By Mohamed Jaward Nyallay
The Sierra Leone government is considering a range of measures to cushion the possible economic effects of the Coronavirus pandemic.
Finance Minister, Jacob Jusu Saffa, said on Thursday that the administration was considering measures like tax break, tax deferral and other incentives for businesses. He announced the move in a press briefing on the preparedness of the country for the pandemic.
Saffa said the government had already calculated that the country’s projected 5.1% growth will drop to 3.8% by the end of the year, even when the country hadn’t registered any case.
“We have done the analysis and we have put together a program. The thrust of the program is to cushion the shock of the effect of the virus on persons and households,” he said, adding: “We are discussing the possibility of tax breaks and tax deferral and cuts, where necessary; we are still looking at the figures. We have to do this to allow businesses to import huge volumes (of essential goods) to avoid shock.”
Saffa said the worse affected sector will be the Services, Trade and Tourism sectors.
The Finance Minister said growth in the services sector will contract from 5.1% to 2% by the end of the year, whiles for Trade and Tourism they would drop from 5% to 2%.
Hotels and guesthouses in the capital, Freetown have had to cancel of bookings and lost revenue in the process.
Saffa said he was also aware of the massive sacking going on in the sector in other to keep costs down.
Part of the government’s economic package includes negotiating with banks to support businesses with loans at a lower interest rate.
Sierra Leone’s economy has always been vulnerable to shocks. In 2014 the Ebola outbreak halted its progress and sent the economy in to free fall. That was followed by the drastic fall in price of iron ore in the global market.
Speaking about how hard Coronavirus could affect the economy, Saffa said government had already started losing revenue. He said by the end of the first quarter of the year, the country would lose huge revenues from import duties, Goods and Services Tax (GST) and mining royalties, noting that even domestic revenue would be affected.
“Between January to March 2020, import revenues are expected to drop by at least 30% in this quarter,” he said, adding: “Preliminary revenue from import duties are expected to drop by 25% from Le 852 billion to Le 639 billion for 2020.”
“We are still working closely with institutions like IMF and World Bank to shore up these numbers, but these are just numbers from our own models.”
Export volume is also expected to drop if demand for Sierra Leonean products like fish, timber and minerals drop across the world.
The government has made US$ 37 million in the last 18 months from timber exports alone.
The domestic revenue for 2020, which was projected to be Le 6.5 trillion, will now drop by Le885 billion in domestic revenue, the ministry said.
The World Bank and IMF have announced US $12 billion and US$ 50 billion, respectively, in economic relief package for countries whose economies will be affected by the outbreak.
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