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Sierra Leone Business: Pres. Bio accepts depreciation of Leones in 1 year

President Bio delivering TED talk 2

Being honest to his conscience and people he is governing, President Julius Maada Bio for the first time has admitted to the fact that within his one year in office the Leones has drastically depreciated in value as against the US dollar. Just before he took up office in April 2018, the exchange rate of Leones as against the US dollar was Le 750 to $1 and within a year this has risen to Le 910 per $1, which has forced the prices of commodities to skyrocket. Addressing Parliament during the State opening of the Second Session of the fifth Parliament, President Bio said despite the gains in fiscal reform, the country have experienced a depreciation of the Leones over the past 12 months. He explained, “The lull in iron-ore mining and possible off-shore foreign exchange transactions are among factors that limit our foreign exchange inflows into the official banking sector” said, stating on the demand side, the continued dollarization of the economy remains the single most factor affecting the exchange rate. He however, assured that iron- ore production will soon resume, and they will clamp down on off shore foreign exchange transactions and compel all remittances and foreign disbursements to be done through the domestic banking system. “On the demand side, we will continue to enforce existing regulations including a ban on carrying out domestic transactions in foreign currency such as payments for rent and hotel accommodation and institute policies to dampen demand for non-productive imported goods” he said. President Bio said that Government is finalising regulations on currency swapping with key trading partners, hoarding of foreign currency in homes, and paying Daily Subsistence Allowance (DSA) in currencies of the host countries, “All these measures will curtail demand for foreign currencies. “The cumulative effect of the increase in supply of foreign exchange and cutbacks in demand will arrest the depreciation of the Leone and stabilise the exchange rate,” he said. “Given that Sierra Leone is an import dependent country, a depreciation in exchange rate is translated into increase in prices of commodities’” he said, disclosing this has kept inflation in two digits although projected to progressively decline to single digit in 2021. He assured that in the coming year, Government would consolidate ongoing reforms and adopt new measures to expand production, which will help to stabilise the exchange rate and retail prices of commodities.

By Alhaji Manika Kamara

Monday May 6, 2019.

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