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Sierra Leone’s Macroeconomic Situation Remains Challenging Despite Bold Policy Measures

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Unlocking the bottlenecks to robust and sustained real growth through economic diversification and addressing pre-existing macroeconomic weaknesses will be crucial for building a resilient economy that promotes inclusive growth and reduces poverty, according to the new World Bank Sierra Leone Economic Update (SLEU) launched today in Freetown. The country’s macroeconomic situation remains challenging despite the bold and courageous policy measures taken by the new government.

Growth is still low (3.7 percent), inflation and exchange rate depreciation are high (16.8 and 11.8 percent, respectively), the fiscal and current deficits are high (6.6 and 13.8 percent, respectively), and increasing debt has resulted in the country being downgraded from moderate to high risk of debt distress. However, the medium-term outlook is promising, with growth expected to reach 5.2 percent by 2021, driven primarily by supply side factors, including favorable agricultural output, uptick in mining activities and strong performance of the services sector, the report notes. Key risks to the growth outlook include a deterioration in Sierra Leone’s terms of trade; lower than anticipated FDI inflows and the effects on the exchange rate and prices; fiscal slippages including adverse debt dynamics; and financial sector weaknesses.

The SLEU is an annual publication that reports on and analyzes recent economic developments, reviews regional and global contexts and analyzes the implications for the country, and presents the medium-term outlook and prospects for the economy. The 2019 Update focuses on promoting inclusive growth and poverty reduction, namely ‘Financial Inclusion for Economic Growth and Development’. The target audience for the SLEU includes policy makers, business leaders, development partners and analysts interested in Sierra Leone’s economy.

“There is an urgent need for Sierra Leone to develop a comprehensive strategy for deepening the financial sector and this is required to ensure poverty reduction, job creation, investment and growth in the country,” said Gayle Martin, World Bank Country Manager for Sierra Leone. “Whether Sierra Leone can promote sustained inclusive growth and reduce poverty depends on whether it can modify the structure of the economy to generate more and better-paid manufacturing and service jobs. That could be accomplished by facilitating creation by the private sector of formal manufacturing and services activities and increasing the productivity of the informal sector.”

The special topic of the 2019 Update focuses on deepening the financial sector for inclusive economic growth and development. The report notes that usage of the financial system is low in Sierra Leone with only about 5 percent of adults using formal savings products and about 54 percent saving money within the past year. Access to finance for enterprises is a significant barrier to growth of the private sector with 40 percent of firms indicating lack of credit as their biggest constraint. Only 11 percent of Sierra Leoneans have mobile money accounts compared to 20.8 percent in Liberia, 38.9 in Ghana and 72.9 percent in Kenya.

“The government plays a key role in developing the financial sector through promoting resilience and stability. One of the key functions that needs to be established is an effective supervision and regulatory regime for financial institutions to address market failures like anti-competitive behavior, market misconduct, information asymmetries, and systemic instability, which can negatively impact financial sector development, economic growth, and shared prosperity,” said Youssouf Kiendrebeogo, World Bank Senior Economist and one of the authors of the SLEU.

To address existing macroeconomic weaknesses and enhance economic growth, the Sierra Leone government should maintain the fiscal consolidation path, improve debt policy and management and intensify efforts to clear the large stock of arrears.

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Human Rights

Military operation in northeast Syria could see unintentional release of ISIL affiliates

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The ongoing Turkish military incursion in northeast Syria could unintentionally lead to the release of scores of people associated with the terrorist group ISIL, the UN Secretary-General fears.

António Guterres called for an immediate de-escalation of the fighting which has generated many civilian casualties and displaced up to 160,000 people in less than a week.

“He also notes with serious concern that the current military operations could lead to the unintended release of individuals associated with ISIL, with all the consequences this could entail,” according to a statement issued on Monday by his spokesperson.

Kurdish militia  have been holding holding more than 12,000 suspected ISIL members in prisons in northeast Syria, according to media reports.

