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Sierra Leone News: It is disheartening to spend Le1.5 trillion on debt servicing – Finance Minister

The International Monetary Fund (IMF) last week approved a new program for Sierra Leone and it stated that for the country to succeed, the program needs to address the country’s large public debt burden. “Sierra Leone’s domestic and external debt levels have been high for some time, in part reflecting past borrowing to address the infrastructure deficit. The recent fiscal slippages and weaker output growth have added to this challenge, and Sierra Leone is now classified as being at “high risk” of debt distress” according to the IMF Press Release No. 18/446. In response to the country’s new classification, Minister Jacob Jusu Saffa affirmed that the only way the country will get out of debt distress is by being a responsible borrower and they will not want to borrow on terms that are unfavourable and can get the country into debt distress. “So that is why most of our efforts towards capital mobilisation is towards financing models which are the public private partnership or bits of transfers as we do not want to incur loans that will pose substantial liabilities on government” he said during a press briefing on Tuesday 4th December, 2018 at the Ministry’s conference room on the IMF approval. Minister Saffa said that it is difficult to manage, when over 20% of the budget is going to be used for debt servicing, the Le1.5 trillion for debt servicing and principal interest payment he said is more than what they are going to spend on education and other critical sectors like agriculture, “it is so disheartening” he presaged. He added that with debt servicing plus wages and salaries, 70% of the budget is almost gone. “That is unsustainable, so you have to make sure you rationalise salaries by bringing the wage bill down to a manageable level and increase your revenue so you have better space to spend.” Minister Saffa said that they will continue with fiscal discipline which is part of the program as they do not have an option and that the agenda for strengthening and continuing the fiscal discipline are clearly spelt out in the 2019 Budget. “As part of our fiscal consolidation it is going to be based on revenue mobilisation and expenditure management control. We are doing it not because IMF wants us to do it but we have to, if we are to survive as a nation, and only when we increase revenue then we have additional space,” he said. Looking back at the IMF decision in 2017 to suspend the previous program, Minister Saffa said it was painful, because the withdrawal by the IMF at that time is what is affecting the country now, since they took up office in April they have not benefitted from any resources as compared to 2007 when the APC took over when Sierra Leone was firmly in the program. “We are excited for this approval as it has restored our international credibility, it is not about getting more loans as our current fiscal space is limited.” The re-launch of the IMF program will trigger additional disbursements of $35.0 million UAS by the World Bank, €23.5 million by the European Union and $18.0 million USD by the African Development Bank for the 2019 Financial Year. Furthermore, he stated that in an effort to revamp the mining sector the Ministry is seriously looking at the mining agreements as they may have to take hard decision as a country, “we are reviewing them with the intention to renegotiate or terminate. We are seeking legal advice as some obnoxious agreements that we inherited, which are even worse off than the debt they left. If we do not go into these agreement Sierra Leone will be taken over by foreigners” Minister Saffa concluded.

ZJ/4/12/18

By Zainab Iyamide Joaque

Wednesday December 05, 2018.

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