The Monetary Policy Committee (MPC) of the Bank of Sierra Leone (BSL) has reduced the Monetary Policy Rate (MPR) by 1 percentage point to 23.75%, effective June 24, 2025, in a move aimed at lowering borrowing costs and stimulating private sector investment.
The decision, approved by the BSL Board of Directors on June 23, follows a review of global and domestic economic conditions. Governor Dr. Ibrahim L. Stevens announced corresponding adjustments to the Standing Lending Facility Rate (SLFR) and Standing Deposit Facility Rate (SDFR), now set at 26.75% and 17.25%, respectively.
The MPC’s decision comes amid a cautiously optimistic outlook for Sierra Leone’s economy, underpinned by a significant decline in domestic inflation from 13.78% in December 2024 to 7.55% in May 2025. This drop, attributed to prudent monetary policies, fiscal discipline, stable fuel prices, and a relatively steady exchange rate, has created room for the BSL to ease monetary policy to support investment and growth.
Globally, the economic landscape remains challenging, with the International Monetary Fund (IMF), the Organisation for Economic Co-operation and Development (OECD), and the World Bank revising down their 2025 global growth forecasts to 2.8%, 2.9%, and 2.3%, respectively. These downgrades reflect trade policy shifts and geopolitical tensions, which could disrupt supply chains and exert inflationary pressures on Sierra Leone’s economy. Despite these risks, the MPC noted that global inflation is expected to decline in 2025 and 2026 due to tighter monetary policies and falling commodity prices.
Domestically, Sierra Leone’s economy is projected to grow by 4.5% in 2025, up from 4.0% in 2024, driven by strong performances in mining, agriculture, and services. The MPC anticipates growth to rise further to 4.7% in 2026 and 2027, supported by government initiatives to enhance agricultural productivity. However, external risks such as global supply chain disruptions and trade tensions could pose challenges, prompting calls for policies to bolster economic resilience.
The MPC highlighted mixed developments in Sierra Leone’s external and fiscal sectors. The trade deficit widened in the first quarter of 2025 due to higher import costs and lower export earnings, while foreign exchange reserves fell to cover just 1.8 months of imports. On the fiscal front, the budget deficit grew in early 2025 due to lower domestic revenue and higher interest payments, though reduced spending on goods, services, and subsidies narrowed the primary deficit. A decline in the 364-day Treasury Bill rate has eased borrowing costs, providing fiscal space for the government.
Monetary developments showed a contraction in reserve money but moderate growth in broad money (M2) in the first quarter. While credit to the private sector increased, it remains insufficient to drive significant investment. The MPC stressed the need for a more inclusive credit environment to support private sector growth.
In its statement, the MPC emphasised that the rate cut aims to encourage private sector credit, reduce borrowing costs, and promote sustainable growth while maintaining vigilance over inflationary risks. The next MPC meeting is scheduled for 25 September 2025.
