World Bank approves $65 million as the country’s economy continues downward spiral

Sierra Leone Telegraph: 16 January 2024:

CORRECTION: The World Bank Country Manager for Sierra Leone, Abdu Muwonge, has not been replaced as incorrectly reported on the 30th December 2023, by the Sierra Leone Telegraph. 

It is important to note that the Sierra Leone Country Office is part of the Ghana Country Management Unit (CMU) comprising of Ghana, Liberia and Sierra Leone. The newly appointed Director of the Ghana CMU –  Mr. Robert Taliercio O’Brien, who is based in Accra, Ghana, supervises the World Bank operations of the three Country Offices which are headed by resident Country Managers. Mr. Abdu Muwonge is still the World Bank Country Manager for Sierra Leone.

Please note that Mr. Robert Taliercio O’Brien, whom our story mentioned on the 30th December 2023, has not replaced Mr. Muwonge but is the new Director for the Ghana CMU. The Sierra Leone Telegraph wishes to apologise for this error.

The World Bank last month announced its approval of  $65 million aimed at bailing out the inept Bio-led government, whose macro-economic policies are causing so much pain for Sierra Leoneans.

But the World Bank whose policy of throwing cash at failing governments in Africa in order to avert instability and popular uprising, is coming under a lot of pressure and criticism.

Since President Bio came to office in 2018, the country’s economy has continued to decline, with inflation running at about 50%; the value of the currency fallen from Le12,000 to the British Pound in 2018 to Le28,000 today, whilst annual economic (GDP) growth is 2.7%.

Government debt which in 2015 stood at 43.76% of GDP is now running at 88.90% of GDP as the government runs out of ideas to generate revenue and resorting to huge public sector borrowing so as to keep the machinery of state afloat.

In July last year, the government re-denominated the Leone and introduced the New Leone by knocking off three zeroes from bank notes, but keeping the value of the Leone unchanged, a decision taken by the former Bank Governor that is now haunting the government.

Since the launch of the New Leone there has been a lot of confusion. The government has  shifted the full transition from the old Leone to the new at least twice, as banks run out of supply of the New Leone.

The government does not have the cash to pay for the printing and supply of the New Leones and has turned to the World Bank, who last month announced it has granted $65 million to the government to help stabilise the falling economy.

The old Leone ceased to be a legal tender on 31st December 2023, and the government has asked the people of Sierra Leone to take their old Leones to local banks for exchange to the New Leone.

But demand for the New Leone outstrips its supply and is set to cause more chaos in the days and weeks ahead.

The man brought in by the World Bank to help direct its policies and strategies  in Sierra Leone is Robert Taliercio O’Brien. He is the new Director for Ghana, Sierra Leone and Liberia, responsible for managing the respective Country Managers in Sierra Leone, Liberia and Ghana.

According to the World Bank, Robert was previously the Regional Director in the Latin America and Caribbean Region for the Equitable Growth, Finance, and Institutions (EFI) Department. In his 23 years at the World Bank, he has served as practice manager, lead economist, and country economist in multiple regions, including East Asia and the Pacific, Europe and Central Asia, and Africa.

Robert will be expected to use all of his diplomatic and economics expertise to help avert looming economic disaster in Sierra Leone.

The government of Sierra Leone has run out of cash and early last month (December 14, 2023), the World Bank Board of Executive Directors approved a $65 million grant which it says will support the Government of Sierra Leone to address critical developmental challenges by supporting reforms related to macroeconomic stability, mining sector governance, land management practices, gender equality, and accountability of the public sector.

“Sierra Leone’s capabilities to eradicate extreme poverty and boost shared prosperity on a livable planet rest on sustained macroeconomic stability, robust growth, and a solid enabling environment for leveraging its abundant natural resources,” said Abdu Muwonge, World Bank Country Manager for Sierra Leone.

“This financing supports reforms that will help address poor governance of the mining and land sectors, enhance inclusion in access to employment and education, and contribute to reducing fiscal and debt vulnerabilities.”

According to the World Bank, this funded program “builds on the strong foundation established by the two earlier operations in this series…”

But the two earlier funding rounds of over $200 million support to the government since June 2020 are yet to bear fruits. The recent US government Millennium Compact Challenge (MCC) report on Sierra Leone said that the government has been ineffective in managing governance.

In December 2022, the World Bank approved $100 million to improve Sierra Leone government transparency and accountability.

Six months earlier the World Bank had given $100 million to the government to “support Sierra Leone’s economic resilience”.

Critics of the government and the World Bank say that this $200 million funding has been  nothing but a gravy train for the government and its ruling SLPP party.

Some analysts have warned against bankrolling the government of President Bio (Photo), whom critics are blaming for the deplorable and declining state of the country’s economy, due to his incompetence and poor leadership.

Handing President Bio $200 million cheque to pay for “strengthening accountability and transparency in public finance, as well as support Sierra Leone’s economic resilience” has yielded very little positive results.

In December 2022, Abdu Muwonge – the World Bank Country Manager for Sierra Leone, said: “Sierra Leone’s capabilities to eradicate extreme poverty and boost shared prosperity rest on sustained macroeconomic stability, robust growth, and a solid enabling environment for leveraging its abundant natural resources. This financing will help address immediate fiscal challenges, while improving overall governance to build resilience and enhance the delivery of services to the people of Sierra Leone.”

Twelve months on, the economy has continued to spiral downwards, and government accountability and transparency are now worse that they were under the Koroma-led APC government.

Critics and policy analysts believe that the additional $65 Million approved two weeks ago by the World Bank to support macroeconomic stability and governance in Sierra Leone, will do little in delivering the much needed political and structural change required to start rebuilding the country’s rotten economic and governance foundation.

Be the first to comment

Leave a Reply

Your email address will not be published.


This site uses Akismet to reduce spam. Learn how your comment data is processed.