Also, government’s drive towards improving electricity supply and distribution, with the completion of the Bumbuna Hydroelectric Power Plant and additional thermal plants, contributed to increased productivity particularly in the manufacturing sector. However, going forward, there is a need to achieve a higher growth rate to stimulate economic activities and create more employment. Your Excellency, ladies and gentlemen, the state of the economy was presented by the Honourable Minister of Finance and Economic Development, in his statement of Economic and Financial policies for 2011. During 2010, fiscal policy was geared towards enhancing revenue mobilisation to support government’s expanded capital expenditure requirements. Emphasis was therefore placed on improving tax administration by reducing inefficiencies in tax collection and increasing the levels of compliance. The performance of the newly introduced Goods and Services Tax (GST) was encouraging, with a compliance rate of 60 percent. This is an indication of hope for future revenue performance in Sierra Leone. On the other hand, expenditures exceeded the budgetary targets due to salary increases, expenditure on the health sector and infrastructural outlays. In this regard, the Bank would like to stress that the global financial crisis has resulted in global austerity measures worldwide, and Sierra Leone should not be left behind in making difficult financial choices. Compared to 2009, the year 2010 reflected a wider deficit which was financed mainly from the drawdown of Multilateral Debt Relief Initiative (MDRI) resources, some external financing and domestic borrowing mainly through Ways and Means Advances.
Gross external reserves increased to $ million at end 2010 compared to $ at end 2009, which could cover six months of imports and cushion the country against external shocks. External borrowing was directed towards highly concessional loans that met rigorous criteria. The level of external debt increased from $ in 2009 to $ in 2010 but remains at modest risk and is sustainable compared to levels before our eligibility to the Highly Indebted Poor Countries Initiative (HIPC) in 2006. Following the successful completion of the IMF’s Poverty Reduction and Growth Facility (PRGF) – supported Programme in December 2009, the country adopted a successor Extended Credit Facility (ECF) programme beginning July, 2010 and was able to successfully complete the first review on 6th December 2010. Financial sector developments in 2010 Your Excellency, distinguished ladies and gentlemen, allow me to take you through the status of financial sector developments during 2010:   On the banking sector, the number of commercial banks was reduced from 14 to 13 with Procredit Bank being taken over by EcoBank, due to an increase in the capital requirements which did not fit in with the Procredit Bank’s business model.   Provisional figures for the banking industry in November 2010, reveal an 18 percent increase in total assets in the last twelve months to almost Le2.0 trillion.   The industry profits increased by 238 percent based on unaudited figures, with five of the commercial banks recording a loss compared to seven last year.