By Mabinty M. Kamara
The decline in the rate of inflation in Sierra Leone announced last Friday by statistics Sierra Leone has according to officials qualified the country to be part of the ECOWAS single currency.
A single-digit inflation rate at the end of each year, a fiscal deficit of no more than 4% of the GDP, a central bank deficit-financing of no more than 10% of the previous year's tax revenues and gross external reserves that can give import cover for a minimum of three months, are the four criteria set for ECOWAS member countries to be part of the single currency that the regional body has been pushing for to ensure bilateral trade amongst member states.
Speaking at the press briefing on Monday 26th April 2021 at the Bank of Sierra Leone Complex in Freetown, the Governor of the Central Bank of Sierra Leone Professor Keifala Kallon said the progress made so far in the decline of the inflation rate to a single digit means so much for the country as it is the factor that affected Sierra Leone’s eligibility for joining the ECO currency.
“The one that we have consistently failed in is bringing inflation down to below 10%. Prior to COVID, in 2018, we achieved three of the four criteria set. The only thing that we failed was bringing inflation below 10% this was why in February 2020, when I was addressing the committee of parliament here in Freetown, I told them that come 2021, Sierra Leone will meet all criteria for joining the ECO,” he said.
“But the one that has been a pain in our neck is lowering the inflation rate but once we have reached this milestone, if we tighten our belts, and we do the needful, and we keep the inflation rate below 10% in addition to all the benefits I talked about, Sierra Leone will proudly join the single currency,” he assured.
The Governor added that lowering inflation will not only aid job creation in the country but will ensure microeconomic stability.
However, he said in as much as the country strives to suppress the inflation rate at its barest minimum, a very low inflation rate is bad as it discourages investors from coming into the country since their aim is to maximize profit. Therefore, he said a balance inflation rate is better.
Key findings of the March 2021 Consumer Price Index (CPI) published by Statistics Sierra Leone show that annual national inflation (year –on –year) stood at 8.95 percent, down by 1.92 percentage point from 10.17 percent in February 2021 with the monthly inflation 0.84 percent, down by 0. 65 percentage point from 1.49 percent in February 2021.
The last time Sierra Leone had single-digit inflation was in June 2016.
Copyright © 2021 Politico Online 28/04/21)
