The Executive Board of the International Monetary Fund (IMF) today approved the disbursement of SDR 35.26 million (US$50.37 million or 17 percent of quota) under the Rapid Credit Facility (RCF) to Sierra Leone to help meet the urgent balance of payments and fiscal needs stemming from the deep and persistent impact of the pandemic.
The Government's quick and decisive actions to contain COVID-19 prevented a larger outbreak and saved lives, yet they also came at an economic cost. Containment measures disrupted the transport of goods within the country, with a heavy impact on the services sector. At the same time, exports weakened significantly in 2020 due to weaker mining production and lower global demand.
The authorities' policy response has focused on saving lives and protecting livelihoods. The Bank of Sierra Leone (BSL) swiftly introduced a special facility for importers to help prevent disruptions to the supply of food and essential goods. Benefiting from the lessons of the Ebola health crisis, the authorities effectively deployed resources to support both health and containment efforts. Their Quick Action Economic Response Programme addressed the broader economic and social response, via support to farmers, direct cash transfers to vulnerable households, and labor-intensive public works.
The economic costs of the crisis - including setbacks to the Government's revenue mobilization goals - together with the necessary crisis response have exacerbated the already-tight fiscal financing and strained debt position. Continued support from development partners will be vital to recapture pre-crisis momentum and ensure a sustainable, inclusive recovery.
At the conclusion of the Board discussion, Mr. Tao Zhang, Deputy Managing Director and Acting Chair, made the following statement:
"Sierra Leone is grappling with serious and persistent effects of the COVID-19 pandemic. While the immediate health risks appear contained, 2021 will be another challenging year. The economic and social impact is likely to be protracted, exacerbating longstanding development challenges and the strained financing situation.
"The authorities have responded promptly to the crisis. In 2020, they scaled up health and other priority spending, consistent with their Quick Action Economic Recovery Programme. The Bank of Sierra Leone's special credit facility helped ensure that food supplies were not disrupted. The 2021 budget continues to prioritize COVID-19 and recovery-related spending within a tight budget envelope.
"Emergency financing from the IMF under the Rapid Credit Facility will help meet urgent external and fiscal financing needs in 2021, and ensure that the authorities can maintain their response and recovery efforts. In line with their National Development Plan priorities, they continue to strengthen governance, including transparently reporting on their COVID-19 response, and publishing details of large emergency‑related procurement contracts.
"Looking ahead, the authorities remain committed to maintaining macroeconomic and fiscal stability, in line with their medium-term reform program supported by the Extended Credit Facility. They are taking steps to address vulnerabilities to debt sustainability, with IMF technical assistance. Nevertheless, Sierra Leone's large development needs and tight financing situation will require concessional support, ideally grants, from the international community in the coming years."