By zainab.joaque
Sierra Leone’s financial landscape is undergoing a bold realignment, with the Bank of Sierra Leone (BSL) taking a decisive step to slash government borrowing costs. At the June 12 auction, the yield on the 364-day Treasury bill dropped to 20.40%, nearly halving from 41.09% in early May—a stunning decline of over 20 percentage points in just six weeks.
This rapid fall in yields is no accident. It represents a deliberate policy move by the central bank to recalibrate the government’s debt portfolio, reduce interest costs, and send a strong signal of macroeconomic stabilization. In doing so, the BSL is reshaping investor expectations and setting the tone for a more disciplined fiscal environment.
The decline in the 364-day Treasury bill rate has been sharp and consistent. It fell to 39.22% on May 8, then dropped further to 36.80% on May 15. A week later, it was down to 33.91%—and now stands at just 20.40% as of the latest auction. The downward trajectory is unprecedented in recent years and underscores the BSL’s commitment to taming borrowing costs and stabilizing public debt.
Investor appetite remains strong despite the lower returns, suggesting renewed confidence in Sierra Leone’s macroeconomic direction. Demand for the 364-day paper far exceeded supply at the June 12 auction, a clear indication that investors are betting on continued fiscal consolidation and monetary stability.
In contrast, activity in shorter-term debt instruments has remained subdued. The 182-day Treasury bill last saw action on May 29, yielding 27.17%, and was left untouched in the June auction. This strategic pivot suggests a preference by the authorities for locking in cheaper, longer-term financing and easing refinancing risks.
With larger offerings anticipated in upcoming auctions, the central bank’s ability to maintain these lower yields will be closely watched. However, the June 12 auction may already mark a pivotal moment in Sierra Leone’s fiscal management—establishing a new benchmark for what investors can expect and what the government is prepared to pay.
This sharp recalibration of Treasury yields not only reflects improved liquidity and market confidence but also signals a broader commitment to economic reform. For businesses and investors alike, Sierra Leone’s debt market is suddenly looking far more attractive—and far more stable—than it did just a month ago.
SOURCED: Awoko News
