From: barnhart@ddsw1.MCS.COM (Mr. Aaron Barnhart)
Subject: IPS:SIERRA LEONE: CORRUPTION, REBELS, RECIPE FOR ECONOMIC CRISIS
Date: Fri, 18 Dec 1992 23:48:17 GMT
Organization: Evanston, Illinois, U.S.A.

Copyright Inter Press Service 1992, all rights reserved.  Permission to re-
print within 7 days of original date only with permission from 'newsdesk'.

Title: SIERRA LEONE: CORRUPTION, REBELS, RECIPE FOR ECONOMIC CRISIS


freetown, dec 9 (ips) -- nobody knows exaclty what is keeping
the sierra leone economy going given that the west african
state's agricutlural district kailhun in the east is under rebel
control and its diamond producing area, kono was recaptured by
rebels last week.

the loss of kono to the revolutionary united front (ruf)
ended hopes that the vital mines would be re-opened by the
beginning of the new year. rather, according to reports, it is
the rebels who are now going into private production at kono.

the economic situation could worsen unless the govt of capt
valentine strasser is able to ''get a grip on the situation in
kono district'', according to diplomats and businesspeople here.

government reserves are very low with only two sources of
foreign exchange remaining. these are the sierra rutile and
serranco a bauxite mining both in the south west. business
confidence is waning with many lebanese who dominate trade and
commerce opting for emigration.

this latest crisis compounds an already bleak situation. the
country is one of the poorest in the world largely a result of
the corruption and mismanagement of the civilian regime that was
ousted last april, and nearly two-years of war.

the diamond industry in kono was a case in point. according
to the military authorities there were around 30,000 illegal
miners in the area.

members of the former ruling all peoples congress also
benefited from the illicit diamond trade alleges captain simeon
sherrif, liason officer at the defence ministry. but ''there's
no evidence'', he added.

last year, 200 million dollars of sierra leonean diamonds
were traded in belgium but only 30 million of this was recorded
in the national accounts.

the present crisis would immediately affect those in the
diamond industry, the diggers and dealers, small businessmen,
and traders from the area.

equally, important are the knock on effects within the wider
economy resulting from the loss of kono as a major commercial
centre.

already, the major company importing wheat flour has noted a 40
per cent drop in sales due to lack of demand. (more/ips)


sierra leone:

emannuel steven joe, owner of a major beer distribution firm
told ips: ''supplies have droped by 50 percent, consumption is
suffering. but if the war ends soon i think things will
improve''. stevens has already had to lay off 25 employees a
further eight may soon have to go, he said.

on top of the difficulties arising from the war, sierra
leone's internationally respected finance minister jim funna,
resigned recently amid rumours that he fell out with the young,
inexperienced military junta.

funna's resignation came days after the paris club of donor
nations agreed to write off 50 percent of sierra leone's total
external debt of 1.9 billion dollars. they further agreed to a
16-year grace period and to reschedule the rest of the debt over
the next 25 years at a concessionary rate or the prevailing
market rate depending on which ever was lower.

under funna, 10,000 state sector workers were laid off, trade
and foreign exchange was liberalised and the budget was pruned.

when strasser's administration siezed power, they accepted a
bridging loan to pay off previous debts and to continue the
economic structural adjustment programme of their predecessors.
this was the basis of international donor confidence, observers
say.

at least 100 million dollars was pledged by the african
development bank, the world bank and the european community for
imports of petrol, raw materials, spare parts and balance of
payments support.

but much of this has yet to be disbursed and the bulk of the
already reduced national budget is taken up with military
expenditure. one diplomat told ips that disbursement of donor
funds will depend on the speed with which the government is able
to implement programmes agreed with the world bank imf.

he said: ''the government must come to grips with the
situation in the war zone and ensure it has full control''.
(end/ips/ro/oa/92)