IMF Staff Completes 2019 Article IV and Second ECF Review Mission to Sierra Leone

IMF News, November 14, 2019

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An IMF mission, led by Karen Ongley, visited Freetown during October 30-November 13, 2019 to conduct the 2019 Article IV consultation and the second review of the IMF arrangement under the Extended Credit Facility (ECF), approved by the Executive Board on November 30, 2018.
End-of-mission statement clarifies that views are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board.

Economic growth set to pick up in 2019 to 5.1 percent, up from 3.5 percent in 2018, buoyed by improved activity in agriculture, mining, and construction.
Current account deficit expected to narrow to 14.1 percent of GDP from 18.7 percent.
Exchange rate pressures remain, in particular during the lean season in the third quarter of the year.
Overcoming legacy of prolonged economic instability and numerous shocks, and improving wellbeing of Sierra Leoneans, remains challenging.
The 2020 budget “strikes a balance between meeting the country’s large development needs and navigating the tight financing situation.”

The Government met all of the end-June 2019 quantitative performance criteria and indicative targets—net credit to the government and net domestic assets of BSL by large margins.
The authorities also met the indicative targets on:
- domestic government revenue,
- poverty-related spending,
- the domestic primary balance.
The Government’s National Development Plan (NDP) aims to develop human and physical capital, strengthen governance and accountability, and build an economy that is macro-economically sound, inclusive and resilient to shocks.
Domestic revenue mobilization efforts advancing, aided by tax administration measures such as operationalizing the Integrated Tax Administration System (ITAS).
Planning arrears clearance—most of which originated in 2016/17—should be:
- transparent,
- equitable,
- fiscally sustainable,
- designed to limit risks to financial stability.

Ongoing efforts to bolster the independence and effectiveness of monetary policy to support the Bank of Sierra Leone’s (BSL) objective to bring inflation down to single-digits in the medium term.
Recommendation to limit recourse to domestic bank financing of the budget to reinforce disinflation efforts.
Maintain a flexible exchange rate system and continue to build foreign exchange reserves to boost resilience to economic shocks.
The impact of recent foreign exchange directives should be closely monitored.

Government and IMF team reached preliminary agreement on macroeconomic and financial policies that could pave the way for the IMF's Executive Board to consider the second ECF review, scheduled for January 2020.
Completion of the review would make available SDR 15.56 million (US$20.0 million), bringing total disbursements under the program to about SDR 46.56 million (US$62.2 million).

Progress on structural reforms and transparency:
- Draft amendments to the National Revenue Authority Act submitted for IMF staff review.
- Finalized the stocktaking of domestic arrears in September.
- Published the forensic audit report in June.
- Steps toward developing a remedial action plan to address the findings of the forensic audit are advancing well.
IMF team welcomes Government efforts to promote more efficient spending and improve public finance management.

IMF team met with a range of government representatives, including:
- President Bio,
- Minister of Finance Saffa,
- Minister of Planning and Economic Development Kai-kai,
- Bank of Sierra Leone Governor Kallon,
- Auditor General Taylor‑Pearce,
- Minister of Youth Affairs Bangura.
The team also engaged with representatives from private and financial sectors, civil society organizations, and development partners.
The mission expressed appreciation for open dialogue on the 2020 budget and constructive discussions with partners.

IMF Staff Completes 2019 Article IV and Second ECF Review Mission to Sierra Leone — Press Release No. 19/417