Weak Mining Sector Slows Salone Economy

Economic growth in Sierra Leone remained subdued

By Sylvester Samba

The Minister of Finance, Jacob Jusu Saffa, formally launched the 2018 Economic Bulletin, at his Ministry's Conference Room in Freetown Friday 6th December 2019. The Bulletin is a joint product of the Macro-Fiscal Research and Delivery Divisions of the Ministry of Finance.

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Mr. Jacob Jusu Saffa, Minister of Finance

According to Mr. Saffa, the annual Bulletin is a flagship report of his Ministry. The report is an in-depth overview of the main economic development in 2018. Include; developments in the real, external, fiscal, monetary, and financial sectors in the economy.

An executive summary of the 2018 Economic Bulletin states that the slow growth of the economy was due to weak performance in the mining sector as well as the contraction of the construction sub-sector. Growth of the non-iron ore economy was relatively stronger at 5.4 percent due to the increase in non-iron ore activities, the normalization of agricultural activities, and the expansion in the service sector.

Economic growth in Sierra Leone remained subdued. Slightly below the global economic growth of 3.6 percent, but higher than the Sub-Saharan average of 3.0 percent in 2018. The economy grew by 3.5 percent in 2018 compared to 3.8 percent in 2017.

The rise in inflation during the year can be attributed to several factors notably the pass-through effect of the depreciation of the Leone. Liberalization of domestic fuel prices and food-related supply stocks.

Furthermore, annual average inflation for 2018 estimated at 16.6 percent was lower, compared to 18.2 percent recorded in 2017, inflammatory pressures will moderate over the medium-term as the exchange rate stabilizes supported by increased domestic food production and tight monetary policy stance by the Bank of Sierra Leone, reinforced by fiscal consolidation.

The stock of total public debt (external plus domestic) stood at Le19.01 Trillion (USD2,24 Billion) at the end of December 2018, representing 58.7 percent of GDP compared to 53.7 percent of GDP in 2017. External debt amounted to Le13.35 Trillion (US$1.57 Billion), accounting for 70.3 percent of total public debt and 38.6 percent of GDP.

Domestic debt amounted to Le5.66 Trillion (US$665.57 million), accounting for 29.8 percent of total public debt and 22.2 percent of GDP.

The medium-term prospects of the economy are favorable and that the economy projected to grow by 5.1 percent in 2019 following the resumption of higher-grade iron mining at the Marampa Mines, and expansion in public-funded construction activities. Economic growth projected to average 4.8 percent during 2020-2022 reflect increased private investments in agriculture, fisheries, and tourism.

After almost two years, strong global economic expansion reaches its peak of 3.8 percent in 2017. Global growth list some of its expansionary momentum in the second half of 2018, when it fell to 3.2 percent from 3.8 percent in the first half of 2018. The slow-down in global economic activity was associated with weak international trade and investment, the escalation of trade tensions between the US and China, and the tightening of global financial conditions.