In a significant move aimed at addressing the rampant inflation and weakened local currency, the Bank of Sierra Leone (BSL) has officially allowed the payment of certain goods and services in foreign currencies in the country.

This decision, approved by the Parliament, allows certain individuals and institutions to pay for goods and services in foreign currencies, dealing a blow to the struggling Leone.

The revealation was made by the Director of Financial Market Department at the Bank of Sierra Leone, Sakone Thomas Boima during an interview on the Radio Democracy 98.1 “Good Morning Salone” program last Friday.

Boima explained that the decision to allow select businesses to utilize foreign currencies was made following the passing of the Bank of Sierra Leone Amendment Act 2023 in April.

He further emphasized that this legislative step was in accordance with international treaties to which Sierra Leone is a signatory, and it provided flexibility for foreign-funded contracts.

Prior to the passage of this act, extensive consultations were held with key stakeholders to gather their input. Boima highlighted that the act empowers the bank to issue directives on using currencies other than the Leone for various transactions.

The government’s decision to accept foreign currencies as legal tender comes as the Leone continues to depreciate, losing more than half of its value since the current administration assumed power in 2018.

The government had previously attempted to curb the inflationary pressure by implementing a ban on the use of dollars in Sierra Leone on May 11, 2023. However, this measure proved ineffective and was announced by the acting Governor of the Bank of Sierra Leone, Dr. Ibrahim Stevens.

The introduction of a new local currency by the Bio government had initially aimed to stabilize the economy. However, the currency quickly lost its value, leaving the government with no choice but to abandon it in favor of foreign currencies such as the US dollar. This decision reflects the government’s inability to resolve the ongoing monetary crisis.

Two years ago, the Bio government had anticipated that the demand for the US dollar in Sierra Leone would decrease as the public embraced the newly introduced Leone. However, this expectation did not materialize, leading to continued exchange rate volatility and economic challenges.

With the official adoption of foreign currencies as legal tender, Sierra Leone enters a new phase where the US dollar and other foreign currencies will dominate financial transactions. The government hopes that this measure will alleviate the pressure on the struggling Leone and provide some stability to the economy.