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Sierra Loene Business: Le7.03 trillion budget before Parliament

The first complete budget under the New Direction administration titled “Fiscal Consolidation for Human Capital Development” was on Friday 2nd November laid before MPs in Parliament, who approved its first reading as the Appropriation Act 2019. Finance Minister Jacob Jusu Saffa presented the Le7.03 trillion budget which will be funded largely by domestic revenue of Le5.66 trillion, domestic financing of Le958.3 billion and expected budgetary support of Le409 billion. He pointed out that “the FY2019 Appropriation Bill … is a total of Le6.94 trillion as it excludes repayment of arrears of Le90.0 billion which had been approved in previous year’s Appropriation Acts” he said. According to the Minister of Finance Jacob Jusu Saffa, the 2019 Budget describes the policies and programmes that will restore fiscal discipline, diversify the economy for sustained inclusive growth and job creation. “It will also promote human capital development while at the same time increase the role of the private sector and expand social protection services consistent with the Sustainable Development Goals (SDGs) and the new National Development Plan,” he said. Minister Saffa assured it would bring hope to a country that had lost the glory of being the “Athens of West Africa” to a country where school children can no longer read a passage or write their names. “It also brings hope to the people of Sierra Leone, who had lost hope of being tagged as one of the countries recording the highest death of infants, children and mothers,” he said. According to him, the real GDP growth for 2018 is revised downwards to 3.7 percent compared to the earlier projection of 6.1 percent following the cessation of iron ore mining in November 2017. He explained the non-iron ore economy is, however, projected to grow by 5.7 percent, underpinned by increased activities in agriculture and fisheries, recovery in diamond and other mining activities as well as improvements in the services sector. According to him despite the fact inflation has declined from its peak of over 20 percent in March 2017 to 15.3 percent by end March 2018, it has increased gradually to 19.2 percent in September 2018 due to the depreciation of the exchange rate, liberalization of retail fuel prices and periodic shocks to the availability of food items in the market. Addressing this issue, he said the Bank of Sierra Leone tightened monetary policy by gradually increasing the monetary policy rate to 16.5 percent in July 2018, from 14.5 percent in December 2017. The Finance Minister disclosed the total import value for the period January to June 2018 declined by 9.9 percent to US$664.2 million compared to US$737.4 million during the same period in 2017, explaining there was a drop in all categories of imports, except fuel products. “Food imports including rice dropped by 5.3 percent” he said, stating the value of rice imports dropped by 15.4 percent to US$91.6 million from US$108.3 million due to the drop in the volume from 432.6 metric tons to 284.1 metric tons. He confirmed fuel imports, however, increased by 60.6 percent to US$139.8 million compared to US$86.8 million due to both increase in price by 25.7 percent and volume by 27.7 percent. He stated the Leone was relatively stable during the first half of 2018, but the non-disbursement of budget support, loss of iron ore export proceeds, combined with the higher demand for foreign exchange by oil marketing companies and associated speculative behavior put undue pressure on the exchange rate during Quarter 3, 2018. “Excluding iron ore, the economy is projected to expand by 5.1 percent in 2019 and further by 4.9 percent in 2020 and 2021” he said, explaining inflation is projected to gradually decline to 14 percent in 2019 as the impact of the increase in fuel prices wanes and the exchange rate stabilize. “Inflation will return to single digit in 2021 due to higher agricultural production; stability in the exchange rate and the tight stance on monetary policy by the Bank of Sierra Leone” he assured. According to the Leader of Government Business Honourable Sidi Mohamed Tunis informed Parliament based on his engagement with the Leader of the opposition Hon Chernor Maju Bah, debate on the 2019 Appropriation Bill will start on Wednesday 7th November 2018.

By Alhaji M Kamara

Monday November 05, 2018.

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