The apex bank, the Bank of Sierra Leone (BSL), is reinforcing financial resilience to stabilize the economy this year.

The move is coming on the heel of potential threats and risks in the financial system notwithstanding recent positive developments in terms of its tight monetary policy stance, relative stability of the exchange rate and the rise in domestic food production all of which had helped in tackling inflationary pressures in the economy in the past one year.

The apex bank is remaining red alert to contain fiscal threats and remaining vigilant on reforms necessary to strengthen the banking system. Consequently, the Monetary policy committee of the bank has mandated it to maintain the current monetary policy stance while strengthening capacity in liquidity management and fiscal consolidation in fiscal 2025.

“Although the 15.41 percent inflation recorded in November 2024 was below the projected target of 21,00 percent, under the IMF Extended Credit Facility (ECF) programme for 2024, and is forecasted to trend downwards, the committee was of the view that there are uncertainties around the outlook for inflation, such as the persistent geopolitical shocks and related supply-chain disruptions”.

BSL, in view of this, has been enjoined to remain sensitive to potential risks in the financial system whilst undertaking reforms necessary to strengthen resilience in the banking system.

The apex bank plans to adopt other macroprudential tools to complement monetary policy operations to achieve price stability .”Accordingly, the committee has proposed to keep the monetary policy rate (MPR), Standing Lending Facility Rate (SLFR) and Standing Deposit Facility Rate (SDFR) unchanged, which was duly approved by the Board”.

The committee has equally assured the public of its alertness and readiness to respond to ‘any developments with the potential to affect the outlook of inflation.’

Reviewing the performance of the financial system in the last quarter, the MPC noted that the banking system ‘continues to be stable, well capitalized, liquid and profitable, with key financial soundness indicators within prudential thresholds. Asset quality has improved, with the Non-Performing Loan (NPL) ratio below the maximum prudential limit of 10 percent’.

It however expressed concern over the high yields on government securities which could limit fiscal space for critical programmes and pose risks to debt sustainability.