Mismanagement or Maladjustment?

In previous chapters it was demonstrated that the multilateral organizations got their analysis and recommendations for Sierra Leone consistently wrong. At this point we go beyond criticism to analyse what actually happened to the economy of Sierra Leone to produce such chronic instability in the 1980s. First, we again summarize the story the multilaterals told about Sierra Leone in the 1980s: after the economy suffered an external shock in the late 1970s, the government unwisely expanded expenditure which worsened the balance of payments and provoked inflation; the inflation resulted in overvaluation of the exchange rate; the overvalued exchange rate depressed exports, which fed back to make a bad balance-of-payments situation even worse; and compounding these problems was a foolish policy of intervention in domestic agricultural markets which discouraged production, as well as worsening the rural-urban income gap. As we saw, there was little fact and much fiction to this story: (1) from the late 1970s onwards the Government cut real expenditure, it did not raise it; (2) compared with other currencies of the region, the Leone was not overvalued; (3) when the Leone appreciated in the 1980s, the trade balance improved; (4) with regard to agricultural policy (a) the policies of the Rice Board seem to have had little negative effect on production; (b) producer prices for the major export crops closely followed the trend in world prices; and (c) there is no evidence that export crop output correlated with the gap between the producer price and the export price; (5) had a shift in income toward urban areas occurred (and the opposite happened), it would have probably improved income distribution, not worsened it.