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- GDP (PPP):
- $10.0 billion
- -21.5% growth
- 5.0% 5-year compound annual growth
- $1,577 per capita
- Inflation (CPI):
- FDI Inflow:
In an effort to move away from dependence on diamond production, Sierra Leone has taken measures to improve its legal and physical infrastructure. It has also taken steps to improve tax administration and the management of public debt.
Significant structural weaknesses, however, continue to strain the fragile economy. Poverty reduction and economic growth are hampered by a restrictive regulatory environment, inadequate infrastructure, and weak enforcement of contracts. The financial system is still recovering from civil war and lacks the capacity to provide sufficient credit for vibrant business activity. Pervasive corruption and nearly nonexistent property rights are significant drags on private-sector dynamism.
Opposition candidate Ernest Bai Koroma of the All People’s Congress, elected president in 2007 in Sierra Leone’s first peaceful transition of power since independence from Britain in 1961, was reelected in 2012. Despite some institutional progress since the end of a decade-long civil war in 2002, living standards remain very low, and basic infrastructure is lacking throughout the country. Because mining is the primary industry and mineral exports generate most foreign exchange, Sierra Leone is vulnerable to fluctuations in commodity prices. Gem-quality diamonds account for nearly half of exports and for high rates of economic growth. The 2014 Ebola epidemic in West Africa killed nearly 4,000 Sierra Leoneans.
There is no land titling system. The judiciary has demonstrated a degree of independence, but low salaries, lack of police professionalism, and inadequate resources still impede judicial effectiveness. Corruption remains endemic at every level of government: Even funds to fight Ebola have vanished. Perceptions of corruption, as reported in November 2015 by Transparency International’s Global Corruption Barometer, are among the highest in Africa.
The top individual income and corporate tax rates are 30 percent. Other taxes include a goods and services tax and an interest tax. The overall tax burden equals 8.3 percent of total domestic income. Government spending has amounted to 18.1 percent of total output (GDP) over the past three years, and budget deficits have averaged 3.5 percent of GDP. Public debt is equivalent to 46.1 percent of GDP.
Despite recent years’ reform measures, the overall regulatory environment lacks efficiency and transparency. With much of the labor force employed in the informal sector, outmoded and inflexible labor regulations are rather futile in application. In 2015, the IMF advised the government to take advantage of lower oil prices and cut subsidies; in 2016, it reported that the authorities had failed to adhere to their commitments in this area.
Trade is important to Sierra Leone’s economy; the value of exports and imports taken together equals 59 percent of GDP. The average applied tariff rate is 10.3 percent. In general, foreign and domestic investors are treated equally under the law. State-owned enterprises distort the economy. The financial system was undermined by prolonged economic and political instability, and the recovery process has been sluggish.