{
  "title": "IMF Executive Board Approves US$224.2 Million Under the ECF Arrangement for Sierra Leone",
  "publication": "IMF News, June 5, 2017",
  "sourceUrl": "https://www.imf.org/en/news/articles/2017/06/05/pr17208-imf-executive-board-approves-under-the-ecf-arrangement-for-sierra-leone",
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  "summary": "Executive Board approved a three-year arrangement under the Extended Credit Facility (ECF) for SDR 161.778 million (about US$224.2 million, or 78 percent of Sierra Leone’s quota).",
  "publishDate": "2017-06-05",
  "sections": [
    {
      "heading": "Program approval and financing",
      "content": "- Executive Board approved a three-year arrangement under the Extended Credit Facility (ECF) for SDR 161.778 million (about US$224.2 million, or 78 percent of Sierra Leone’s quota).\n- The Executive Board’s decision enables a first immediate disbursement of SDR39.166 million (about US$54.3 million).\n- Remaining amounts will be phased over the duration of the program, subject to semi-annual reviews.\n- The ECF carries a zero-interest rate, with a grace period of 5½ years, and a final maturity of 10 years."
    },
    {
      "heading": "Objectives and policy focus",
      "content": "- Program aims:\n  - Support policies targeted at reducing inflation and significantly increasing domestic revenues.\n  - Increase infrastructure spending and bolster the social safety net.\n  - Play a catalytic role to maintain external support.\n  - Provide a framework for structural progress on revenue mobilization, public financial management (PFM), and financial sector reforms, as well as increased reserves.\n- Short-run focus:\n  - Provide financing space to fund critical spending, scale up infrastructure and social spending to support higher and inclusive growth.\n  - Create fiscal space consistent with a moderate risk of debt distress rating.\n- Medium-term focus:\n  - Forceful revenue mobilization supported by a medium-term Revenue Mobilization Strategy (RMS).\n  - Finalize regulatory framework for the recently passed PFM Act to enhance spending efficiency, support medium-term budget planning, and consolidate cash resources under the Treasury Single Account (TSA).\n  - Structural reforms to enhance governance, improve the business environment, and promote economic diversification and private sector participation."
    },
    {
      "heading": "Macroeconomic projections and targets",
      "content": "- Growth and inflation:\n  - Growth is expected to reach 7 percent in the medium-term.\n  - Inflation is expected to fall to 12 percent by end-2017, further declining to 9.5 percent in 2018 and narrowing by about 0.5 percent each year thereafter.\n  - Monetary policy in the medium-term will aim at containing the inflation below 10 percent.\n- Fiscal and external metrics:\n  - Program proposes front-loaded financing to help improve the current account deficit in the medium-term to 18 percent by 2021 from the projected 21.8 percent in 2017.\n  - Fiscal stance envisions gradual tightening to 2.4 percent domestic primary balance by the end of the program, from a projected 4 percent.\n  - Financing needs for large-scale investment projects should be covered mostly with grants and concessional loans; non-debt generating options should be considered for the proposed new airport."
    },
    {
      "heading": "Policy measures and conditional actions",
      "content": "- Revenue mobilization:\n  - Eliminate numerous tax and duty exemptions to significantly increase domestic revenues.\n  - Authorities to design and implement a medium-term Revenue Mobilization Strategy (RMS).\n- Expenditure and social protection:\n  - Scale up infrastructure and social spending; expand the social safety net to provide relief to vulnerable segments of society.\n- Subsidy and resource measures:\n  - Authorities committed to implement a fuel subsidy reform no later than the second ECF review.\n  - Interim alternative actions include elimination of all import duty and GST exemptions and collection of royalties from mining companies based on published market prices.\n- Financial sector and monetary policy:\n  - Bank of Sierra Leone (BSL) to seek to build reserves, allow further exchange rate flexibility, and limit interventions to smooth exchange rate volatility.\n  - BSL should take firm action to strengthen the financial system based on diagnostics for the two state-owned banks.\n  - Establishment of a civil registry and move toward risk-based supervision to help increase credit to private sector.\n- Public financial management:\n  - Implement PFM Act regulatory framework; consolidate cash resources under the TSA; strengthen budget preparation and execution."
