Sierra Leone Telegraph: 18 April 2023:
The government of Sierra Leone is fast running out of cash to meet its monthly financial obligations, as revenue from export earnings and general taxation continue to fall dramatically.
On 4th April 2023, the President wrote this memo to ministers, telling them to stop foreign travel.
With government borrowing now at a record high of over $2 billion and foreign donor aid curtailed by the international community as election approaches, the Bio-led government is trying to squeeze every Cent it can find to keep going.
Sierra Leone Government Debt is alarmingly expected to reach over 92 percent of GDP by the end of 2023. Sierra Leone’s GDP stands at $3.5 billion. In 2015, government debt to GDP was 43%.
According to the ministry of finance, the government’s “2023 Budget will prioritise Programmes and Policies that will enhance economic resilience and protect the livelihoods of the most vulnerable in the country”.
But how does the government hope to achieve this in the face of declining public finances?
The ministry of finance says: “Government will continue to implement programmes and policies to mitigate the impact on the population, especially the vulnerable groups by intensifying local food production and facilitating food importation to address food insecurity, especially for the most vulnerable groups; sustain critical investments in education and health to improve human capital; expand social safety nets to enable vulnerable people to cope with the challenging economic situation; pursue adaptation and mitigation measures in response to climate change risks; promote private sector development for job creation; contain inflation and stabilise the exchange rate to lower the cost of living; strengthen public finances and maintain sustainable debt levels; and improve governance and accountability.”
Domestic revenue for the financial year 2023 is projected at NLe9.35 billion (14.0 percent of GDP) and total expenditure and net lending for 2023 is projected at NLe15.1 billion (22.7 percent of GDP) compared to NLe13.7 billion (25.7 percent of GDP) for 2022. Of this, recurrent expenditure will amount to NLe10.9 billion (16.4 percent of GDP).
Capital expenditure is forecast to reach NLe4.2 billion (6.3 percent of GDP) in 2023, of which, domestic financed capital expenditures will amount to NLe1.2 billion.
Last week the government tabled a new taxation law that will introduce new tax measures including raising Goods and Services Taxation (GST) that will hurt the poor the most in the country. Many businesses are expected to struggle and may close down as a result of the new taxes.
These new taxes come despite the government promising in November last year (2022) that “the 2023 budget would not introduce any new taxes with all current rates of taxation remaining unchanged in 2023; adding that “Efforts to raise revenues will focus mainly on strengthening tax compliance and broadening the tax base, noting that Government would escalate the Duty Waiver Policy approved by Cabinet in March 2022 to law.”
“The Government will implement the 45 percent increase in salaries for teachers for the next three years, starting with an annual increase of 15 percent in January 2023; the final 25 percent increase in salaries for the security sector, as pronounced in the 2021 budget speech, implying that the security sector would have received a 75 percent increase from 2021 to 2023.”
The government also said there will be a recruitment of 2,000 Police Officers as follows; 1,000 effective January 2023 and another 1,000 effective March 2023 and the recruitment of 500 health workers, which is part of the delayed recruitment for the FY2022 quota.
Today, those unaffordable promises have come to haunt the government as it runs out of cash. President Bio has given notice to all ministers – excluding himself and his lavishly spending wife, to stop all overseas travelling from 30th April 2023.
Sierra Leoneans are calling for regime change at the polls in June 2023.
According to a recent British Parliament Report: “Africa in 2023: Economies, power and fear of famine Insight”, published 19 January, 2023: “Dr Alex Vines, Director of the Africa programme at the think tank Chatham House, warns high inflation at a time of heightened political uncertainty increases the likelihood of civil strife. In August 2022, the police used force against large scale protests in Freetown over the rising cost of living and economic hardship. Reuters said the unrest was “highly unusual” for Sierra Leone.
The Report also says that:
“President Julius Maada Bio is seeking a second term in Sierra Leone in June. Opinion polls suggest dissatisfaction with the Government’s handling of the economy.”
You can read the British Parliament Report here: