Sierra Leone ups spending, cuts mining tax

Sat Nov 13, 2010 8:36am GMT
 

By Simon Akam

FREETOWN (Reuters) - Sierra Leone announced capital and development outlays up over one third on Friday in a 2011 budget that will drive its deficit up to 5.7 percent of GDP, but the finance minister said borrowing was under control.

In a move aimed at encouraging further private investment, the West African country -- which sees growth accelerating from 4.5 percent this year to six percent in 2012 -- announced cuts to mining sector taxes and levies on imported raw materials.

Finance Minister Samura Kamara forecast the 2011 deficit at 492.1 billion leones, up from a deficit of 334.5 billion leones registered at the end of September.

Of that amount, 271 billion leones or 53 percent of the total will by funded by foreign financing, Kamara said.

"It's being contained within sustainable limits," Samura Kamara told Reuters in an interview after presenting the budget to parliament in the West African country's capital Freetown.

The 2011 budget sees Sierra Leone's total expenditure rise to the equivalent of 25.8 percent of national output, up from 24.5 percent this year.

Domestic revenue is projected at 13 percent of GDP for 2011 which, combined with external grants of 591 billion leones, will bring total revenue to 20.1 percent of GDP.

Inflation, currently running at 16 percent, will fall to 9.5 percent next year and eight percent by 2012, Kamara said.   Continued...

<p>An aerial view shows Lumley Beach in the Sierra Leonean capital Freetown, November 4, 2010. Sierra Leone has enormous potential for tourism, but eight years after the end of the civil war much of the infrastructure remains ramshackle and visitors are few. Picture taken November 4, 2010. REUTERS/Simon Akam (SIERRA LEONE - Tags: SOCIETY POLITICS)</p>
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