IMF Executive Board Completes First Review Under the Extended Credit Facility and Approves US$21.62 Million Disbursement for Sierra Leone
IMF News, June 28, 2019
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- Published: June 28, 2019
Review completion and disbursement
- Date of announcement: June 28, 2019
- The Executive Board completed the first review of Sierra Leone’s performance under the program supported by an Extended Credit Facility (ECF).
- Completion of the review enables the immediate disbursement of SDR 15.555 million (about US$21.62 million).
- Total disbursements under the arrangement after this disbursement: SDR 31.11 million (about US$43.25 million).
- In completing the review, the Executive Board approved the authorities’ request for a waiver of non-observance of a performance criterion.
Program parameters and objectives
- Sierra Leone’s ECF arrangement: 43‑month duration for SDR124.44 million (about US$172.1 million or 60 percent of the country’s quota at the time of approval of the arrangement).
- Original approval date of the arrangement: November 30, 2018 (see Press Release No. 18/446).
- Program aims:
- Create fiscal space for priority spending by strengthening revenue mobilization.
- Contain current spending.
- Improve the efficiency of public investment.
- Lay the foundation for inclusive growth and poverty reduction.
- Support the government’s National Development Plan priorities.
IMF assessment of implementation and performance
- Overall assessment: Implementation of the program, supported by the IMF, has been satisfactory in the face of a challenging economic environment.
- The Executive Board (statement by Mr. Tao Zhang, Deputy Managing Director and Acting Chair) noted:
- Performance under the ECF‑supported program has been satisfactory despite a challenging economic environment.
- Progress on structural measures has been slower than anticipated, but the government remains firmly committed to the reform agenda.
- Authorities have made commendable progress in mobilizing revenue and taking a cautious approach to expenditure since the start of the program.
Key policy recommendations and priorities highlighted by the IMF
- Fiscal policy and public finances:
- Secure fiscal sustainability and create space for priority spending to tackle development needs.
- Durably higher revenue will be essential to boost social spending and invest in infrastructure.
- The authorities’ more cautious medium-term fiscal approach is appropriate given fiscal risks.
- Managing fiscal risks expeditiously will provide more certainty about the space available for priority spending.
- Quick actions to complete the arrears stocktaking and the diagnostic of state‑owned banks are particularly important.
- Improving public financial management will help control expenditure and avoid the emergence of new arrears.
- Reorient spending to priorities with clear economic or social returns.
- Develop a Medium-Term Debt Management Strategy to better manage fiscal risks.
- Structural reforms:
- Structural reforms are a central component of the fiscal strategy, including continued tax policy and administration reforms to achieve revenue mobilization goals.
- Monetary and external sector:
- Monetary policy should remain appropriately focused on reducing inflation to single digits over the medium-term.
- Progress toward developing indirect instruments will, over time, improve policy effectiveness.
- Enhance exchange rate flexibility and reserve buffers to boost resilience to external shocks.
- Central bank governance:
- Continued reforms to strengthen the Bank of Sierra Leone’s governance are critical for accountability and operational effectiveness.
- Finalizing the new central bank law and acting on the recently completed forensic audit are important milestones; quickly acting on both will help advance the BSL’s reform efforts.
Selected quotations
- “Performance under the ECF‑supported program has been satisfactory in the face of a challenging economic environment.”
- “Securing fiscal sustainability and creating space for priority spending will be crucial for tackling Sierra Leone’s development needs.”
- “The authorities’ more cautious medium-term fiscal approach is appropriate given fiscal risks.”
- “Structural reforms are a central component of the authorities’ fiscal strategy.”
- “Monetary policy remains appropriately focused on reducing inflation to single digits over the medium-term.”
- “Continued reforms to strengthen the Bank of Sierra Leone’s governance will be critical for the institution’s accountability and operational effectiveness.”
IMF Press Release No. 19/254 — IMF Communications Department (Press Officer: Meera Louis).