By Hassan Osman Kargbo
The Monetary Policy Committee of the Bank of Sierra Leone has maintained the Monetary Policy Rate at 16.75 percent following its meeting held on 26 March 2026. The decision, later approved by the Bank’s Board of Directors on 27 March, reflects growing concerns about global uncertainties and their potential impact on the domestic economy.
The meeting was chaired by the Governor, Dr Ibrahim L Stevens, who led deliberations on recent global and domestic economic developments, with particular attention to inflation and growth risks.
The Committee noted that while global growth had previously been considered stable, the situation has become increasingly fragile due to the ongoing conflict involving the United States, Israel, and Iran. The war has triggered a rise in global oil prices and heightened the risk of supply chain disruptions, creating upward pressure on inflation worldwide. These external shocks, the Committee observed, present serious challenges for monetary authorities and require careful policy responses at the domestic level.
On the domestic front, inflation, which had declined to 4.35 percent in December 2025, rose sharply to 6.38 percent in January and further to 8.05 percent in February 2026. The increase has been attributed largely to recent adjustments in fuel pump prices and new tax measures introduced in the 2026 Finance Act. The Committee stressed the need to keep inflation expectations under control, especially in light of the evolving global situation.
Despite rising inflation, Sierra Leone’s economic outlook remains positive. Real GDP growth is projected at 4.5 percent in 2026, supported by strong agricultural output, continued mining activities, and expansion in the services sector. The Committee also highlighted the role of the government’s Feed Salone programme in sustaining domestic growth momentum. However, it cautioned that prolonged increases in global oil prices could raise production costs and weaken business confidence.
The external sector showed signs of improvement in late 2025, with a narrowing trade deficit driven by stronger export earnings and moderated import spending. Foreign reserves rose to cover 2.1 months of imports, while the exchange rate remained relatively stable. Nonetheless, the Committee warned that rising fuel import costs linked to the Middle East conflict could exert fresh pressure on the balance of payments.
Fiscal conditions also improved during the period under review, with reductions in the fiscal deficit and lower government borrowing reflected in declining Treasury bill yields. The Committee emphasized the importance of continued coordination between fiscal and monetary policies to strengthen economic resilience.
In the financial sector, the banking system remains stable, supported by strong capital levels and improved asset quality. Credit to the private sector expanded significantly, particularly in business services, commerce, and construction. However, the Committee expressed concern that lending remains concentrated in a few sectors, limiting its wider economic impact.
In its conclusion, the Committee stated that maintaining the current policy rate is the most appropriate course of action at this time. It noted that inflationary pressures are largely driven by external and supply side factors, and that tightening policy could unnecessarily constrain economic activity.
Effective 31 March 2026, the Monetary Policy Rate remains at 16.75 percent, while the Standing Lending Facility Rate is set at 20.75 percent and the Standing Deposit Facility Rate at 11.25 percent.
The Committee reaffirmed its commitment to price stability and indicated that it stands ready to adjust policy if global conditions worsen or inflationary pressures intensify.
