SIERRA LEONE - JOINT BANK-FUND DEBT SUSTAINABILITY ANALYSIS - Key Findings and Assumptions

Jul 19, 2026

Sierra Leone’s public debt is assessed as sustainable, yet external and overall debt-distress risks remain high, consistent with the November 2023 DSA. Key indicators show a modestly more favorable trajectory, supported by national accounts rebasing, which prevents the PV of public debt-to-GDP from breaching its threshold. However, external debt service-to-revenue continues prolonged breaches, and the overall debt-service-to-revenue ratio stays above 100% until 2027. Sustainability depends on continued concessional financing, grants, committed fiscal adjustment, and improvements in debt and fiscal risk management.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages22

Reading Time55 min

Summary of risk ratings

External risk and overall risk

Assumptions and coverage of debt

Contingent liability stress test

Data and debt management actions

Public Disclosure Pub lic Disc losure Authorized Approved by: Manuela Francisco and Abebe Adugna (IDA), and Montfort Mlachila and Jarkko Turunen (IMF) Prepared by the staff of the International Development Association (IDA) and the International Monetary Fund (IMF) | SIERRA LEONE: JOINT BANK-FUND DEBT SUSTAINABILITY ANALYSIS | | | --- | --- | | Risk of external debt distress | High | | Overall risk of debt distress | High | | Granularity in the risk rating | Sustainable | | Application of judgment | No | Sierra Leone’s public debt is sustainable, but risks of external and overall debt distress are high, unchanged from the previous DSA published in November 2023, but key indicators display modestly more favorable paths than before, in part helped by the national accounts rebasing.1 This assessment hinges on the authorities’commitment to program objectives, continued access to highly concessional external financing (including grants), and medium debt carrying capacity. As a result of the national accounts rebasing in May 2024, the PV of the public debtto-GDP ratio no longer breaches its threshold. However, the external debt service-to-revenue ratio continues to exhibit protracted breaches. In addition, the overall debt-service-to-revenue ratio remains above 100 percent until 2027. Continued ambitious fiscal adjustment is required to ensure that debt remains sustainable. All debt indicators decline over the medium to long-term, predicated on the continued adjustment, the growth recovery, and continued reliance on concessional financing and grants. Efforts to seek grant financing and lengthen the maturity of debt remain critical as debt service ratios and gross financing needs will remain elevated over the medium and long term. Domestic rollover risks are contained by limited alternative investment options for banks, and the authorities’ commitment to bringing down the domestic financing envelope. Sierra Leone is highly susceptible to shocks to growth, exports, commodity prices, and the exchange rate, as well as fiscal slippages. 1 Sierra Leone’s debt-carrying capacity remains rated “medium” with a composite indicator value of 2.70 based on the April 2024 IMF’s World Economic Outlook (WEO) and the 2022 World Bank’s Country Policy and Institutional Assessment (CPIA) . 1. Public debt coverage remains the same as in the previous DSA. The debt stock includes central government public and publicly guaranteed debts on a residency basis (Text Table 1) . The DSA also includes the latest estimate of the consolidated stock of domestic payment arrears. The government is working on improving its financial and debt management systems—with the support of development partners including the World Bank—and on enhancing the accounting for and timely reporting of public debt, including the debts of state-owned enterprises (SOEs) and self-accounting-bodies. This DSA uses the debt stock data as of end-2023. | | | | | --- | --- | --- | | | Subsectors of the public sector Central government State and local government Other elements in the general government o/w: Social security fund o/w: Extra budgetary funds (EBFs) Guarantees (to other entities in the public and private sector, including to SOEs) Central bank (borrowed on behalf of the government) Non-guaranteed SOE debt | Check box | | 1 2 3 4 5 6 7 8 | | | | Note: Blank indicates there is no data. | | | 2. The assumptions in the contingent liability stress test are modestly higher than the ones in the previous DSA. Total contingent liabilities are estimated at 10 percent of GDP, which exceeds the size of the contingent liabilities of 12 percent of GDP assumed in the previous DSA since GDP has since been rebased (which resulted in a 74 percent increase in nominal GDP for 2022 (Text Table 2) . Specifically, (i) the contingent liability for SOE debt is set at 5 percent of GDP, higher than the default value, reflecting the authorities

FAQs

What are the overall debt sustainability risk ratings for Sierra Leone?

The analysis rates both external debt distress risk and overall risk of debt distress as High. Granularity in the risk rating is listed as Sustainable, with no application of judgment.

How does national accounts rebasing affect the debt sustainability results?

Rebasing in May 2024 makes the PV of the public debt-to-GDP ratio no longer breach its threshold. Despite this improvement, external debt service-to-revenue still shows protracted breaches.

What conditions are emphasized as necessary to keep debt sustainable?

Sustainability relies on commitment to program objectives, continued access to highly concessional financing including grants, and medium debt carrying capacity. Continued ambitious fiscal adjustment is required, alongside efforts to seek grant financing and lengthen maturities.

Jul 19, 2026

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