IMF report cites uncertainty and increased import costs; World Bank report cites COVID-19 fiscal stimulus, global uncertainties, and inflationary pressures, while Consumer Price Index shows a significant increase in food prices.
The redenomination of the Leones has resulted in its collapse in the foreign exchange market, causing hyperinflation, as food prices have continued to rise sharply since November 2022, at around 45%.
SLAJ iVerify has verified the claim above and discovered that the said claim is misleading because the redenomination of the Leones was not the only reason for its collapse in the foreign exchange markets, causing hyperinflation and a hike in food prices of around 45% since November 2022. According to the International Monetary Fund report 2022, the announcement of Leones currency redenomination on August 2021 also caused uncertainty and speculation, putting downward pressure on the exchange rate and contributing to higher import costs. It also stated that it is expected to depreciate further on account of spillover from US monetary policy and an increased need for dollars to access essential commodities.
And in June 2022, a World Bank report stated that “the COVID-19 shock disrupted the fiscal consolidation momentum of previous years and prompted the authorities to provide support through fiscal stimulus, including social transfers. The fiscal deficit has since increased by 2.6 percentage points of GDP (to 5.8%) in 2020 and 5.9% in 2021.” The report further said “uncertainties due to the war in Ukraine, global inflationary pressures, and the continued threat of COVID outbreaks” also influenced the collapse of the Leones.
Furthermore, Statistics Sierra Leone Consumer Price Index November 2022 press release states that “food and non-alcoholic beverages with weight 40.30%, increased from 40.14% in October 2022 to 43.62% in November, 2022.
World Bank press release, June 21, 2022
Sierra Leone’s Economy is recovering from the COVID Shock Although Uncertainties Persist
IMF elibrary Sierra Leone: Selected Issues
Consumer Price Index November 2022 press release