Sierra Leone’s external debt-servicing costs rose sharply in the first half of 2025, underscoring the country’s growing dependence on multilateral lenders as it finances post-crisis recovery and development spending.
Payments on foreign debt climbed to US$55.6 million (about 1.26 billion leones), a 21 percent increase from the same period a year earlier, according to the Finance Ministry’s Semi-Annual Public Debt Statistical Bulletin. The total comprised US$47.7 million in principal repayments and US$7.9 million in interest, with higher payments recorded across all major creditor categories.
Despite the increase, the government said the immediate fiscal impact remains contained because most of Sierra Leone’s external borrowing is on concessional terms, offering long maturities and low, fixed interest rates.
“External debt service burden was low relative to domestic debt service burden because of its concessional nature with longer maturities, low and fixed interest rates for the first half of 2025,” the bulletin said.
Multilateral lenders led by the World Bank and the International Monetary Fund accounted for the largest share of repayments, totaling US$34.6 million, up 22 percent year on year. Payments to bilateral creditors rose more steeply, reaching US$12.4 million, a 60 percent increase, while repayments to commercial banks nearly doubled to US$8.7 million.
The broad-based rise reflects Sierra Leone’s deeper engagement with international financiers to fund infrastructure projects, social spending and macroeconomic stabilisation following years marked by political tensions, pandemic-related shocks and global commodity volatility.
Sierra Leone, one of the world’s poorest countries, has leaned heavily on concessional financing to support growth while limiting exposure to expensive market borrowing. Such loans typically come with extended grace periods and below-market interest rates, helping to keep external debt servicing costs lower than those associated with domestic debt, which often carries higher yields and shorter maturities.
Analysts say the latest figures point to a normalisation of repayment schedules as earlier grace periods expire, rather than a sudden deterioration in debt sustainability.
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“The uptick signals a return to regular repayment cycles and some regained economic footing,” said an independent economist based in Freetown. “The risk lies in the trajectory. If concessional flows thin or global financial conditions tighten further, the debt profile could worsen quickly.”
The report comes at a time when Sierra Leone is attempting to consolidate recent macroeconomic gains. Inflation has eased from earlier highs, while the government is preparing to benefit from a major U.S. Millennium Challenge Corporation (MCC) compact, expected to channel significant funding into energy and infrastructure upgrades.
However, public debt remains elevated, and fiscal space is constrained by weak domestic revenue mobilisation and rising spending needs. Political polarisation following recent elections has also added to uncertainty, complicating efforts to push through reforms aimed at broadening the tax base and strengthening public financial management.
According to the Finance Ministry, multilateral creditors will continue to dominate Sierra Leone’s external debt portfolio over the medium term, reflecting both policy choices and limited access to international capital markets on affordable terms. Commercial borrowing, while still relatively small, has been rising from a low base, prompting calls for caution.
Debt sustainability assessments by international partners have so far judged Sierra Leone to be at moderate risk of debt distress, provided borrowing remains largely concessional and economic reforms stay on track. But officials acknowledge that external debt-servicing costs are likely to keep rising as disbursements made in recent years move further into their repayment phases.
The government’s debt management strategy, which prioritises concessional financing and seeks to lengthen maturities, will face increasing pressure as repayments continue to climb through 2026. Much will depend on sustained donor support, stable global financial conditions and the authorities’ ability to translate recovery spending into durable economic growth.
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For now, the Finance Ministry says the structure of Sierra Leone’s external debt offers a buffer but one that could erode if borrowing terms harden or fiscal discipline weakens.
