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- GDP (PPP):
- $5.1 billion
- 5.3% growth
- 5.1% 5-year compound annual growth
- $849 per capita
- Inflation (CPI):
- FDI Inflow:
Sierra Leone’s economic freedom score is 48.3, making its economy the 151st freest in the 2013 Index. Its score is 0.8 point lower than last year, with improvements in investment freedom and freedom from corruption overshadowed by declines in half of the 10 economic freedoms including labor freedom and the control of government spending. Sierra Leone is ranked 36th out of 46 countries in the Sub-Saharan Africa region, and its overall score is below the world average.
Continuing a downward trend in economic freedom, Sierra Leone recorded another significant score decline in the 2013 Index. The country has been plagued by civil war for many years, and the institutions necessary for economic freedom have not developed to generate long-term economic growth. Recent reforms have been targeted at opening the economy to international trade and strengthening the enforcement of contracts.
Mismanagement of public spending remains a serious problem and ultimately hurts implementation of necessary reforms. The protection of property rights is weak, and the judicial system lacks both independence and transparency. Legal proceedings are vulnerable to political interference and commonly subject to pervasive corruption.
Opposition candidate Ernest Bai Koroma was elected president in 2007 in Sierra Leone’s first peaceful transition of power since independence in 1961. Recovery since the end of the 10-year civil war in 2002 has been fragile. Infrastructure remains deficient. Industry (primarily mining) accounted for about 23 percent of GDP in 2008. Mineral exports are the principal foreign exchange earner. Sierra Leone is a major producer of gem-quality diamonds, which account for nearly half of exports. Exploitation of iron ore is expected to have expanded the economy significantly in 2012. Several offshore oil discoveries were announced in 2009 and 2010, but while contracts have been awarded for exploration, Sierra Leone has yet to benefit from its oil wealth.
The rule of law is fragile and uneven across the country. In the absence of an effectively functioning legal framework, property rights and contracts are not secure. There is no land titling system, and judicial corruption is significant. Traditional tribal justice systems still serve as a supplement to the central government’s judiciary, especially in rural areas. Corruption remains pervasive in all branches of government.
The top income and corporate tax rates are 30 percent. Other taxes include a goods and services tax (GST) and an interest tax. The overall tax burden equals 11.6 percent of total domestic income. Government spending has increased to 28.3 percent of GDP. The budget deficit remains over 5 percent of GDP, and public debt is equivalent to 60 percent of total domestic output.
The procedure for establishing a business has been simplified, but licensing requirements remain burdensome. Launching a company takes less than the world averages of seven procedures and 30 days, but completing licensing requirements is time-consuming and costly. Making additional hiring burdensome, an increase in the minimum wage has exceeded labor productivity growth in the formal sector. Inflation has been chronically high.
The trade-weighted average tariff rate is prohibitively high at 9.9 percent, and additional non-tariff barriers also severely constrain trade freedom. Private investment activity has been weak, and much-needed long-term investment continues to be discouraged by inadequate rule of law and instability. The state controls the majority of bank assets, and much of the population operates outside of the formal banking sector.