crowding out critical spending in agriculture, education, health, infrastructure and other programmes that should have directly benefited the poor and vulnerable population of our society.”
Fantamadi Bangura said that the Government will pursue the following actions to minimise debt distress and ensure debt sustainability:
“(i) Limit domestic borrowing to levels consistent with the macro-fiscal framework agreed under the IMF programme;
(ii) Sustain efforts at consolidating public finances through intensified domestic revenue mobilisation and prudent expenditure management to reduce the budget deficit and by
extension Government borrowing;
(iii) Continue to seek grant financing or borrow concessional loans to finance investments in key sectors of the economy, especially infrastructure;
(iv) Press ahead with efforts to issue medium to long-term bonds to extend average maturity in line with the updated Medium Term Debt Strategy (MTDS);
(vii) Implement the updated Arrears Clearance Strategy and deploy an Arrears Profiling System (APS) to capture information on all transactions processed within the Integrated Financial Management Information System (IFMIS) and on any outstanding invoices at the MDA level; and
(viii) Explore the introduction of innovative financing schemes, such as, PPPs, debt swaps for education, health and climate-related financing.”