Sierra Leone’s external debt stock is projected to decline gradually over the medium term, offering modest relief to the country’s public finances even as domestic borrowing continues to rise to meet budgetary needs, according to official data.
The country’s external debt is expected to fall from about US$1.85 billion in 2025 to US$1.73 billion by the end of 2028, reflecting high debt service payments, limited new external borrowing and relative exchange-rate stability. The outlook was outlined in the Semi-Annual Public Debt Statistical Bulletin for January to June 2025, published at the end of the year by the Public Debt Management Division of the Ministry of Finance.
As of end-2024, the Government of Sierra Leone’s external debt stood at 41.52 billion leones, equivalent to about US$1.87 billion. Multilateral creditors accounted for the largest share, holding 79.2 percent of the total, or 32.89 billion leones (US$1.4 billion). Bilateral creditors represented 11.7 percent, or 4.87 billion leones (SU$214.5 million), while commercial creditors accounted for 9.1 percent, or 3.77 billion leones (US$166.1 million).
Despite the projected decline in the stock of external debt, the bulletin cautioned that risks remain elevated. “The stock of external debt is faced with a high risk of debt distress mainly on account of high external debt service to domestic budget revenue, although sustainable on a forward-looking basis,” the report said.
Overall public debt, combining domestic and external obligations, rose to 69.87 billion leones by the end of the 2024 fiscal year, equivalent to 44.4 percent of gross domestic product. This represented a 9.7 percent increase from 63.69 billion leones recorded a year earlier, although the debt-to-GDP ratio declined from 46.6 percent due to economic growth and the rebasing of GDP that began in 2023.
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The increase in total public debt was driven primarily by a rise in domestic borrowing, as the government issued new treasury bills and bonds to finance the 2024 budget. This increase more than offset a reduction in external debt, which was supported by high debt service payments, relatively modest new disbursements and a slightly appreciating exchange rate against major loan currencies.
Domestic debt accounted for 40.6 percent of total public debt at the end of the 2024 fiscal year, amounting to 28.35 billion leones. The domestic debt portfolio consists mainly of treasury bills with maturities of 91, 182 and 364 days, treasury bonds with tenors ranging from one to 10 years, verified arrears, non-negotiable non-interest-bearing bonds and judgment debts.
By the end of September 2025, domestic debt had increased by 13.9 percent to 32.29 billion leones and is projected to reach 33.34 billion leones by December, underscoring the government’s growing reliance on the domestic market to meet financing needs.
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Commercial banks remain the largest holders of domestic government debt, accounting for 56.5 percent or 18.22 billion leones. The Bank of Sierra Leone holds 29.7%, equivalent to 9.58 billion leones, while non-bank public entities account for 13.9 percent, or 4.48 billion leones, including arrears.
External debt continued its downward trend in the first half of 2025, falling to 40.0 billion leones, or about $1.77 billion, by the end of June. The decline reflects persistent high debt service costs that exceeded new inflows, combined with relative exchange-rate stability.
Multilateral, bilateral and commercial creditors remain central to Sierra Leone’s external financing, with funds largely directed toward development projects. Projections suggest the external debt stock will continue to ease gradually, declining to about US$1.40 billion in 2026 before stabilising at lower levels through the end of the decade.
While the projected reduction in external debt offers some relief, analysts say rising domestic borrowing could increase refinancing and interest-rate risks over time. Maintaining fiscal discipline, improving revenue mobilisation and managing borrowing costs will be critical to keeping Sierra Leone’s debt on a sustainable path, even as authorities balance development needs against growing financing pressures.