The Turkish military offensive was launched last Wednesday, just days after the United States announced it was withdrawing its troops from the region.

US forces had long been working with Kurdish militia in northeast Syria to root out ISIL. Turkey regards the Kurdish militia as terrorists.

International media report that the Kurdish forces have struck a deal with the Syrian Government which will allow national forces into the area.

The UN chief has underlined the need for sustained and safe humanitarian access to people in need. He also emphasized that civilians must be protected.

The UN humanitarian affairs office, OCHA estimates that the military assault has so far generated between 150,000 to 160,000 “population movements”, with more expected.

Call for humanitarian access

In addition to the displacement, humanitarians are concerned about the situation of some 13,000 internally displaced people (IDPs) living in the Ein Issa camp in Raqqa governorate.

It is among camps in three locations housing more than 100,000 displaced people, mainly women and children “with presumed links to ISIL fighters”, according to the Independent International Commission of Inquiry on the Syria, appointed by the UN Human Rights Council.

OCHA said reports indicate that although a number of residents have fled the camp, most remain behind.

The UN is calling for immediate protection of the camp, alongside guarantees of safe and unhindered passage for the IDPs to leave for the provincial capital, also called Raqqa, or other areas.

People also have been evacuating from Mabruka camp, located in neighbouring Al-Hasakeh Governorate in the far northeast corner of Syria, where around 19 families remain.

“During the morning of 13 October, a truck rented by IDPs to leave Mabruka hit a landmine before reaching the camp, wounding the driver. As a result, the trucks were unable to reach the camp to transfer people out,” OCHA said in its latest Syria update.

Impact on health care

As shelling continues in the border city of Quamishli, also in Al-Hasakeh governorate, the UN and its partners are increasingly concerned about the security of staff on the ground. OCHA reported that international humanitarian partners have been forced to evacuate personnel and relocate some operations to safer areas away from the border.

The insecurity is also having an impact on the already weakened health services in northeast Syria, the World Health Organization (WHO) informed.

Two national hospitals, three field hospitals as well as health centres and health facilities at IDP camps are either out of commission or offering limited services. Additionally, some health partners have also suspended their services

WHO is working to respond to needs during what it described as “this chaotic and fast-moving situation.”

The UN health agency and partners have pre-positioned thousands of medical treatments, vaccines and trauma medicines at a hub in Qamishli, with thousands more being airlifted this week.

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EU trade agreements: Delivering new opportunities in time of global economic uncertainties

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Despite the difficult global economic climate, European companies have continued to make good use of the opportunities created by the European Union’s trade network – the largest in the world. In 2018 this network covered 31% of Europe’s trade exchanges, a figure that is set to rise significantly (to almost 40%) as more trade agreements enter into force, according to the European Commission’s annual report on the implementation of trade agreements released today. Overall, trade accounts for 35% of the EU’s gross domestic product (GDP).

In 2018 EU exports to and imports from trade agreement partners showed positive developments, with a continued growth of 2% and 4.6% respectively, with a strong performance of EU agri-food exports. The EU’s growing network of trade agreements is creating economic opportunities for workers across Europe, with over 36 million jobs being supported by exports to outside of the EU. The EU recorded a surplus of €84.6 billion in trade in goods with its trade agreement partners, compared to its overall trade deficit with the rest of the world of about €24.6 billion.

Commenting on the report, Commissioner for Trade Cecilia Malmström said “Trade agreements create opportunities for European businesses to grow and hire more people. Today’s report shows that overall trade is up, and more of our global trade is covered by preferential deals than ever before. Our food and drink exports in particular are flourishing thanks to lower tariffs and legal protection abroad for artisanal EU products like Champagne and Feta. The report also provides evidence of how our focus on trade and sustainable development is bearing fruit. Furthermore, we have taken a number of unprecedented steps to enforce the commitments made by our trade partners in the last year, including notably on workers’ rights. There is still work to be done, of course. But by opening up this data to the wider public we hope to launch a wider discussion about how to make sure trade agreements benefit as many citizens as possible.”

