INSIDE SIERRA LEONE’s 2025 SUPPLEMENTARY BUDGET: AUSTERITY FOR CITIZENS, FAVOURABLE TERMS FOR POWER BROKERS
By Mahmud Tim Kargbo
Sunday, 23 November 2025
Sierra Leone’s July 2025 Supplementary Budget arrives at a moment of deep fiscal stress, yet the government presents it as a disciplined corrective measure. A tougher examination suggests a far more troubling picture. Essential development funding has been slashed, opaque contracts have been quietly honoured, and the public is left with rising debt costs and shrinking services. Critical information that should accompany a responsible fiscal revision has been withheld, raising serious questions about whether the adjustments prioritise national interest or entrenched networks of influence.
The Headline Numbers Conceal More Than They Reveal
The Ministry of Finance has trimmed the projected deficit from 3.9 per cent to 3.8 per cent of GDP, based largely on steep expenditure cuts.
Source: http://www.mof.gov.sl/wp-content/uploads/2025/07/Supplementary-Budget-Speech-2025.pdf
Total spending falls by nearly NLe 4 billion, a contraction driven overwhelmingly by a halving of domestically funded capital investment. The allocation for capital projects funded from domestic resources drops from NLe 2.2 billion to NLe 1.1 billion. This means fewer roads, stalled school upgrades, delayed rural electrification and shelved water projects. For a government that has repeatedly championed infrastructure as the backbone of growth, the scale of the retreat is striking.
Recurrent expenditure moves in the opposite direction. It rises to NLe 22.3 billion. Interest payments grow to NLe 8.0 billion, fuelled by heavy reliance on short maturity domestic borrowing at some of the highest Treasury Bill rates in the subregion. Subsidies and transfers rise as well, largely to clear arrears for Independent Power Providers. The public receives no breakdown of these arrears, no audit findings on IPP performance, and no explanation for why taxpayers must absorb rising energy obligations while core development spending is slashed.
GST revenue forecasts have collapsed from NLe 4.3 billion to NLe 3.1 billion. The government cites evasion and avoidance but offers no detail on which sectors are responsible, which firms are non compliant, or how enforcement will be strengthened. In a budget dependent on painful spending cuts, revenue transparency is conspicuously absent.
Where the Red Flags Multiply
IPP Arrears: High Stakes Payments with Low Transparency
The Supplementary Budget allocates an extra NLe 214.1 million to settle overdue obligations to Independent Power Providers. Sierra Leone’s IPP arrangements have long been marred by opaque tariffs, uncertain contract enforcement and disputed metering. Yet the government offers no evidence that it has conducted independent engineering audits to verify the invoices it is now rushing to settle. Without disclosure, taxpayers have no assurance that they are not paying for inflated or unverifiable claims. The pattern mirrors earlier concerns around energy contracts, where political allies and well connected intermediaries have gained disproportionately from public funds.
Domestic Debt: A Powder Keg Hidden in Footnotes
The rise in interest payments is not a minor adjustment. It reflects the government’s increasingly risky reliance on short term Treasury Bills, many of which carry unusually high yields. Investors who purchase these instruments benefit from guaranteed, above market returns while the public assumes the cost. The Budget speech does not specify who holds recent issuances, whether there are conflicts of interest among primary dealers, or whether politically linked buyers dominate the market. In a fiscally constrained environment, opacity around debt buyers is a major accountability breach.
Capital Cuts: Austerity That Targets the Public, Not the Powerful
The halving of domestic capital spending is one of the most consequential policy decisions of 2025, yet the government has released no annex listing which projects have been cut or postponed. Conversations with several contractors indicate that some were not notified in advance, leaving them with unpaid invoices and significant exposure. Such opacity risks triggering contract disputes, litigation and inflated future project costs as contractors price in political uncertainty. Meanwhile, influential sectors and politically protected contracts appear largely untouched.
GST Collapse: A Revenue Crisis the Government Refuses to Name
The NLe 1.2 billion fall in GST projections signals a deep failure of revenue administration. The speech refers vaguely to evasion and avoidance, but avoids naming sectors, firms or mechanisms. Import under declaration remains rampant, yet the government has not published customs compliance data for more than a year. The ASYCUDA audit is mentioned but not explained. Without clear enforcement actions, the GST shortfall suggests that well connected businesses may be benefitting from weak oversight while ordinary citizens shoulder the tax burden.
Mining Incentives: Deals Signed in the Shadows
Safe Harbour regimes and Advance Pricing Agreements for iron ore companies are highlighted as reforms, but the government provides no terms, no negotiation history and no estimates of revenue forgone. International best practice requires non confidential summaries of such agreements, yet Sierra Leone’s remain locked away. Given the country’s troubled history of extractive sector concessions, withholding this information raises the possibility that new loopholes may be replacing old ones under different names.
The Questions That Parliament Must Demand Answers To
IPP Payments
• What are the contractual terms for each IPP, including tariffs, penalties and capacity charges?
• What arrears have been paid in 2025, to which providers, and for which months?
• Have independent audits verified the accuracy of metered output and invoices?
Treasury Bill Issuance
• Who are the principal purchasers of recent Treasury Bills?
• What yields were offered, and how do they compare to regional markets?
• Have politically exposed persons or their affiliates purchased significant volumes?
Development Cuts
• Which capital projects have been stopped, delayed or downscaled?
• Why were these particular projects selected for cuts, and what analysis supports those decisions?
• Are contractors being paid for completed work, and what liabilities is the government accruing?
GST Enforcement
• Which sectors are responsible for the largest shortfalls?
• How many compliance audits were conducted in the past year, and what were the findings?
• What is the expected timeline and outcome of the ASYCUDA investigation?
Mining Concessions
• What financial models were used to evaluate the Safe Harbour and APA arrangements?
• What revenue losses are expected from these incentives?
• Why has the government not published summaries to enable public scrutiny?
Policy Recommendations Grounded in Accountability
Full Disclosure of Fiscal Decisions
• Publish a complete list of all capital project cuts with contract details and financial implications.
• Release summaries of IPP contracts, arrears and audit findings.
• Disclose the investor composition of all domestic debt instruments issued in 2025.
Strengthen Revenue Enforcement
• Publish the ASYCUDA audit report in full.
• Mandate Electronic Cash Registers across high risk GST sectors.
• Conduct targeted audits of the top one hundred GST contributing companies.
Reform Domestic Borrowing
• Reduce dependence on short term Treasury Bills and pursue longer term, lower cost instruments.
• Create a public domestic debt registry with investor disclosure.
Freeze Tax Incentives Pending Review
• Suspend new Safe Harbour and APA approvals until independent cost benefit analyses are completed.
• Publish accessible summaries of existing agreements.
A Budget That Narrows the Future
The 2025 Supplementary Budget is not simply a fiscal adjustment. It is a political statement about who bears the cost of Sierra Leone’s economic pressures. Development projects are halted. Revenue enforcement remains weak. Debt holders and energy sector operators are protected. Critical information is withheld from the public and Parliament. In a country already struggling with governance challenges, such secrecy compounds distrust and fuels suspicions that fiscal policy is being shaped by private interests rather than national priorities.
Without urgent transparency and decisive oversight, this Supplementary Budget risks entrenching a system in which citizens absorb the losses while well connected actors reap the gains. The stakes for Sierra Leone’s long term development could not be higher.
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