Audit Exposes Fiscal Strain and Rising Borrowing

By Mo Hamad Kargbo

The 2024 Audit Report on the Consolidated Fund of the Government of Sierra Leone has revealed deepening fiscal vulnerabilities, marked by rising expenditure, heavy domestic borrowing, escalating interest costs, and persistent weaknesses in budget execution. While government revenue recorded notable growth during the year, the gains were more than offset by excessive spending, weak donor inflows, and growing debt obligations, leaving the country with a wider cash deficit and worsening liquidity position.
The General Purpose Financial Statements for the year ended 31st December 2024 show that total revenue and grants amounted to NLe 16.48 trillion, up from NLe 12.93 trillion in 2023. Domestic revenue accounted for the bulk of this performance, increasing to NLe 14.86 trillion, driven largely by improved income tax collections, customs and excise duties, mineral resources revenue, and fisheries receipts.
Despite this improvement, overall fiscal performance deteriorated sharply as total expenditure surged to NLe 24.62 trillion, compared to NLe 18.44 trillion in the previous year. This imbalance resulted in a cash deficit of NLe 8.14 trillion from operations, significantly higher than the NLe 5.51 trillion deficit recorded in 2023, highlighting mounting pressure on public finances.
Revenue Performance: Mixed Outcomes
The audit notes that income tax collections exceeded budget expectations, generating NLe 5.82 trillion against a target of NLe 5.36 trillion. Revenues from mineral resources and fisheries also outperformed projections, reflecting improved compliance and stronger sectoral activity.
However, these gains were undermined by underperformance in other key revenue streams. Goods and Services Tax (GST) fell short of target by more than NLe 1.2 trillion, while Customs and Excise duties also recorded significant shortfalls, pointing to weaknesses in consumption, trade volumes, enforcement, or policy design.
More concerning was the sharp decline in foreign grant receipts. The government received only NLe 1.62 trillion against a budgeted NLe 5.9 trillion, creating a financing gap of over NLe 4.28 trillion. This shortfall underscores the risks of over-reliance on donor funding and overly optimistic budget assumptions, particularly in a challenging global economic environment.
Expenditure Pressures and Rising Debt Costs
Recurrent expenditure increased dramatically to NLe 20.88 trillion, driven mainly by non-salary recurrent spending and debt servicing obligations. Interest payments alone consumed NLe 4.73 trillion, reflecting the growing burden of both domestic and external debt.
Domestic interest payments rose sharply to NLe 4.44 trillion, up from NLe 2.92 trillion in 2023, highlighting the high cost of government borrowing within the domestic market. This trend raises serious concerns about debt sustainability, crowding out of private sector credit, and long-term fiscal resilience.
Meanwhile, capital and development expenditure remained weak, with only NLe 3.28 trillion spent out of a budgeted NLe 7.05 trillion. The under-execution of development spending suggests delays in infrastructure projects and public investments that are critical for economic growth and service delivery.
Borrowing, Cash Deficits and Liquidity Challenges
To finance the widening deficit, the government relied heavily on domestic borrowing, which rose to NLe 4.55 trillion in 2024. Although external borrowing declined compared to 2023, external debt amortization exceeded new loan disbursements, placing additional strain on cash flows.
Despite financing inflows of NLe 3.91 trillion, the government closed the year with an overall cash deficit of NLe 4.23 trillion, reflecting persistent fiscal imbalances.
The Statement of Cash Position reveals a sharply deteriorating liquidity situation. While total cash and cash equivalents stood at NLe 2.81 trillion, bank overdrafts ballooned to NLe 8.72 trillion, resulting in a net consolidated fund deficit of NLe 5.91 trillion at the end of 2024 worse than the already fragile position recorded in 2023.
Significant overdrafts were recorded on the Treasury Main Account, salaries account, infrastructure development funds, and several ministerial accounts, pointing to ongoing weaknesses in cash management, commitment controls, and treasury planning.
Governance and Policy Concerns
The Auditor-General confirmed that the financial statements were prepared in accordance with Cash Basis International Public Sector Accounting Standards (IPSAS) and the Public Financial Management Act of 2016, covering transactions processed through the centralised treasury system and selected self-accounting entities.
However, the audit findings raise serious policy and governance concerns. These include weak expenditure control, rising dependence on costly domestic borrowing, delayed development spending, and unrealistic budgeting particularly regarding donor support. Without stronger fiscal discipline, improved revenue administration, better cash management, and more credible budget planning, Sierra Leone’s public finances risk becoming increasingly unsustainable.