## IMF Executive Board Concludes 2016 Article IV Consultation for Sierra Leone

_IMF News, July 8, 2016_

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## Bibliographic details
- Published: July 8, 2016

---

### Overview and recent shocks
- On July 1, 2016, the Executive Board of the International Monetary Fund (IMF) concluded the 2016 Article IV consultation with Sierra Leone.
- Sierra Leone experienced twin shocks since mid-2014: the Ebola epidemic and sharply declining iron ore prices, which led to sharply deteriorated economic outcomes over 2014–15.
- The World Health Organization declared Sierra Leone Ebola-free for the second time on March 17, 2016.
- Between mid-2014 and end-2015, the Leone depreciated 22 percent against the US dollar.
- Banking sector vulnerabilities increased and living standards deteriorated significantly since late 2014.

### Economic performance and program implementation
- Growth trajectory:
  - Growth declined from 20.7 percent in 2013, to 4.6 percent in 2014, and further to -21.1 percent in 2015.
- Program performance:
  - All quantitative performance criteria at end-December 2015 were met.
  - Some end-September 2015 indicative targets were missed, but with policy corrections all end-December 2015 indicative targets were met.
  - Considerable progress was made in key structural reform areas; a few structural benchmarks were met with delays, and others were missed.
- Executive Directors’ assessment:
  - Commended steadfast implementation of the Fund-supported program under difficult circumstances.
  - Noted significant challenges from Ebola and lower iron ore prices and vulnerability to external risks.

### Outlook and risks
- Medium-term growth projections (staff projections in text):
  - Growth projected to recover to 4.3 percent in 2016, increasing gradually to around 6.5 percent by 2020, assuming the twin shocks have largely wound down.
- Risks to the outlook are firmly to the downside, including:
  - Possible slowdown of reform efforts.
  - Further slowdown in China could worsen the outlook.
  - Iron ore production may again shut down if the company continues to produce at a loss.

### Policy recommendations and priorities
- Fiscal policy and public finances:
  - Make fiscal space for priority spending by increasing domestic revenues and rationalizing expenditure.
  - Broaden the tax base, remove tax exemptions, and improve tax administration.
  - Implement a prudent wage policy and eliminate fuel subsidies to help increase excise revenues.
  - Speedy implementation of the new Public Financial Management (PFM) Act to enhance transparency and efficiency of expenditures.
  - Maintain prudent borrowing policies given the narrow export base and fragile fiscal position; financing needs for large-scale investment projects should continue to be covered mostly with grants and concessional loans.
- Monetary and financial sector policies:
  - Support central bank’s intention to target price stability to aid recovery.
  - Continue enhancing monetary policy instruments and liquidity management.
  - Limit intervention in the foreign exchange market to preserve foreign exchange reserves.
  - Strengthen the banking system, resolve stresses (especially non-performing loans), and conduct timely diagnostics of troubled banks.
- Structural and growth-enhancing measures:
  - Decisively implement the post-Ebola Economic Recovery Strategy (ERS) in close cooperation with donors.
  - Economic diversification is key: accelerate efforts to improve the business environment, increase the role of the private sector, and address infrastructure bottlenecks.
  - ERS elements: getting to and staying at zero new Ebola cases; implementing immediate recovery priorities through social measures, education and sanitation; and transitioning back to the Agenda for Prosperity Plan in the medium term.

