Press Release No. 07/259

Press Release: Statement by IMF Staff Mission to the Republic of Sierra Leone

November 14, 2007

The following statement was issued today in Freetown by Norbert Toé, International Monetary Fund (IMF) Mission Chief for the Republic of Sierra Leone:

"An IMF mission visited the Republic of Sierra Leone during November 7-14, 2007 to meet with the new administration and discuss its economic priorities, including the 2008 budget, and to take stock of the current economic situation and prospects. The mission met with His Excellency President Ernest Bai Koroma, Minister of Finance and Economic Development David O. Carew, Deputy Governor of the Bank of Sierra Leone Dr. Mohammed Fofana, other senior officials of the government and the central bank, representatives of the business community, nongovernmental organizations, and development partners. The mission would like to thank the authorities for their warm hospitality and the constructive and fruitful policy discussions.

"The mission noted that output growth in Sierra Leone in 2007 continues to be robust at about 7 percent, sustained by strong agricultural and mining production as well as buoyant construction and service sectors. Inflation remained slightly above double digit level for most of 2007, reflecting a shortage of basic consumer goods following supply disruptions and the effects of an accommodating monetary policy in the first quarter of 2007. A continuing fiscal challenge is the significant weakening in domestic revenue mobilization and shortfall in external budget support. In response, the authorities implemented a cash-budget management system starting in April 2007 with adherence to tight cash targets but accumulated substantial payment arrears. For the remainder of 2007, the mission was encouraged by the authorities' decision to continue the cash-budget management system while prioritizing spending and avoiding the accumulation of new payment arrears.

"For 2008, the mission and the authorities agreed on the need to shore up the revenue base. This is essential to create room for sustainable poverty-reducing expenditures in the priority areas of health, education, electricity and water supplies, while preserving macroeconomic stability. The mission also underscored the importance of enhancing the efficiency of public spending and of strengthening governance and accountability.

"The mission reaffirmed the IMF's readiness to continue to assist Sierra Leone and looks forward to the continuation of the close policy dialogue in the near future."