Sierra Leone: Selected Issues
IMF Staff Country Reports, November 22, 2024
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- Sierra Leone: Selected Issues
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Bibliographic details
- Published: November 22, 2024
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400295898.002
Summary and Key Findings
- The paper highlights mobilizing mining revenue in Sierra Leone.
- Sierra Leone is described as a resource-rich economy, and its mining sector can generate revenue to finance its development goals and ensure debt sustainability.
- The mining fiscal regime for industrial miners was previously incorporated into mineral license agreements that are difficult to modify.
- Negotiated tax concessions, combined with acute capacity challenges in revenue administration, are hindering revenue performance and have led to an elevated reliance on fees and trade taxes which increase investor costs, hindering competitiveness.
- Sierra Leone legislated a new fiscal regime—the Extractive Industries Revenue Act (EIRA)—in 2018 for new investments.
- Applying the EIRA could significantly boost revenue performance, whilst also ensuring taxes are responsive to changes in economic conditions.
- Efforts to improve mineral royalty compliance are starting to pay dividends but the National Revenue Authority (NRA) will need to bolster its resources and widen its skill sets.
Analysis: Fiscal Regime and Revenue Performance
- Existing practice: Mining fiscal terms for industrial miners embedded in mineral license agreements that are difficult to modify.
- Consequence: Negotiated tax concessions reduce fiscal take; capacity constraints in revenue administration impede collection and enforcement.
- Fiscal dependence: Elevated reliance on fees and trade taxes contributes to higher investor costs and reduced competitiveness.
- Reform potential: The EIRA (2018) establishes a new fiscal regime for new investments that would make taxes more responsive to changes in economic conditions and could significantly boost revenue performance if applied.
Policy Recommendations
- Apply the Extractive Industries Revenue Act (EIRA) to new investments to enhance revenue responsiveness to economic conditions and increase fiscal revenue.
- Strengthen revenue administration capacity to improve collection and compliance, including:
- Bolstering the National Revenue Authority (NRA) resources.
- Widening NRA skill sets to manage mining fiscal oversight and mineral royalty compliance.
- Maintain focus on mineral royalty compliance efforts, building on initial positive results.
Subjects and Keywords
- Subjects: Climate change, Environment, Food security, Gender, Inflation, Poverty, Prices, Revenue administration, Trade facilitation, Women
- Keywords: Climate change, Food security, Global, Inflation, inflation surge, policy option, Policy recommendation, programs in Sierra Leone, spending program, Sub-Saharan Africa, trade cost, Trade facilitation, Women
IMF Staff Country Report: Sierra Leone: Selected Issues, November 22, 2024; Pages: 98; Volume: 2024; Issue: 322; DOI: https://doi.org/10.5089/9798400295898.002; Stock No: 1SLEEA2024002; ISBN: 9798400295898; ISSN: 1934-7685
Content in this bundle
- Sierra Leone: Selected Issues; IMF Country Report No. 24/322; October 16, 2024