President Bio... tasked to fix the economic mess created by the past regime
Ernest Bai Koroma... to give account of stewardship over ten years
The newly elected President of Sierra Leone, Brigadier (Rtd.) Julius Maada Bio, last Friday (13th April) called on the International Monitory Fund (IMF) Chief Brain Aitken and team to help rejuvenate the country's economy as his new government has inherited huge external and domestic debts.
President Bio, who has been in office for less than a two weeks, told the IMF boss in a high-level forum on economic management at State House that the initial assessment by his Transition Team revealed that his administration would be faced with the worse economic situation since independence.
He told the delegation that the past government under Ernest Bai Koroma couldn't pay monthly salaries without borrowing or heavily relying on overdraft facility at the Bank of Sierra Leone, which now stands at over Le160 billion.
"More serious is that today, Sierra Leone's external debt is at the level of 2.0 billion dollars and domestic debt is 4.9 trillion Leones. With the signing of new agreements on the eve of the elections, Sierra Leone is already in a debt crisis, which in collaboration with our development partners we must urgently address," he said.
In June 2017, ex-President Koroma's government signed a three-year arrangement under the Extended Credit Facility with the IMF to the tune of US$224 million. The sum of US$54.3 million was disbursed immediately.
But the Koroma administration failed to meet key targets agreed with the IMF; hence the mission suspended the loan in December 2017, citing 'weak budget revenue outlook' and failure to implement measures under the programme that would increase revenue.
President Bio told the delegation last Friday that the health of the banking system was significantly challenged by the financial conditions of two state owned banks that have huge non-performing loans; some he said were given to politically exposed persons.
He said that for the first time in two years his government would pay salaries to the tune of Le150 billion, including payment of NASSIT - National Social Security Trust - contributions without recourse to domestic borrowing.
He noted that the dire economic problem has been exacerbated by low level of economic growth, high incidence of poverty, lack of economic diversification, high unemployment and challenging business environment for private sector development.
He stated that it was as a result of his quest to restore economic discipline by substantially reducing leakages in domestic revenue mobilisation that he pronounced an Executive Order suspending duty waivers and timber export, among other.
He assured the delegation that his government would broaden revenue by enhancing measures towards achieving their target of at least 20 percent of GDP.
"In addition, we will soon put in place measures to harmonise public sector wage bill, including state-owned enterprises, limit excessive overseas and local travels, control procurement and maintenance of vehicles," he said.
President Bio affirmed his commitment to renegotiate with the IMF to resume implementation of the Extended Credit Facility Programme aimed at restoring economic stability.
The economic outlook in Sierra Leone is a nightmare, according to an expert, who noted that late President Ahmad Tejan Kabbah inherited a public debt of US$1.6 billion and left the country debt-free with over Le.500 billion at the Central Bank.
There has been no reaction yet from the erstwhile government.