Sierra Leone’s domestic revenue rose by 21 percent in the 2025 fiscal year, narrowly surpassing government targets, as stronger income tax and customs collections offset weaker consumer spending in parts of the economy, according to official data released on Monday.
Total domestic revenue reached 17.99 billion leones (NLe), slightly above the projected 17.94 billion, in a sign of improving tax administration and compliance despite a challenging economic environment marked by inflation, exchange rate volatility and subdued household demand.
Income tax remained the backbone of government finances, contributing 7.68 billion leones — about 43 percent of total domestic revenue — and recording a 32 percent year-on-year increase. The surge was largely driven by personal income tax, which climbed 58 percent to 6.53 billion leones, significantly outperforming expectations.
Analysts say the strong showing reflects both tighter enforcement and an expansion in the tax base, particularly among salaried workers.
Pay-As-You-Earn (PAYE) deductions from government employees rose 27 percent to 975 million leones, while withholding taxes on rental income more than tripled, albeit from a low base, indicating gradual improvements in compliance in previously under-taxed areas.
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Customs and excise duties also delivered robust growth, increasing 47 percent to 3.96 billion leones and slightly exceeding budget targets. The gains were attributed to stricter border controls and higher import values, even as global trade conditions remained uneven.
However, not all revenue streams performed strongly.
Goods and Services Tax (GST) collections rose 25 percent to 2.77 billion leones but fell short of the government’s 3.12 billion target by around 11 percent. Economists say the shortfall points to weaker-than-expected consumer demand, as rising prices continue to erode purchasing power.
“GST underperformance is often a reflection of stress in household consumption,” one regional economist said, noting that inflationary pressures have constrained spending across much of the year.
Other categories showed mixed results. Revenue from withholding taxes on contractors, education levies and free healthcare-related deductions declined by a combined 25 percent, highlighting persistent compliance gaps in certain sectors.
Meanwhile, mineral revenues contributed 1.28 billion leones, underscoring the continued importance of the extractive sector to Sierra Leone’s fiscal position. Other departmental revenues added 1.92 billion, while smaller streams such as the Road User Fund and fisheries accounted for around two percent of total collections.
The overall performance comes as the government seeks to strengthen domestic resource mobilisation in order to reduce reliance on external financing, including donor support and borrowing.
Sierra Leone, like many countries in the region, has faced mounting fiscal pressures in recent years due to global economic shocks, including the lingering effects of the COVID-19 pandemic and rising import costs linked to currency depreciation.
Officials have prioritised reforms aimed at broadening the tax base, digitising revenue collection systems and improving enforcement mechanisms.
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While the latest figures suggest progress, analysts caution that the gains remain fragile.
“The narrow margin by which the target was exceeded shows that while reforms are taking hold, the revenue base is still vulnerable to economic headwinds,” said a fiscal policy expert based in Freetown.
Sustaining growth in domestic revenue will likely depend on continued improvements in tax compliance, as well as a recovery in consumer demand and broader economic stability.
For now, the data offers cautious optimism for policymakers seeking to shore up public finances, even as challenges persist across key sectors of the economy.
