The government has outlined measures to minimize debt distress and ensure debt sustainability in fiscal 2025.

Among others, the state is limiting domestic borrowing to levels consistent with the macro fiscal framework agreed under the International Monetary Fund (IMF) programme; sustain efforts at consolidating public finances through intensified domestic revenue mobilization and implementing prudent expenditure management to reduce the budget deficit and government borrowing.

The government expressed grave concern on the ratio of debt service to revenue fingered as the greatest challenge to 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 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”.

According to the government, Sierra Leone’s public debt is assessed to be sustainable though at a high risk of distress. “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 constitute the greatest challenge to fiscal management.”

The government plans to redress this situation in fiscal 2025 by seeking grant financing or to borrow concessional loans to finance investments in key sectors of the economy, especially infrastructure, to 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), 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.

It also has plans to explore the introduction of innovative financing schemes, such as, PPPs, debt swaps for education, health and climate-related financing arrangements.

Minister of Trade and Industry Ibrahim Alpha Sesay has confirmed government’s move to stimulate the organized private sector of the economy with a 428 million US dollar stimulus package. It would generate over 2,300 in employment opportunities and the construction of about 10 industries that would span manufacturing and agribusiness. This, Sesay stated in Freetown recently, is in aligning with government’s various initiatives aim at transforming key sectors of the economy.

“The factory investments span a variety of industries, including manufacturing and agribusiness, as the government seeks to reduce Sierra Leone’s dependence on imports, strengthen domestic production, and support local job creation. This influx of capital will spur economic growth and enhance Sierra Leone’s self-sufficiency,” Minister Sesay stated.

This development, according to Sesay, represents the latest outcome of the ‘Big Five Game Changers’ plan, designed to prioritize advancements in trade, agriculture, tourism, energy, and human capital development. President Bio’s administration has set ambitious goals under the initiative, including fostering an enabling environment for foreign and domestic investors.

When completed the manufacturing concerns would up the ante for Sierra Leone in terms of sustainable industrialization and ultimately support the country’s long-term economic stability.