### Key economic indicators (selected, as presented)
- GDP at constant prices (annual percent change, series as shown):
  - 20.7; 4.6; -21.5; -21.1; 0.1; 4.3; 5.0; 5.8; 6.2; 6.6; 6.5
- Excluding Iron ore (annual percent change, series as shown):
  - 5.5; 0.8; 1.0; 1.4; 1.3; 3.3; 4.0; 6.0; 6.4
- Iron ore production (millions metric tons):
  - 16.2; 19.4; 0.0; 9.0; 12.0; 13.2; 14.5; 16.0
- Iron ore price (US$ per ton), WEO (spot price 62% Fe):
  - 135.4; 96.8; 55.8; 55.2; 44.8; 42.4; 35.5; 33.8; 35.9
- Weighted average company price:
  - 82.6; 39.8; 31.3; 31.0; …; 24.3; 25.9
- Consumer prices (end-of-period):
  - 8.5; 9.8; 10.1; 9.5; 8.0; 7.5
- Consumer prices (average):
  - 8.3; 9.9
- Terms of trade (deterioration -):
  - -5.0; -16.0; -18.0; -21.8; 0.4; -1.9; -2.4; -2.2; 0.6; 0.5
- Exports of goods (annual percent change, series as shown):
  - 47.4; -15.4; -55.1; -55.4; -0.3; 13.7; 32.6; 21.7; 11.8; 9.3; 10.7
- Imports of goods (annual percent change, series as shown):
  - -19.9; 4.7; -14.9; -20.6; -3.8; 1.9; 4.4; 6.9; 8.4; 8.7
- Average exchange rate (leone per US$):
  - 4337; 4532; 5076
- Nominal effective exchange rate change (end-period, depreciation -):
  - -7.1
- Real effective exchange rate (end-period, depreciation -):
  - 3.6; 0.7
- Gross international reserves, months of imports 1/:
  - 2.0; 3.8; 3.4; 3.5
- Excluding iron ore related imports, months of imports 2/:
  - 4.9; 4.8; 5.1; 5.2
- Domestic credit to the private sector:
  - 11.9; 5.4; 3.2; 2.1; 6.8; 11.6; 13.6; 12.6
- Base money (series as shown):
  - 17.7; 30.2; 7.1; 10.4; 11.0; 15.5; 16.4; 16.5; 15.4; 14.3
- M3 (series as shown):
  - 16.7; 16.6; 13.0; 11.3; 13.3; 12.9; 15.3; 15.0; 13.9
- 91-day treasury bill rate (in percent):
  - 2.4
- Gross capital formation (Percent of non-iron ore GDP):
  - 14.9; 16.3; 15.2; 16.8; 17.6; 17.8
  - Government: 6.3; 5.9; 7.0; 7.3
  - Private: 8.6; 10.0; 10.5; 10.8
- National savings:
  - -5.6; 2.5; 3.1; 0.3; 1.2; 2.6
- Current account balance (including official grants):
  - -20.5; -20.1; -13.5; -15.5; -12.1; -16.6; -15.7; -15.6; -15.0; -15.1
- Current account balance (excluding official grants):
  - -21.7; -35.6; -25.1; -23.5; -19.4; -22.2; -19.6; -18.6; -18.5; -17.8; -17.9
- External public debt (including IMF):
  - 24.9; 30.9; 28.5; 32.5; 33.0; 33.1; 32.1; 29.4; 27.8
- Central government budget:
  - Domestic primary balance 3/:
    - -0.7; -5.4; -5.5; -5.1; -4.7; -4.2; -2.7; -2.3
  - Overall balance:
    - -4.0; -4.8; -4.4; -5.3; -4.9; -3.3
  - Overall balance (excluding grants):
    - -8.7; -10.1; -9.6; -8.6; -8.1; -6.2; -5.7
- Revenue:
  - 10.9; 12.1; 12.8; 13.5; 14.1; 14.6
- Grants:
  - 3.0
- Total expenditure and net lending (series as shown):
  - 17.5; 19.5; 20.0; 20.1; 19.0; 18.3; 18.6; 19.2; 19.8; 20.3
- Memorandum item: GDP at market prices (billions of Leone; series as shown):
  - 21,317; 22,690; 22,260; 22,326; 24,582; 25,807; 29,508; 33,788; 38,656; 44,056; 49,737
  - (Alternate series shown): 18,159; 20,542; 22,190; 22,254; 25,101; 28,360; 32,183; 36,698; 41,824; 47,210
- Excluding iron ore in millions of US$:
  - 4,187; 4,533; 4,310; 4,384; 4,513; 4,165; 4,264; 4,524; 4,850; 5,225; 5,614
- Per capita GDP (US$):
  - 805; 803; 684; 696; 701; 665; 676; 710; 750; 798; 844

*Source: IMF Communications Department — Press Release No. 16/327 (July 8, 2016).*

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## References

- [Sierra Leone and the IMF](http://www.imf.org/external/country/SLE/index.htm)
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_Source: https://www.imf.org/en/news/articles/2016/07/11/15/35/pr16327-sierra-leone-imf-executive-board-concludes-2016-article-iv-consultation_