As the value of the country’s legal tender, the Leones continue to depreciate against other foreign currencies like the US dollar, the Bank of Sierra Leone on August 22 started an auction process aimed at injecting $USD 5 Million into the financial sector.
This was disclosed by the Director of Research, Bank of Sierra Leone, who said that the Bank decided to intervene by providing the much needed dollar to commercial banks to ease foreign exchange challenges currently facing business people in the country.
He said a maximum of about $USD 400,000 will be sold to interested commercial banks that applied during the bidding process so as to address the shortage of dollar at the banks that will in turn help to stabilize the economy.
The Director furthered that foreign exchange rate is a major determinant of inflation, especially for the prices of imported goods, adding that is why the Bank is coming in at this time to mitigate the effect of the devaluation of the Leones against the dollar.
He recalled that this is not the first time the Bank is making such critical intervention, saying during the Ebola outbreak when the economy was struggling BSL had to step in to support the economy bounce back to life.
He attributed the current economic challenges facing the country to the demise of iron ore mining, which he said it price plummeted in the global market, Ebola outbreak and other external shock factors beyond the country’s control.
Apart from the above mentioned causes of the current poor economic performance, he said the past elections were partly responsible because of the general climate of political uncertainty at the time; most investors either pulled out or halted investment altogether.
The Director also spoke about the absence of donor funding support like from the World Bank and IMF, which he said could have provided enough resources to stabilize the exchange rate in particular and the economy as a whole.
He expressed hope that with government renewed engagement with the aforementioned institutions, the economy will be given a new lease of life come September.