Finance Minister Sheku A.F. Bangura has sounded the alarm over the strain rising debt service payments are placing on Sierra Leoneโs ability to fund critical sectors, including agriculture, education, and healthcare.In an address, he cautioned that the countryโs growing fiscal pressures could jeopardize investments essential for economic development and poverty reduction.
Bangura highlighted that the countryโs debt-to-GDP ratio has seen significant improvement, dropping from 94% in 2022 to 53.4% in 2023 due to a GDP rebase. However, he warned that the ratio of debt service to domestic revenueโat 50% in 2023 and projected to reach 59% by 2025โposes a serious threat to fiscal stability.
โThese high debt service obligations are squeezing out funding for crucial sectors that directly affect our most vulnerable populations,โ Bangura stated, emphasizing the governmentโs shrinking ability to sustain investments in social services amid mounting repayment obligations.
To address these challenges, Bangura outlined strategies aimed at reducing debt distress. Key measures include:
Adhering to IMF Framework: Limiting domestic borrowing and strengthening domestic revenue mobilization.
Debt Management: Issuing medium- to long-term bonds under a revised Medium Term Debt Strategy to extend debt maturity and ease short-term repayment pressures.
Arrears Clearance: Introducing an updated Arrears Clearance Strategy and Arrears Profiling System to track and resolve outstanding government obligations efficiently.
Bangura also highlighted efforts to secure grants and concessional loans for priority sectors, particularly infrastructure. The government is exploring innovative financing models, such as public-private partnerships and debt swaps, to support education, healthcare, and climate resilience.
Bangura warned that the debt burden threatens the governmentโs ability to prioritize agriculture, a key sector for economic stability and food security. He underscored that unchecked fiscal pressures could undercut the countryโs long-term development goals.
โWe must balance fiscal prudence with the need to invest in Sierra Leoneโs future,โ he said, urging for reforms to bolster public finances and sustain critical public services.
Despite the fiscal challenges, Bangura expressed optimism that strategic reforms and partnerships could steer the country toward sustainable economic growth, ensuring essential services for its citizens.
The warning comes as Sierra Leone continues to navigate post-pandemic economic recovery and rising global financial uncertainties.
