Sierra Leone's economy grew by 5.7% in 2023, surpassing expectations, largely due to strong performance in the mining sector. However, a new report from the World Bank forecasts a slowdown to 4.3% growth in 2024, attributed to declining iron ore prices. The Sierra Leone Economic Update, released today, presents a cautiously optimistic medium-term outlook with growth anticipated to recover to its long-term average of 4.6%. This recovery is expected to be driven by a resurgence in the service sector, improved agricultural productivity, robust mining activity, and ongoing fiscal consolidation efforts aimed at restoring macroeconomic stability.
The report offers an extensive analysis of Sierra Leone's economic performance while highlighting key challenges and opportunities for sustainable growth. It emphasizes the country's resilience amidst global challenges and calls for decisive action on critical issues.
"Sierra Leone has shown remarkable resilience and potential for recovery despite the development challenges it continues to face,” said Abdu Muwonge, World Bank Country Manager for Sierra Leone. “The findings of this report underscore the critical need for fiscal discipline and strategic investments and reforms in key sectors like energy, which remains a binding constraint to sustainable development in Sierra Leone."
Public debt-to-GDP in Sierra Leone decreased from 53% in 2022 to 46.2% in 2023, aided by a stable exchange rate and higher nominal GDP growth. Nevertheless, concerns remain over increasing debt service obligations and reliance on costly domestic borrowing. The country faces high risk of debt distress unless strong fiscal adjustments are made alongside ensuring macroeconomic stability. Rising debt stock has heightened liquidity risks amid weak domestic revenue performance.
"The economic performance of Sierra Leone in 2023 highlights both the progress, opportunities and challenges ahead," said Michael Saffa, World Bank Senior Country Economist and lead author of the report.
A special focus within the update is on Sierra Leone's energy sector titled "Unlocking the Potential of the Power Sector in Sierra Leone – Breaking the Crisis Cycle." It explores how limited electricity access hinders economic development. The report warns of significant fiscal risks due to operational inefficiencies and arrears owed to independent power producers but acknowledges government efforts through its Action Plan 2030 aiming for financial sustainability and universal electricity access by that year.
To achieve macroeconomic stability, key policy priorities outlined include maintaining commitment to fiscal consolidation efforts, enhancing revenue mobilization while controlling expenditures; reforming the Electricity Distribution and Supply Authority (EDSA) as part of strengthening the energy sector; transitioning towards renewable energy sources; attracting private investment; improving debt management; continuing monetary policy tightening; easing inflationary pressures; promoting financial inclusion particularly for micro, small, medium enterprises.