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Estimates & 2015 Economic Recovery for Sierra Leone

 By Tanu Jalloh

I have always had issues with government estimates and projections as they relate to economic growth and expansion, national and project budget requirements, and investments in the public and private sectors. There seems to have been no regard for the implications on the electorate to be more appropriate.

The reasons, among other things, are that some of these promises of planned activities, that should be considered to have the potential to define overall national economic progress, in ways that affect the lives of ordinary people, are most times inconsiderate of internal and external shock factors – national policies and global market prices.

The blips usually engendered by these dynamics are often downplayed or even completely ignored. That is despite obvious signs of a volatile investment across the mining and extractive sectors. It is good to be positive about the future.However, that excitement must not inform what would seem to be some overly optimistic economic growth projections.

Again and again we have seen, as proofs of neglect, that some of these factors have caught up with policy makers, proving that there have always been some weaknesses in terms of how they do or do not consider giving a basic cautionary note. By this I mean a caveat to realising sustainable growth or a way out of an initial projection. In all of this there is no consideration for perception management.

In Sierra Leone the perception of the average politician, regarding the way they see the electorate, is the general impression on the mind of the public, which has been left openconstantly to different interpretations. In Sierra Leone the electorate, probably the target audience for any political statement that is meant to heighten ‘feel-good factors’, is most susceptible to cynicisms.

Economic Recovery in 2015 is a must

We are in mid-2015 and I reckon it is going to be extremely very difficult for a complete recovery equal to the gains recorded in the period before the Ebola crisis - a deadly haemorrhagic fever that collapsed the entire health delivery system. That single challenge is further increasing the social burden on the overall economic emergency that set in some one year ago.

However, I think the government must focus on post Ebola recovery. They must not get distracted by unrelated political obtrusions.  At the same time they must not expect sympathy from the people because the period immediately after the debilitating health crisis (2015 and beyond) will obviously see an unprecedented triumphalism –that attitude or feeling of victory upon which a triumvirate (the party in power, the opposition party and the electorate) - will launch the heaviest political campaigns in decades. You will agree with me that the third and most pliable of the three, the electorate, often tends to victimise the villain, in this case the government, despite the enormity of efforts and resources that would have been expended to restore hope and heal a nation that suffered from a ‘natural disaster’.

That notwithstanding, the narrative that the country had a thriving economy with bright prospects may not survive the display of ‘ignorance’ by the very electorate as if to prove that even without Ebola therewas hardship. The year 2014, especially with challenges of the last two quarters, will be remembered for Ebola alone and probably regarded as a wasted effort that was as costly as the time to deal with it was retributive. I am saying, in essence, that a post Ebola 2015 economy must be characterised by massive and sustainable approach to social service delivery as in health and sanitation, social security and education. These will be among those hopes that will provide a take-off for economic recovery and sustainable development.

Government had it, but they flunked it

By August 2014 the country had about 1,000 people infected by the Ebola Virus Disease and with some 461 deaths recorded nationally, the government rushed into initiating an ‘Accelerated Ebola Outbreak Response Plan’. They said they needed $26 million to meet direct costs in the six months through December of 2014. I think they got their estimates it wrong. Also, when they preached a sustainable economic recovery based on projections inspired by the increasing investment in the mining sector, they got that wrong too.Therefore, when they set out to deliver on the agendas for change and prosperity they missed out on so many things.

Again, when they estimated that the cost of the epidemic, four months after its outbreak in May last year, they didn’t consider the strength or weakness of the health sector upon which their success depended. Two months later, the massiveness of the problem at hand manifested itself in a way that overwhelmed the world and its twenty first century technological and financial powers. And two months afterwards and despite government efforts, which diverted the biggest chunk of resources in its disposal to contain the disease, contagion rate and morbidity got out of hand. It would later prove that the full cost for containment of the disease and humanitarian needs were going to be much higher than the government had anticipated. It turned out that Ebola-related budgetary needs were going to be almost US$82 million, three times more than what the authorities had estimated.

2015 will bear the brunt

Plans to take care of the year to come are already being altered and slaughtered in so many ways on the altar of a neglected social development policy. The government said that in 2015 there would definitely be some lingering effects of the epidemic which ravaged the best of 2014. As a result we are likely to see a huge change in the pattern of revenue generation and spending, partly because the government continued to express fear that a financing gap of about 1.1 percent of non-iron ore GDP, which is slightly above 5.3 percent, was imminent. The World Bank has said that “domestic activity [in 2015] will shift towards government consumption as the recovery effort focuses on Ebola containment”.

News from the ore industry, both from within and out of the country, in terms of production, market supply and demands is not encouraging.  This is going to place a huge burden on the budget in terms of revenue loss and additional expenditure which had already generated important balance of payment needs already estimated at US$ 110 million, according to the IMF. By its own admission the ministry of finance said in Freetown that even before the Ebola outbreak on 25 May the 2014 budget faced serious pressures as a result of revenue loss. According to a World Bank 2014 assessment in December, revenues in Sierra Leone were down $85 million while spending increased $43 million, a combined impact of more than 2.5 percent of the country’s GDP.

Therefore, unless government cut down on non-priority spending or domestically-financed investment, the Extended Credit Facility (ECF) supported program for 2014-2015 would be affected. By the way the ECF supports countries’ economic programs that are aimed at moving toward a stable and sustainable macroeconomic position. Sierra Leone must work towards the design and effective implementation of measures and policies that would address the immediate needs resulting from the EVD epidemic and to support subsequent economic recovery in a manner that restores and maintains macroeconomic stability.

Politico 10/06/15