SIERRA LEONE is capitalizing on its hard-won stability to stimulate economic growth through financial reform, whilst deepening democratic structures and maintaining a prudent fiscal regime.

Rising economic activity and increased exports have led to five consecutive years of economic recovery. GDP grew by 9.3 percent in 2003, 7.4 percent in 2004, and is expected to be similar in 2005.

UNHCR Goodwill Ambassador Angelina Jolie participates at a crafts workshop with young refugee women.

Dr. James Rogers, Governor of the Bank of Sierra Leone, expects the trend to continue. “Projected growth over the next three to four years is on average 7 percent, which seems a reasonable expectation,” he says.

This improvement in performance goes hand in hand with a renewed commitment to effective fiscal management. The recently published Truth and Reconciliation Report cited bad governance and economic mismanagement as two of the root causes of the civil war, and President Kabbah has characterized corruption as a “national security threat.”

New public procurement legislation and an improved regulatory framework could have a potentially strong impact on ensuring transparency and efficiency in the use of public funds.

Financial Secretary Samura Kamara (INTERVIEW) elaborates, “With the advice and support of our international partners, we have developed the new Government Budgeting and Accounting Act, where rules and responsibilities are clearly laid out. Now, it is clear who is liable if anything goes wrong, and there are sanctions imposed in these laws for the first time.”

Agustín Carstens, Deputy Managing Director and Acting Chair of the IMF’s Executive Board, states, “The emergence of peace in recent years has paved the way for an enduring and broad based economic recovery, reflecting robust activity in agriculture, diamond mining, manufacturing, and services. Inflation is expected to decline to single digits as a result of tighter fiscal and monetary policies.”

Key to this performance has been the focus on food security. President Kabbah has pledged that no Sierra Leonean should go to bed hungry by the year 2007, and unofficial statistics suggest good progress in achieving that goal.
The Bank of Sierra Leone has strengthened monetary market management by intensifying its open market operations, instituting policy measures aimed at containing monetary growth, and mopping up excess liquidity in the banking system.

The government is proceeding steadily with the implementation of critical reforms to consolidate economic recovery. In a bid to build fiscal sustainability, a National Revenue Authority has been established to improve on tax administration and boost domestic revenue collection.

A National Commission for Privatization (NCP) has been established to implement a divestiture program, with a view to making public enterprises financially and economically viable, better service providers, and less dependent on subsidies.

Whilst developmental assistance and international aid will continue to play an important role in the short-to-medium term future of Sierra Leone, the government realizes that it is trade, not aid, that offers a long-term solution to the challenges of sustainable development. Foreign investment is a priority, and the revision of the Investment Code to make it more transparent and competitive is only the precursor to further liberalization of the trade regime.

“We will create the foundation so that both the public and private sectors can play their role in stimulating growth, and we are looking to open up the country to create investment opportunities,” says John Benjamin, Minister of Finance.

Priorities for the future include the development of complementary policies to attract investors, including the harmonization of tariffs within the subregion and achieving monetary unity through the West African Monetary Zone.

With investment flows increasing and the prospect of substantial debt relief in the near term, the future looks bright. As one of nine African nations considered close to the completion point in the Highly Indebted Poor Countries (HIPC) initiative established by the World Bank and the IMF, Sierra Leone could soon be eligible for complete debt cancellation following the landmark debt relief deal at the G8 Summit in Gleneagles, Scotland, last year.

Remarkable progress has been made in the years since the end of the civil conflict. However, Sierra Leone needs sustained focus from donors to consolidate peace.

Mr. Benjamin says, “We are emerging from a long and devastating war, and for now we depend on donors’ support. Debt relief will be very welcome, but it is not enough to put in place the mechanisms for our development. We need access to markets and equitable investment. We have hope. The war left a lot of scars, but we know that the price of peace is never too high.”