World Bank Warns
Abdu Muwonge, WB SL Country Manager
By Ishmail Saidu Kanu
The World Bank has warned that Sierra Leone’s debt sustainability risks have worsened significantly, driven by recurrent budget overruns and rising borrowing costs, according to the Sierra Leone Economic Update, 7th Edition.
The report notes that Sierra Leone has been assessed at high risk of debt distress in the latest joint Debt Sustainability Analysis by the World Bank and the International Monetary Fund (IMF).
This assessment is based on high debt servicing obligations, liquidity pressures, and rollover risks.
In 2024, debt service to government revenue was estimated at 125 percent, up from 103 percent at the time of the assessment.
Budget overruns in 2024 pushed up domestic borrowing costs sharply, with average interest rates rising from 29.3 percent in 2023 to 40.8 percent in 2024.
However, the report states that expenditure rationalisation measures introduced in 2025 have helped reduce the cost of domestic debt to 15.17 percent by May 2025.
Public debt is estimated to have declined slightly from 46.2 percent of GDP in 2023 to 44.4 percent in 2024, largely due to strong nominal growth, a stable exchange rate, and a modest reduction in external debt.
Despite this decline, the World Bank cautions that the structure of the debt portfolio remains a major concern.
While the majority of Sierra Leone’s public debt remains external and concessional, the share of expensive, short-term domestic debt has increased significantly.
External debt stood at US$1.83 billion at the end of 2024, accounting for 59.5 percent of total public debt. Most of this is owed to multilateral creditors, with the IMF and World Bank together accounting for a large share.
Domestic debt has risen from nearly 30 percent of total public debt in 2021 to about 40 percent by the end of 2024, with treasury bills making up more than three-quarters of domestic obligations.
The World Bank warns that the growing reliance on short-term, high-interest domestic borrowing poses serious risks to fiscal stability.
The report stresses the need for stronger fiscal discipline and sustained expenditure controls to reduce borrowing costs and place Sierra Leone’s debt on a more sustainable path.
