The delegation from Sierra Leone, on Saturday June 25, 2022 presented their Country Report at the First on going Ordinary Session at the plenary.
As the last country to present its report, they pointed out that they have made significant progress in the implementation of the community texts and protocols.
- a) Current Status of Community Levy Implementations
- On 25th June 2021, the Government of Sierra Leone paid Community Levy arrears to the ECOWAS Commission to the tune of Le 44,416,734,323.50 ($ 4,284,910.00.
- The ECOWAS Commission Community Levy Assessment Mission visited Sierra Leone from 21 st – 25 th February, 2022, in order to evaluate Sierra Leone’s compliance with the tenets of the Community Levy (CL) Protocol implementation. The Mission was very pleased with the country’s compliance level.
- b) Current Status of the Ratification of ECOWAS Protocols and Conventions
- Sierra Leone has ratified 42 Protocols out of 54.
- There are 12 protocols that are yet to be ratified.
- Inasmuch as the implementing MDAs face challenges, these MDAs remain committed to the ratification process. The ECOWAS National Office has been constructively engaging the responsible Ministries, Departments and Agencies (MDAs) to ensure that the ratification and domestication of the community texts are completed before the end of 2022.
- c) Status of the implementation of community programs and projects;
Government has fully implemented the Abidjan Free Roaming Protocol that has eased communication between Sierra Leone and some West African Countries. Sierra Leone will again fully implement the ECOWAS Roaming Protocol, which will ensure that calls are made at the local rate without having to change or buy new SIM cards or pay roaming charges for the first one month. This is bound to promote an integrated ICT market, borderless communication and cohabitation.
- d) Performance on the microeconomic convergence criteria
Domestic Economic Growth
Mr. Speaker, Honourable Members, the domestic economy was initially projected to recover by 3.2 percent, yet downgraded to 2.9 percent in 2021, compared to a contraction of 2.0 percent in 2020.
The revised growth projection is due to uncertainties surrounding the mining sector owing to the COVID-19 pandemic. However, non-mining growth sectors such as agriculture, manufacturing, transports and trade are expected to support growth through the implementation of government diversification policies to boost economic activities.
Mr. Speaker, Hon. Members, inflationary pressures persisted in the last three quarter of 2021, as headline inflation recorded an uptick of 17.94 percent in December 2021 from 10.45 percent in December 2020, reflecting the uncertainties associated with the COVID-19. This includes the disruption in global supply chain, high freight charges and depreciation of the exchange rate.
Similarly, both food and non-food inflation edged-up during the review period.
5.5 In order to mitigate the effect of inflationary pressure and give support to government’s recovery programme, the Bank of Sierra Leone implemented the second phase of the Special Credit Facility with the injection of Le 500 billion at 5 percent interest rate in March 2020. The Bank also created Le100 billion agricultural credit facilities to support the agricultural sector.
5.6 Furthermore, Statistics Sierra Leone rebased Consumer Price Index (CPI) basket from 2008 to 2021. Headlines inflation moderated to 16.65 percent in January 2022, driven mainly by decline in food inflation owing to a boom in the harvest of domestic food production while non-food production increased during the review period. Nevertheless, the risk to inflationary pressure elevated partly due to global uncertainties, increase in international commodity prices, especially oil price, and geo-political tension (i.e. war between Russia and Ukraine) that resulted in the upward adjustment of the fuel pump price. Headline inflation increased in both food and non-food inflation.
Mr. Speaker, Hon. Members, provisional data indicates government fiscal operations in 2021 were expansionary as deficit widened from 2,283.85bn in 2020 to 2,390.71bn in 2021. The widened deficit ensued from the expansion in government expenditure and net lending which more than outweighed the increase in government revenue and grants during the review period. Total Government revenue and grants collected expanded from Le7, 809.22bn in 2020 to Le8, 992.75bn in 2021. The expansion in total government revenue was mainly attributed to increase in domestic revenue mobilization, whilst foreign grants received contracts during the review period. Domestic revenue mobilization increased from Le5, 506.68bn in 2020 to Le6, 893.05bn in 2021. On the other hand, foreign grants received contracts from Le2, 302.53bn in 2020 to Le2, 099.70bn in 2021.
Government expenditure and net lending expanded from Le10, 093.07bn in 2020 to Le11, 383.46bn in 2021, which was due to the increase in both recurrent and development expenditure.
Mr. Speaker, Hon. Members, in 2021 exchange rate dynamics were relatively stable up to quarter three. Thereafter, pressures from exchange rate dynamics heightened in quarter four, 2021, indicating decline in foreign exchange inflows with attendant surge in high demand for importation of essential commodities. Looking ahead, exchange rate pressures are expected to be moderated in the medium term, underpinned by anticipated increase in export earnings, remittances, foreign direct investment and inflows from developments.
Gross foreign exchange reserves rose to US$931.76 Million in December 2021 relative to US$677.21 Million in December 2020. This increase was largely driven by a mixture of inflows with regards to aid disbursement and balance of payment support from development partners. The gross foreign external reserves level is still above the required threshold of the three (3) months of import cover.
5.9 Furthermore, trade deficit widened in the December 2021 to US$1.07 billion, relative to a deficit of US$0.96 billion in December 2020.
Assessment of macroeconomic convergence criteria
5.91 Mr. Speaker, Honourable Members, Sierra Leone’s performance on the primary convergence remained the same in 2021 as was in 2020 satisfying one (gross external reserves) out of the four primary criteria. The country did not meet the annual average inflation, central bank financing, and the fiscal deficit criteria. With respect to the secondary convergence criteria, the country met the nominal exchange rate variation but missed the public debt-to-GDP criterion.
Primary Convergence Criteria
Table 1a: Status of Rationalized ECOWAS Primary Convergence, 2017 – 2021
|Inflation ( annual-average)||≤5percent||15.3||17.5||14.4||13.9||14.4||10.5||11.1||11.9|
|Fiscal Deficit including grants/GDP (percent GDP)||≤3percent||8.6||5.2||0.6||2.6||7.8||6.2||9.0||6.2|
|Central Bank Financing of Fiscal Deficit as percent of previous year’s tax revenue||≤10percent||18.9||18.8||5.8||0.7||22.5||21.9||9.6||20.0|
|Gross External Reserves (in months of import cover)||≥ 3 months||4.4||3.4||3.8||3.1||4.5||5.3||4.6||6.1|
|Number of criteria satisfied||1||3||3||3||1||1||2||1|
Source: Ministry of Finance & BSL
Table 1b: Status of Rationalized ECOWAS Secondary Convergence, 2017– 2021
|Exchange Rate Variation||±10percent||4.5||10.2||12.3||13.6||9.4||4.1||3.0||9.2|
|Public Debt/GDP (percent)||≤70percent||56.4||59.5||54.4||61.0||76.2||76.2||68.4||74.6|
|Number of criteria satisfied||2||1||1||1||1||1||2||1|
Source: Ministry of Finance & Bank of Sierra Leone
Note: The country met the nominal exchange rate variation criterion in the review period. The nominal exchange rate variation stood at 9.2 percent as at end December 2021 which was within thethreshold of 10 percent.
By: Kwaku Sakyi-Danso/Ecowasnews.com/Abuja-Nigeria