Looking at specific sectors across agreements, the 2018 report shows:

  • EU agri-food exports to trade partners continued to grow with an overall increase of 2.2% compared to the previous year. Exports of agri-food products to South Korea also gained 4.8 %. Also noteworthy are agri-food exports to Georgia, Moldova and Ukraine, which grew by 11% compared to 2017;
  • EU industrial goods exports also increased overall by 2%, with stronger growth among others for chemicals (2.5 %), mineral products (6 %) and base metals (4.4 %).

Looking for instance at one of the recent trade agreements, the report shows that in the first full calendar year (2018) of the EU-Canada trade agreement implementation:

  • bilateral trade in goods grew by 10.3% and the EU’s trade surplus with Canada increased by 60%;
  • EU goods exports to Canada rose by 15% (or €36 billion in extra export revenue), especially for sectors where import duties were previously high such as pharmaceuticals (up 29%), machinery (up 16%) or organic chemicals (up 77 %); 
  • EU Agri-food exports to Canada (accounting for 9% of total EU exports) rose by 7%.

Moreover, following intensive discussions in the joint committees created under the different trade agreements, several partner countries lifted barriers to trade, thus allowing more EU companies to benefit fully from the opportunities these agreements offer. Danish and Dutch farmers, for example, will be able to export beef to South Korea, while Poland and Spain will be able to export poultry meat to South Africa.    

The report investigates also the impact of the provisions included in the dedicated ‘Trade and Sustainable Development’ (TSD) chapters, which are part of all modern EU trade agreements. These chapters aim at engaging with trade partners to implement international rules on labour and the environment, as incorporated in multilateral environmental agreements or International Labour Organisation (ILO) conventions. Recent achievements ahead of the entry into force of the respective agreements include the ratification by Mexico and Vietnam of ILO Convention 98 on the rights to organise and collective bargaining. Additionally, the agreements with Vietnam, Japan, Singapore, Mercosur and Mexico include reinforced commitments to effectively implement the Paris Agreement on Climate Change.

In 2018 and 2019, the EU also took several enforcement actions under its trade agreements, including in relation to labour standards. Among other examples, the EU requested a panel following South Korea’s failure to ratify ILO Conventions on workers’ rights, notably freedom of association and collective bargaining.

However, the report also highlights the need to increase efforts – together with Member States and stakeholders – to raise awareness of the opportunities trade agreements offer, as well as stepping up enforcement action so the agreements deliver the intended results. 

The report will now be subject to discussion with the European Parliament and Member States’ representatives in the Council.

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Human Rights

Turkey’s Syria offensive could spark another catastrophe

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An estimated 26,000 children aged 3-17 in Al Hol camp of Syria's Hasakeh governorate have been out of schools for years due to conflict and displacement and are in need of education services. © OCHA/Hedinn Halldorsson

Airstrikes and a ground offensive by Turkey in northern Syria against Kurdish forces have left civilians dead and forced tens of thousands to flee, UN agencies said on Friday, amid fears of another “humanitarian catastrophe” in the war-torn country. 

Expressing concern about the military campaign launched on Wednesday, the UN’s emergency relief chief Mark Lowcock noted that the Turkish Government had “assured me that they attach maximum importance to the protection of civilians and the avoidance of harm to them”. 

Speaking to journalists in Geneva,  Jens Laerke from the Office for the Coordination of Humanitarian Affairs (OCHA), said that Thursday had seen “intense shelling all along the north-eastern Syrian border with Turkey, from Jarablus, to the west of the Euphrates, to the Iraqi border”. 

Highlighting the potential for further suffering for Syrians caught up in more than eight years of war, Christian Cardon de Lichtbuer, from the International Committee of the Red Cross (ICRC), said that “we have there all the ingredients for unfortunately yet another humanitarian crisis in Syria”. 

