SIERRA LEONE

RISK RATING
High
Default High Risk Score 6.50
Normal Average 5.35
Weighted Average 4.95
RISK RATING HISTORY
RISK RATING SCALE

Risk Rating Scale

Severe: 8.0 to 10
High: 6.0 to 7.9
Elevated: 4.0 to 5.9
Moderate: 2.0 to 3.9
Low: 0.0 to 1.9
EXCHANGE RATE
Country Outlook

Public contractors and government-debt holders face increased risk of significant payment delays due to the country’s crippling economic situation and the dire state of public finances. Businesses, notably telecoms, banking, and mining firms, will have to contend with tax and royalty payment increases. The aviation sector might be spared such tax hikes as the government tries to spur international travel and the tourism sector. In addition to the economic challenges, the country is also faced with heightened political tension arising from the crippling polarisation between the two main political parties: the governing SLPP and opposition APC. This has led to division in parliament and recurrent violent confrontations between supporters of the two parties, as well as opposition supporters and security forces. If the government’s policy agenda stalls or the economic recovery falters, sporadic outbreaks of localised violence between partisan supporters and security forces will remain particularly likely in Freetown, Bo, Kenema, Kono, Pujehun, Kailahun, and at Tonkolili mine.

  • The government has received praise from donors in its stance against corruption over the past two years. However, the latest round of asset freezes and investigations into opposition leaders risk undermining the administration‚Äôs credibility on transparency as the accusations seem politically motivated to distract from a weakening economy and failing development policies. The risk of ethnic and political violence will rise as a result in coming months. On the policy front, the government‚Äôs main achievement has been its flagship free education programme. However, this spending commitment has raised some concern over the budget deficit and increased borrowing.
  • Politically and ethnically charged rhetoric at the onset of the pandemic has reversed some of the gains of the peaceful transition of power in 2018. If the government‚Äôs policy agenda stalls or the economy falters, sporadic outbreaks of localised violence between partisan supporters and security forces will remain particularly likely in Freetown, Bo, Kenema, Kono, Pujehun, Kailahun, and at Tonkolili mine. Sierra Leone’s stability remains vulnerable to the incorporation of former combatants into politically motivated violence. Risks of protest and sporadic attacks on property are elevated, with workers contesting pay, conditions, or redundancy packages, particularly around iron-ore sites.
  • Weak growth and high inflation will hamper an economic recovery. The value of the country‚Äôs currency ‚Äď the leone ‚Äď has plummeted, losing about a third of its value since Bio came to power, pushing up the cost of living. The government is hard-pressed for funds to finance its post-COVID-19 recovery, although the IMF, World Bank, and others have provided financing. To alleviate the socioeconomic burden and spur the economy, the fiscal deficit is almost certain to increase. This will be a setback to the government‚Äôs fiscal consolidation programme. Besides, total public debt is also almost certain to increase further to plug the government‚Äôs falling revenue. Already at a ‚Äúhigh risk‚ÄĚ of debt distress for both external public debt and overall public debt, the country‚Äôs total public debt rose in 2020 to 77.4 percent of GDP from 45 percent five years previously.
CUMULATIVE AND DAILY COVID-19 INFECTIONS AND DEATH RATE
INTERNATIONAL MONETARY FUND | DATAMAPPER
Risk Perils
Political Instability
5.0
Expropriation, Nationalisation, Confiscation & Deprivation
3.5
Contract Frustration & Breach
5.0
Taxation
5.5
Bribery & Corruption
6.5
Regulatory Burden
6.0
Strikes, Riots & Civil Commotion
5.5
Security
4.0
Sovereign Default
6.0
Economic Volatiliy
6.5

Risk Rating Scale (small)

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