By zainab.joaque@awokonewspaper.sl
Freetown, SIERRA LEONE – The significant increase in domestic debt, particularly through the reliance on various treasury instruments, is evident in recent trends as reported in the Public Debt Statistical Bulletin 2023.
By the end of December 2023, the total domestic debt rose to SLe 20.78 billion, reflecting a 29.49% increase from SLe 16.06 billion in December 2022. This surge is largely attributed to marketable instruments, which accounted for the majority of the debt at SLe 13.06 billion.
Marketable treasury securities include a variety of instruments such as treasury bills with maturities of 91, 182, and 364 days, as well as treasury bonds with tenors ranging from 1 to 5 years. The predominance of the 364-day treasury bill in both 2022 and 2023 underscores the government’s strategy to utilize short-term instruments for immediate financing needs.
In contrast, non-marketable instruments totalled SLe 0.98 billion and primarily consisted of longer-term treasury bonds. Additionally, the “Other” category of non-marketable securities, which includes Ways and Means Advances and Bridging Loans from the Bank of Sierra Leone, contributed SLe 1.81 billion to the total domestic debt.
The holders of these government securities remained consistent from the previous year, with banks and non-bank public entities being the primary investors. The banking sector’s holdings increased by 40.63%, while non-bank holdings saw a decline of 15.72%. This shift indicates growing confidence among banks in government securities as a stable investment option during uncertain economic times.
Specifically, holdings in the banking sector amounted to SLe 6.06 billion from the Bank of Sierra Leone and SLe 12.02 billion from commercial banks. Meanwhile, the non-bank public’s holdings—including those from NASSIT (National Social Security and Insurance Trust), Discount Houses, Other Financial Institutions (OFIs), and the general public—totaled SLe 2.70 billion.
The banking sector’s dominance is evident as it represents approximately 87.02% of total holdings; within this category, the Bank of Sierra Leone holds about 29.16%, while commercial banks account for around 57.86%. Additionally, domestic arrears classified as non-treasury securities amounted to SLe 1.26 billion.
In terms of market demand for treasury bills during FY2023, total demand reached SLe 15.20 billion against a supply of SLe 15.01 billion from the government. This included maturities totalling SLe 11.55 billion alongside new borrowings of SLe 4.74 billion throughout the fiscal year. Notably, there was a slight over-subscription in the market amounting to SLe 560.45 million after secondary operations by the Bank of Sierra Leone; however, prior to these operations, an under-subscription of SLe 693.39 million had been recorded.
Overall, these figures illustrate a dynamic shift in domestic debt management strategies and highlight ongoing trends in government borrowing and investment patterns within Sierra Leone’s financial landscape as we approach the end of fiscal year reporting for December 2023. ZIJ/30/9/2024
