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In Sierra Leone, concern about the sustainability of public debt has become very central to-economic management and analysis considering the share of debt service in Government’s public expenditure.
However, between 2017 and 2021 total debt service which includes principal plus interest payment increased from Le846 billion to Le2.2 trillion. The payment surged by Le1.354 trillion in five years. Domestic debt stock and its
cost of servicing constitute a burden on the revenue of the Government thereby reducing available resources for its expenditure on other important economic and social infrastructures.
According to the recently published Sierra Leone Economic Update published by the World Bank, total interest on domestic debt stood at 2.7 percent of GDP, while interest payment on external debt amounted to only 0.4 percentage points of GDP.
As the Ministry of Finance holds s its annual Debt Sustainability Analysis (DSA), Alfred Thulla of Assistant Director Public Debt Management said the s country’s public debt has moved from as low as 10 percent in 2009 to 78 percent in 2021. The conduct of DSA is a globally accepted benchmark which improves on a country’s capacity to manage the level of debt exposure in the face of fiscal pressures and macroeconomics uncertainty. Domestic debt stock, generally deals with the marketable securities, non-marketable securities and other non treasury securities, majority of the percentage growth stock he said are from the marketable securities especially the 364 day T-Bills which increased by 36.4 percent from 6.3 percent in 2020 to 8.4 trillion in 2021.
He explained that, that, the people participating in the domestic debt market are the Bank of Sierra Leone (BSL), Commercial Banks and the Non-Bank Public. In 2018, BSL was holding Le1.3 trillion of government debt, Commercial Banks Le7.39 trillion of domestic debt and Le3.8 trillion was held by the Non-Bank Public.
He also talked about the 2021 public debt maturity profile, with 91.2 percent of the external debt portfolio concentrated in the long run and 86.6 percent of domestic debt portfolio concentrated in the short term.
The 2022 DSA’s base-period is 2021. Assistant Director Thullah revealed that from 2017 to 2021, public debt moved from Le16 trillion to Le35 trillion. However, in 2021, total disbursement was Le4 trillion of which external was Le1.99 trillion and domestic Le2.01 trillion.
