By: Saidu Jalloh
Sierra Leone has made commendable progress in stabilizing its exchange rate and broader macroeconomic environment between 2024 and 2025, according to recent assessments by the International Monetary Fund (IMF) and the World Bank. These developments reflect a coordinated effort by the government and its international partners to restore fiscal discipline, curb inflation, and enhance economic resilience.
Following significant depreciation in 2022 and early 2023, the Sierra Leonean Leone (SLL) has since stabilized. This recovery is attributed to tighter monetary policies and a series of fiscal reforms. The IMF reported that inflation dropped sharply from 55% in October 2023 to 25% by August 2024 while the exchange rate remained stable across both official and parallel markets. Notably, this stabilization was achieved with minimal foreign exchange intervention, highlighting the effectiveness of domestic policy measures.
The Bank of Sierra Leone (BSL) played a central role in stabilizing the market by introducing measures to deter speculative activities. One such intervention required that all donor-funded project disbursements be processed through the central bank at official exchange rates, contributing to a more predictable and disciplined foreign exchange environment.
In November 2024, the IMF approved a 38-month Extended Credit Facility (ECF) arrangement valued at approximately \$248.5 million. The ECF program aims to enhance debt sustainability, lower inflation, and rebuild international reserves. Core fiscal reforms under the arrangement include reducing the domestic primary deficit and maintaining tighter monetary policy—both of which have helped to curb exchange rate volatility and inflation.
Despite this progress, several challenges remain. Treasury bill rates continue to be high, and the country’s international reserves have dropped below two months of import coverage an indication that further fiscal discipline and reserve accumulation are necessary.
Supporting these stabilization efforts, the World Bank approved an \$80 million financing package in December 2024 to reinforce Sierra Leone’s macro-fiscal stability and resilience. This includes a \$60 million grant for budget support and a \$20 million Catastrophe Deferred Drawdown Option (Cat DDO) for emergency financing. The funding is designed to back reforms in fiscal management, financial sector stability, and energy sector performance.
According to the World Bank’s October 2024 Economic Update, GDP growth slowed to 4.3% in 2024, mainly due to declining global iron ore prices. However, growth is projected to rebound slightly to 4.4% in 2025, driven by improvements in the agriculture, services, and mining sectors. The report stresses the importance of fiscal consolidation and targeted investment to sustain and expand this growth.
Looking ahead, Sierra Leone’s economic outlook is cautiously optimistic. The IMF forecasts GDP growth of 4.5% in 2025, with inflation expected to decline further to 14.9%. The exchange rate is projected to remain stable, bolstered by continued fiscal and monetary reforms. However, the nation remains at high risk of debt distress, underscoring the urgent need for effective debt management and fiscal responsibility.
The government’s ongoing commitment to the Medium-Term National Development Plan (2024–2030), alongside continued support from international partners, will be vital in maintaining macroeconomic stability and promoting inclusive, sustainable growth.
In summary, Sierra Leone’s economic reform efforts—backed by the IMF and World Bank have resulted in significant progress, particularly in exchange rate stabilization. Yet, persistent vulnerabilities highlight the need for ongoing reform, prudent economic management, and strategic investment to achieve long-term resilience.