The Executive Board of the International Monetary Fund (IMF) completed the second review of Sierra Leone's performance under the program supported by an Extended Credit Facility (ECF).
Completion of this review enables the IMF to immediately disburse SDR15.555 million (about US$21.13 million), bringing total disbursements under the arrangement to SDR46.665 million (about US$63.39 million). The Executive Board approved the authorities' request for a waiver of non-observance of a performance criterion.
The Board had approved Sierra Leone's 43‑month ECF arrangement for SDR124.44 million (about US$172.1 million) on November 30, 2018 (see Press Release No. 18/446). The Government's reform agenda, supported by the ECF, aims to create fiscal space for development needs by strengthening revenue mobilization, containing current spending and improving the efficiency of public investment. In the critical and uncertain period ahead, the Fund is committed to working closely with the Government to help address the priority health and economic needs to combat the fallout of the COVID‑19 pandemic.
The Executive Board today also concluded the 2020 Article IV Consultation with Sierra Leone. A separate press release will be issued shortly.
Following the Executive Board discussion, Mr. Geoffrey Okamoto, Acting Chair and First Deputy Managing Director, made the following statement:
"Sierra Leone continued to make good progress under the Fund‑supported program. The authorities have demonstrated firm commitment to their reform agenda.
"While the program's medium‑term goals remain appropriate to enable future growth and development, the dramatic onset of the global COVID‑19 pandemic poses significant near‑term risks. Combating the economic fallout of the crisis and protecting the health of Sierra Leoneans should be the immediate priority.
"The authorities' cautious fiscal policy has been important. They have made commendable progress in mobilizing domestic revenue and prudent execution of budgeted expenditures. This has stabilized domestic borrowing needs and allowed inflation pressures to ease.
"The 2020 budget appropriately balances the tight fiscal position and meeting development needs. In line with the Government National Development Plan, the budget prioritizes investing in education and provisions for repaying legacy arrears as part of a broader arrears clearance strategy. The authorities will need to prioritize additional spending to help cushion the impact of COVID‑19.
"Managing fiscal risks and securing debt sustainability remain the medium‑term priority. Continued revenue mobilization will require both tax administration and policy reforms. Deeper public financial management reforms will further improve budget planning and execution, including preventing new arrears. A strategic plan for the two state‑owned banks will be instrumental in addressing underlying fiscal risks.
"Monetary policy remains appropriately focused on reducing inflation to single digits over the medium term. Redoubling efforts to implement the new central bank law and the forensic audit action plan will be critical to strengthening operational effectiveness. Continued actions to reduce strains on the foreign exchange market and preserve exchange rate flexibility are also critical to boost resilience.
"The inadvertent omission of securities issued to the nonbank sector gave rise to a breach of the performance criterion on net credit to the government. The authorities took the necessary corrective actions and measures to avoid re-occurrence of misreporting."