By zainab.joaque@awokonewspaper.sl
Freetown, SIERRA LEONE – In 2023, Sierra Leone witnessed significant fluctuations in interest rates across its primary market, particularly impacting treasury bills and bonds. These shifts underscore the broader economic pressures the country faced throughout the year.
The annual average interest rates for 91, 182, and 364-day treasury instruments were recorded at 5.5%, 11.04%, and 29.28%, respectively. While the 91-day and 182-day bills saw a decrease of 1.03 and 1.89 percentage points compared to 2022, the 364-day bill experienced a notable increase of 3.17 percentage points, indicating a rise in long-term borrowing costs.
The year was marked by varying trends across different tenors. The 364-day bill showed a consistent upward movement, with its rate averaging 28.72% from January to July and peaking at 34.71% in December. In contrast, the 91-day bill saw more dramatic fluctuations, starting at 8.44% in February, plummeting to 4.11% in May, and remaining at that level through the end of the year. Similarly, the 182-day bill’s rate dropped sharply from 13.43% in March to just 3.64% by November and December.
Treasury bonds also mirrored this volatility. The one-year treasury bond averaged an interest rate of 29.0%, while two-year and three-year bonds averaged 29.59% and 31.56%, respectively, pointing to increased borrowing costs over the longer term.
These interest rate movements reflect the challenges Sierra Leone faced in managing its debt portfolio amidst rising inflation and economic uncertainty. The upward pressure on longer-term rates suggests increasing costs for the government to secure financing, while the erratic movement in shorter-term rates highlights market volatility.
As the government navigates these shifts, maintaining fiscal stability and investor confidence in its financial instruments will be key to mitigating the risks posed by these fluctuating interest rates. Sierra Leone’s ability to adapt to these economic conditions will be crucial in ensuring sustainable debt management and economic resilience moving forward.ZIJ/30/9/2024