    },
    {
      "heading": "Assessment of risks and recommendations",
      "content": "- Debt and financing risks:\n  - Sierra Leone’s risk of debt distress remains moderate.\n  - Large-scale investment financing should rely mostly on grants and concessional loans.\n- Structural and governance risks:\n  - Structural reforms aimed at enhancing governance and improving the business environment are critical to attract private sector participation and diversification.\n- Implementation recommendations:\n  - Consider non-debt generating financing options for major projects.\n  - Continue efforts to broaden the tax base and remove exemptions to secure sustainable domestic revenue increases.\n  - Strengthen financial sector oversight and PFM institutions to support medium-term stability."
    },
    {
      "heading": "Recent economic developments (Annex highlights)",
      "content": "- Recovery and growth:\n  - Growth recovered to 6.1 percent in 2016 with resumption of iron ore production; non-iron ore growth at 4.3 percent in 2016.\n- Inflation and monetary developments:\n  - Reserve money grew nearly 24 percent in 2016; inflation exceeded 17 percent by the end of 2016.\n- Fiscal and external performance:\n  - Fiscal deficit was higher than anticipated at 8.3 percent of GDP in 2016.\n  - Current account widened by 1.6 percent of GDP in 2016.\n- Selected projected indicators (excerpted):\n  - GDP at constant prices: 2016 Prel. 4.9; 2016 actual 6.1; 2017 Proj. 5.4; medium-term projections include 6.0 (2019), 6.8 (2020), 7.1 (2021).\n  - Consumer prices (end-of-period): 2016 11.5; 2017 17.4; 2018 10.5; 2019 9.5; 2020 8.0.\n  - Current account balance (including official grants): 2016 -17.7; 2017 -21.8; 2021 -17.9.\n  - External public debt (including IMF): 2016 37.2; 2017 34.2; 2018 44.8; 2021 59.6.\n  - Central government domestic primary balance: 2016 -6.7; 2017 -2.6; end-of-program target 2.4 percent (medium-term objective).\n  - Revenue: 2016 12.2; 2017 13.1; 2018 14.2; 2019 15.1; 2021 15.8.\n  - Gross international reserves (months of imports): 2016 3.5; 2017 2.7; 2018 2.9.\n\nIMF Press Release No. 17/208, June 5, 2017 — IMF Communications Department\n\n---\n\n\n References\n\n- Tao Zhang\n- Sierra Leone and the IMF\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2017/06/05/pr17208-imf-executive-board-approves-under-the-ecf-arrangement-for-sierra-leone"
    }
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    "Published: June 5, 2017",
    "Executive Board approved a three-year arrangement under the Extended Credit Facility (ECF) for SDR 161.778 million (about US$224.2 million, or 78 percent of Sierra Leone’s quota).",
    "The Executive Board’s decision enables a first immediate disbursement of SDR39.166 million (about US$54.3 million).",
    "Remaining amounts will be phased over the duration of the program, subject to semi-annual reviews.",
    "The ECF carries a zero-interest rate, with a grace period of 5½ years, and a final maturity of 10 years.",
    "Program aims:",
    "Short-run focus:",
    "Medium-term focus:",
    "Growth and inflation:",
    "Fiscal and external metrics:",
    "Revenue mobilization:",
    "Expenditure and social protection:",
    "Subsidy and resource measures:",
    "Financial sector and monetary policy:",
    "Public financial management:",
    "Debt and financing risks:",
    "Structural and governance risks:",
    "Implementation recommendations:",
    "Recovery and growth:",
    "Inflation and monetary developments:",
    "Fiscal and external performance:",
    "Selected projected indicators (excerpted):",
    "[Tao Zhang](https://www.imf.org/en/About/senior-officials/Bios/tao-zhang)",
    "[Sierra Leone and the IMF](http://www.imf.org/external/country/SLE/index.htm)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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