- Economic growth in post-war Sierra Leone is too slow to forcefully fight poverty, new data show. But diamond production and agriculture have picked up.
According to the latest analysis of Sierra Leone's economy by the International Monetary Fund (IMF), the impoverished nation is experiencing real economic growth, but at a too slow rate to secure a noticeable reduction in poverty.
"Economic activity appears to have picked up in 2010 led by a rebound in diamond production and solid growth in agriculture," the IMF report says. GDP growth was projected at 4.5 percent in 2010, compared to only 3.2 percent in 2009.
With the Sierra Leonean population growing at a rate of 2.5 percent annually, last year's GDP growth was close to zero per capita. This year, GDP growth per capita therefore will hit a modest 2.0 percent.
Also the IMF, which principally is to oversee government's efforts to fight poverty and boost the economy, holds that these modest growth numbers are to small to reach Sierra Leone's development goals. After the bloody civil war, Sierra Leone had emerged the world's poorest country, and there were great hopes the end of the war would lead to very quick economic growth.
"The main challenge facing the authorities is the achievement of higher long-term growth by creating fiscal space for investments in infrastructure and improvements in social services," the IMF analysts conclude.
Meanwhile, government is eager to boost public investments in roads, water and energy to meet public demands for quick improvements. However, the IMF expressed its concerns to President Ernest Bai Koroma, saying government first needed to strongly increase its revenue base before entering large investment schemes.
"While the export and tax revenue potential from mining is significant," the IMF in a meeting with President Koroma had underscored "the need to resist raising spending allocations before such revenues materialise because of substantial uncertainties about the timing and magnitude of future mining revenues."
Government was in particular urged to raise its tax revenues, especially from the diamond sector. It also should consider to "eliminate fuel subsidies," the IMF advised.
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