Statement at the Conclusion of an IMF Mission to Sierra LeonePress Release No.10/109
March 24, 2010
An International Monetary Fund (IMF) mission led by Mr. Jan Mikkelsen visited Sierra Leone during March 10-24, 2010 to conduct discussions on the sixth review under the Extended Credit Facility (ECF) arrangement, and a new ECF-supported program. The mission met with Minister of Finance and Economic Development, Dr. Samura Kamara, Minister of Mines and Mineral Resources, Mr. Alpha Kanu, Minister of Trade and Industry, Mr. David Carew, the Governor of the Bank of Sierra Leone, Mr. Sheku Sesay, other senior officials of the government and the central bank, representatives of the business community, civil society organizations, and development partners.
At the end of the mission, Mr Mikkelsen issued the following statement in Freetown:
“Sierra Leone’s macroeconomic performance in 2009 weakened due to the global economic slowdown. Real GDP is estimated to have slowed to 4 percent in 2009 from 5.5 percent in 2008. While lower fuel and domestic food prices eased inflationary pressures in the first half of 2009, the depreciation of the leone in the latter part of the year contributed to a rebound in inflation to 10.8 percent in December. In February 2010, inflation jumped to 17 percent, reflecting largely the challenges in implementing the new Goods and Services Tax in January, and higher domestic fuel prices. International reserves remained above 6 months of import cover.
“The fiscal policy response to the effects of the global economic downturn in 2009 was appropriate. However, the main challenge facing the authorities continues to be the creation of fiscal space to finance investment in basic infrastructure and implement structural reforms to promote higher sustainable private sector-led economic growth. To this end, the authorities are committed to strengthening tax administration in order to raise tax collections. The mission welcomed the adoption of the new Minerals and Mines Act and underscored the importance of its full application. On budgetary expenditures, the mission supported the implementation of the public financial management reform program to raise the efficiency in public spending, particularly for development projects.
“The mission concurred with the Bank of Sierra Leone on the need to enhance the effectiveness of monetary policy and to maintain a tight monetary stance to contain the second round effects of the recent increase in the price level. The mission welcomed the efforts to promote the interbank market and implement the financial sector development plan.
“The mission welcomed the authorities’ plan to adopt an automatic price adjustment mechanism for fuel products to ensure a full pass through of international prices.
“The mission determined that all but one performance criteria were met for end-December 2009. Discussions with the authorities will continue in the coming weeks to allow the IMF Executive Board’s consideration of the staff report for the sixth review and a request for a new three-year program in June 2010.
“The mission would like to thank the authorities for their continued excellent cooperation.”