Sierra Leone President orders 30 percent government spending cut

FREETOWN (Capital Markets in Africa) – Sierra Leone will cut the cost of running its government by 30 percent to try to tackle an economic crisis triggered by falls in commodity prices and the aftermath of an Ebola epidemic, President Ernest Bai Koroma said in a statement.

The measures will come into effect immediately and continue for the rest of the year. The budget for the first half of 2017 will face similar cuts, the statement issued by Koroma’s office on Monday said.

Spending in the 2016 budget was set at 4.65 trillion leones ($831 million) of which 3.1 billion leones was marked for the cost of running the government, the rest being for capital investment.

The IMF forecasts that the Sierra Leone economy will recover by 4.3 percent in 2016, but public finances are still reeling from a 21.5 percent economic contraction in 2015.

The world’s worst recorded Ebola epidemic, which began in late 2013 and killed some 11,300 people in Sierra Leone and its neighbours Guinea and Liberia, shattered the country’s economy.

“If we are able to fight Ebola, we should be able to put up a fight that will turn around the economic fortunes of the country,” Koroma said in the statement, which came after an emergency cabinet meeting.

Diamonds and agriculture form the backbone of Sierra Leone’s economy, although iron ore is also a significant source of revenue.

Measures include tasking all government departments with a 50 percent cut to fuel allocations, travel budgets and vehicle maintenance; restrictions on overseas travel, and an outright ban on buying office equipment.

At least 70 percent of all contracts with suppliers would have to be paid in leones, instead of the preferred currency of dollars, and all businesses owing back taxes had 30 days to clear them or face a penalty, the statement said.

Source: Reuter Africa News