Gross domestic product (GDP) growth in 2014 remains linked to iron ore export, as international iron ore price (of about $100/ton) falls. This indicates that without greater domestic revenue mobilization, revenue in 2015 will dwindle against targets for expected GDP growth. Tax incentives to several mining companies and declining capabilities of the national revenue authority are also hindering revenue boosting prospects. As a result, revenue as a percentage of GDP is expected to average around 14% in 2015, a low rate even by regional standards.
The government aims to boost the contribution of the natural resources sector, mainly by introducing a resource rent tax, although the impact will be marginal, as the new rules are unlikely to apply to existing deals. The government has said that it wants to review existing agreements with mining companies but any changes are likely to be gradual, as it is eager not to scare off investors. Overseas grants will continue to contribute around one-quarter of total revenue, although they are likely to fall short of budget projections.
Lax spending control, growing popular expectations of improved public-service delivery and a rising public-sector wage bill (due in part to the introduction of a minimum wage for public-sector workers in 2014) will weigh on fiscal discipline.
Servicing the domestic debt—which mainly consists of relatively expensive short-term Treasury bills—will continue to consume around 10% of total spending. This, together with efforts to clear arrears and unsettled payment obligations accumulated in previous years, will limit investment budget execution. Institutional capacity constraints also make execution of the full range of public investment unlikely.
Overall, we expect the fiscal deficit as a percentage of GDP to widen from an estimated 2.5% in 2013 to 3.3% in 2015 as improvements in revenue collection are offset by rising capital spending and increases in the public-sector wage bill.
External loans from donors—principally project linked - will support the financing of the fiscal deficit at concessional rates.
On September 17, 2007, Ernest Bai Koroma of the All People's Congress (APC) was sworn in as President of Sierra Leone. The second set of local council elections took place in July 2008, with the APC winning 10 out of 19 local councils and the SLPP wining nine. The 2012 presidential and parliamentary elections were fiercely contested. The incumbent, Koroma won 58.7% of the votes, while his main challenger the SLPP’s candidate, retired Brigadier Julius Maada Bio polled 37.4% of the votes, thus preventing a run-off.
In the past 50 years since Sierra Leone’s independence in 1961, the SLPP has ruled for a total of 16 years, from 1961 to 1967 and again from 1996 to 2007; while the APC has ruled for 31 years, from 1967 to 1992 and again from 2007 to 2014. Although various military regimes have ruled Sierra Leone for a total of five years, civilian rule, under either the APC or SLPP accounts for over 90% of the country’s post-independence time span as of 2014. Since 1991, the country has been governed under a multi-party constitution, which is now under review for the expressed purpose of addressing many of the country's governance challenges. A national census is also due to be conducted in December 2014, after 10 years since the last one was conducted.
Sierra Leone was one of the world’s poorest countries when the civil war began in 1991. In spite of its remarkable strides and reforms since the war ended in 2002, problems of poor infrastructure -- including roads and energy -- low capacity, youth unemployment, high maternal and infant mortality, widespread rural impoverishment, impact of the global economic downturns, and lapses in public financial management and governance still persist. There is also the daunting challenge of enhancing transparency in managing the country’s vast natural resources. In May 2014, the country was hit by the deadly Ebola virus disease which has affected virtually every district but one. The viral nature of the disease has affected the operations of many FDIs especially in the mining, agriculture and service sectors.
Through its Country Partnership Strategy (CPS), the World Bank Group (WBG) in Sierra Leone supported the country’s Agenda for Change which has phased into the Agenda for Prosperity. The current Agenda for Prosperity prioritizes economic diversification, managing natural resources , accelerating human development and other growth drivers; international competitiveness, labor and employment, social protection, governance and public sector reform and gender and women’s empowerment. The Bank supports policy reforms and macroeconomic management through budget support (provided in harmonization with other budget support donors), and in the areas of human development, infrastructure & productive sectors, and governance. The WBG is also focused on strengthening country systems, including support to decentralized services and public finance management and helping to build the demand for good governance. With the outbreak of the Ebola Virus disease, the WBG is now paying attention to strengthen the country’s health infrastructure.
Country Performance and Institutional Assessment rating has been 3.3 for the past three years, compared to 3.2 in 2009
Transparency International ranking, which measures perceived levels of public sector corruption, ranked Sierra Leone 134 out of 183 countries and territories in 2011, and 123 out of 178 in 2012. In 2013, Sierra Leone had the highest number of respondents admitting to having paid a bribe at 84%.
Doing Business data provides objective measures of business regulations and their enforcement. In 2013, Sierra Leone ranks 137 out of 183 countries on the "ease of doing business," up from 148 in 2012. The 2014 ranking is 142.
The United Nations' Human Development Index, which focuses on the challenge of sustainable and equitable progress, ranked Sierra Leone 180 out of 187 countries and territories based on 2011 data. In 2012, Sierra Leone moved up to 177 out 187 countries. In 2013, Sierra Leone was estimated to have the highest MMR at 1100.
Health and nutrition outcomes were among the worst in the world: infant mortality rates were recorded at 160 per 1,000 live births in 2006, maternal mortality was at 1,077 per 100,000 live births in 2005, and the mortality rate for children under five was 271 per 1,000 in 2005. The incidence of tuberculosis is high, with about 628 cases per 100,000 people versus 495 cases for the region.
The reported incidence of malaria is high but declining, from a morbidity rate of 37.5 (2003) to 35.2 (2005). Sierra Leone has made rapid progress in measles immunization, with better than average results relative to the rest of Sub-Saharan Africa.
The HIV/AIDS prevalence continues to be low at 4.9% (2009) nationally. Ninety-one percent of children born to HIV-positive mothers are now negative (2009). The reported incidence of malaria is high but declining, from a morbidity rate of 37.5 in 2003 and 2004, to 35.2 in 2005, 35.0 in 2006, 35.1 in 2007, and 35.0 2008 and 2009.
Poverty is heavily concentrated in the rural and other urban areas outside Freetown. Revised estimates suggest that 66% of the population lived below the poverty line in 2004. But between 2011 and 2013, poverty decreased to 52.9%. The proportion below the poverty line in Freetown in 2003 and 2004 was estimated at 22%, compared to about 79% in the rural areas. In 2011, while rural poverty decreased to 66.1%, it increased to 28% in the Western Area
Underemployment still continues to be a problem. In 2006, three of every 10 men aged 20 to 24, were neither formally employed nor in school. The problem is especially acute in urban areas.
The distribution of public power in 2007 was limited mainly to Freetown in the Western Area, Bo in the South and Kenema in the East, with approximately 20 megawatts of actual output in the three cities. This translates into 30 kilohertz per capita versus a regional average of 541 kilohertz per capita. With the commissioning of the first phase of Bumbuna Hydroelectric Project in December 2009, power distribution in Freetown has improved and coverage has been extended to Makeni in the North. Nevertheless, the current power generation capacity remains highly inadequate to accommodate the country’s overall power demand. State-owned installed capacity totals 90MW approximately, of which 85% serve the Freetown Capital Western area, including the 50MW Bumbuna hydro plant.
The use of the electricity distribution network in Freetown area is severely constrained by insufficient transport capacity and frequent outages. Partial power supply remains available only in 4 District Headquarter towns out of 12 District Headquarter towns in total. In rural areas, where the bulk of the population resides, electricity access is practically non-existent. The mining sector primarily relies on captive generation to meet its large power needs. Non-mining customers are forced to resort to private diesel generators.
Also, from 9.8%, paved, all-weather roads have been slightly improved in 2014.
Last Updated: Oct 05, 2014