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Overview

Macroeconomic Context

Sierra Leone’s sustained economic growth has been constrained by (i) exposure to multi-dimensional exogenous shocks (economic, epidemic, climatic); (ii) fragile institutions; and (iii) limited fiscal space. Agriculture and mining account for two-thirds of all economic output. Since the 2010s, the economy has been affected by back-to-back crises, interspersed with periods of short-lived recovery: the Ebola epidemic (2014-16), the collapse in global commodity prices (2015-16), the mudslide in Freetown (2017), the COVID-19 pandemic (2020), and the implications of the war in Ukraine (March 2022 onwards).

Recent Developments: During 2021, the economy grew by 4.1%, supported by a recovery in agriculture, mining and private consumption demand. During 2022, headline inflation accelerated to a decade-high of 30% (year-on-year) by July, compared to an average of 12% during 2021. High food and fuel inflation has had significant social impacts. According to the World Food Programme (2022), about 73% of Sierra Leoneans are food-insecure. Using the 2017 PPPs (at $2.15/day), the poverty rate is estimated to have increased during the pandemic in early 2020. Fiscal pressures have intensified. In response to COVID-19, the deficit rose from 3.1% of GDP in 2019 to average 6.2% of GDP during 2020-21. During 2022, inflationary pressures have prompted authorities to increase energy subsidies and cash transfers to vulnerable households, slowing the planned fiscal consolidation.

Outlook: A nascent economic recovery was disrupted in 2022 by a net negative terms-of-trade shock with the onset of the war in Ukraine and the rise in global food and fuel prices (only partially mitigated by higher prices for key exports). The increase in fuel prices also resulted in pervasive power outages. GDP growth is now projected at 3.6% during 2022, down from 5% projected at the end of 2021. It will be supported by: (i) resumption of iron-ore mining at Marampa and Tonkolili, for the first time since Ebola; and (ii) a gradual recovery in consumption demand. However, supply chain disruptions and inflationary pressures caused by the war in Ukraine will dampen investments and slow the recovery in private consumption, prolonging the overall economic recovery. Over the medium-term, GDP growth is expected to average 4%, but remain below the long-term average of 4.3%, reflecting economic scarring from repeated shocks.

Risks and Challenges: Accelerating inflation and intensifying fiscal pressures pose significant risks to the medium-term economic outlook. Risks of social instability have also risen as witnessed during the violent riots in August 2022, which left 27 people dead (including security personnel). Besides the continued global spillovers from the war in Ukraine, the main risks to the outlook stem from rising public discontent and uncertainties associated with the upcoming general elections. Any aggravation of the negative terms-of-trade shock could destabilize inflation and cause further public expenditure overruns. Higher food inflation would hurt the poor disproportionately since they tend to spend a higher share of their budget on food. Rising inflation can further spur public discontent and rioting, which could hamper the authorities’ appetite for reforms ahead of the general elections in mid-2023, resulting in populist policies.

Political Context

Sierra Leone holds Presidential, Parliamentary, and Local Council elections on June 24, 2023. The Electoral Commission announced that the upcoming elections will be conducted under the District Block Proportional Representation (PR) System as opposed to the Constituency-based First-Past-the-Post System used since 2007. The main opposition, All People’s Congress (APC), has challenged the legality of the PR System in the Court, and the laying of the Constitutional Instruments on November 23 resulted to a violent confrontation between the opposition and ruling party members in Parliament. Meanwhile, the ruling Sierra Leone People’s Party (SLPP) has endorsed the current President Julius Maada Bio as the party’s presidential candidate for 2023. The main opposition APC and other registered political parties are yet to decide on their flag bearers.

Development Challenges

Until the outbreak of Ebola in 2014, Sierra Leone was seeking to attain middle-income status by 2035, but the country still carries its post-conflict attributes of high youth unemployment, corruption, and weak governance. The country continues to face the daunting challenge of enhancing transparency in managing its natural resources and creating fiscal space for development. Problems of weak infrastructure and widespread rural and urban impoverishment persist despite remarkable strides and reforms.

Last Updated: Oct 20, 2022

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Sierra Leone : Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments
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Additional Resources

Country Office Contacts

Main Office Contact
3 & 3A Spur Road,
Wilberforce,
Freetown, Sierra Leone
+232-78-874600
Communications contact
Moses Alex Kargbo
External Affairs Officer
+232 76 345930
For project-related issues and complaints