UN human rights office confirms eight civilian deaths  

As of Thursday evening, the UN human rights office, OHCHR, reported that seven civilians, including two women and a boy, had been killed in the first two days of the Turkish operation. 

A male civilian man was also reported killed in Jarablus on Wednesday, OHCHR spokesperson Rupert Colville said, adding that a woman and a boy were injured yesterday, during “counter-attacks and ground strikes” by Kurdish non-State armed groups. 

In response to the mass displacement of people from the northern border area, mainly to Al-Hasakeh district, the World Food Programme (WFP) has provided ready-to-eat meals to around 11,000 people there, with the help of the Syrian Arab Red Crescent (SARC). 

WFP supports close to 650,000 people in north-eastern Syria via a field hub in Qamishli; around 580,000 are currently in areas under Kurdish control, it said in a statement. 

“Mass population displacement has been reported since the escalation of violence”, said WFP spokesperson Hervé Verhoosel. “Over 70,000 people from Ras al-Ain and Tal Abiad have been displaced so far.” 

UN food agency ‘will cover’ needs of the displaced 

Several thousand more have move to Raqqa governorate since the beginning of Operation Peace Spring by the Turkish military on Wednesday, Mr. Verhoosel added, while many other were on their way to shelters in Raqqa city, “where WFP will be covering their food needs”. 

Although UN humanitarian staff remain in Qamishli, “their ability to operate and provide relief is severely restricted” by the hostilities, OCHA’s Mr. Laerke explained, adding that local authorities were also reportedly “imposing some quite strict security measures at checkpoints”. 

Linked to the military campaign, Marixie Mercado from the UN Children’s Fund (UNICEF) said that the Alouk water pumping station reportedly came under attack early on Thursday.  

“This is a station that provides safe water to at least 400,000 people in Hassakeh governorate, including displacement camps,” she said 

In Tal Abiad, two schools have been reportedly taken over for military use, Ms. Mercado added, while child protection programmes have been suspended in Ras al-Ain, Mabrouka camp, Tal Halaf, Sulok and Tal Abiad.  

Health and Nutrition response in Ras al-Ain and Mabourka camp had also been put on hold, while schools in these areas have closed and the water supply has been affected.  

Asked whether any Syrian refugees had been seen returning to a so-called safe zone either side of the Turkey-Syria border, Andrej Mahecic, spokesperson for the UN High Commissioner for Refugees (UNCHR), said that he had “no information” of any Syrian refugees doing so. 

Any such buffer zone would have to set up “with full international humanitarian law safeguards in place, including the consent of the Government and warring parties and the zone being of civilian character, the safety of civilians would be hard to guarantee”, the UNHCR spokesperson added. 

So-called ‘safe zone’ is not managed by UN 

Echoing those comments, OCHA highlighted the vulnerability of those displaced by the conflict and the uncertainty surrounding a so-called buffer zone cleared of Kurdish fighters on the border, reportedly proposed by Turkey. 

“It’s not something that’s been set up by humanitarians, it is a zone that has been set up by military planners in Turkey,” said Mr. Laerke. “We do not control it and we have not been involved in the planning of it.” 

After more than eight years of war in Syria, needs are “significant and widespread”, Najat Rochdi, Senior Humanitarian Adviser to the UN Special Envoy for Syria, reiterated in Geneva on Thursday. 

Over 11 million people require some form of humanitarian assistance, she said, including 4.7 million living in areas of high severity of need. 

Amid uncertainty about how the military campaign will develop, the ICRC reiterated concern about the lack of basic services available to those displaced in the coming days and weeks, in towns and cities levelled by bombardment and shelling in a bid to drive out ISIL forces. 

“People are moving inside Syria, so we can assume, yes, they will go towards (the) south,” said the international Red Cross committee’s Mr. de Lichtbuer. “With the complexity and so areas like Deir-Ez-Zor, and Raqqa, which are not necessarily places that can welcome thousands of people, we will see how it evolves in the coming hours, because it is moving very fast.”

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