14 February 2013

Sierra Leone: Finance Ministry Wraps-Up Medium-Term Debt Strategy Seminar

The public debt management division of the Ministry of Finance and Economic Development on Friday 8th February 2013 ended the Sierra Leone Medium Term Debt Strategy workshop at the ministry's conference room in Freetown.

The workshop was conducted in collaboration with the World Bank, IMF and the West African Institute for Financial and Economic Development (WAIFEM) from January 30th to February 8th 2013. A Medium Term Debt Strategy (MTDS) is a plan that the government intends to implement over the medium-term in order to achieve a desired composition of the government debt portfolio, which captures its preferences with regard to the cost-risk trade-off.

The objective of the MTDS workshop was to develop a comprehensive framework within which authorities can make informed choices on how government financing requirement could be met while taking due account of constraints and potential risks.

In his remarks, the Minister of State in the Ministry of Finance and Economic Development, F.B.L. Mansaray, thanked the organizers of the workshop, particularly the consultants from the International Monetary Fund (IMF), the World Bank and WAIFEM for working tirelessly and diligently with the country officials for eight days to produce the first formal Medium Term Debt Strategy document for the country. He expressed delight on the presentation of the Sierra Leone-MTDS Document which he said has clearly proved the transfer of analytical capacity, especially in MTDS to the country.

The Minister of State stated that the government is faced with the enormous challenge of improving the standard of living of its people through the 'Agenda for Change', pointing out that very soon the government will launch the 3rd Poverty Reduction Strategy called the "Agenda for Prosperity" in which they would strategize the diversification of sources of growth in the country to include manufacturing, tourism and fisheries.

He said they will also accelerate human development with the aim of building on the gains made under the Agenda for Change by making sure that the free health care programme is expanded and sustained, access to quality education is improved, including adult education and ICT development. Mansaray further stated that government would promote international competitiveness of the country by making it more attractive to foreign direct investment through the improvement of the infrastructure for investment and promotion of competitive industries etc., while noting that meeting the above development aspirations would requirement enormous resources and that they would carefully mobilize external resources to supplement the available domestic resources.

The Minister of State stressed that maintenance of debt at sustainable level while achieving growth remains an important public financial management objective of the government, adding that as soon as the costing of the Agenda for Prosperity is finalized, they will incorporate it in the MTDS. He assured the consultants that government will look at their recommendations and circulate them to all stakeholders and that the final report will be forwarded to Cabinet for consideration and approval.

In his statement, Director of Financial Markets Department, Bank of Sierra Leone, Ibrahim K.Lamin, said public debt management in Sierra Leone is governed mainly by the Constitution and the Public Debt Management Act of 2011. He maintained that the Ministry of Finance and the Bank of Sierra Leone work closely in the execution of the debt management function, namely loan negotiations, renegotiations, disbursement, amortizations and recording.

Lamin stated that while Ministry of Finance undertakes the policy function in terms of formulation of debt strategies, policies and implementation consistent with the macroeconomic and fiscal frame work of the country, the Bank of Sierra Leone acts as agent of government and manages domestic debt. He reiterated that the framework has contributed significantly to improve debt management in the country, stressing that the Public Debt Law requires annual production of debt management strategy which was designed to ensure that public debt remains sustainable in the country.

Mr.Lamin added that debt strategy is about how to develop the structure of the debt portfolio over time in a way that manages risk and the trade-off between cost and risk. The Bank of Sierra Leone, he noted, looks forward to receiving the final report on the Sierra Leone Medium Term Debt Strategy and that the Bank is ready to make additional input if necessary.

Ms. Eriko Togo, mission chief for the Medium Term Debt Strategy from the IMF, said debt management policy promotes countries' economy and also provides a clear framework and additional information from data on medium-term debt strategy decision-making. She called on the government of Sierra Leone to consider foreign investors to come, which she said will help boost and sustain the debt strategy.

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