{
  "title": "IMF Executive Board Completes Third and Fourth Reviews of Sierra Leone’s Extended Credit Facility",
  "publication": "IMF News, July 27, 2021",
  "sourceUrl": "https://www.imf.org/en/news/articles/2021/07/27/pr21231-sierra-leone-imf-executive-board-completes-third-fourth-reviews-ecf",
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  "summary": "The Executive Board completed the third and fourth reviews of Sierra Leone’s program under the Extended Credit Facility (ECF).",
  "publishDate": "2021-07-27",
  "sections": [
    {
      "heading": "Reviews, approvals, and financing actions",
      "content": "- The Executive Board completed the third and fourth reviews of Sierra Leone’s program under the Extended Credit Facility (ECF).\n- IMF approved disbursement of US$ 44.2 million (SDR 31.11 million) to Sierra Leone to support the government’s policy and reform efforts.\n- Total disbursements under the arrangement are SDR 77.775 million (about US$ 111 million).\n- The Executive Board approved the authorities’ request for a waiver of non-observance of two performance criteria.\n- The Board approved the rephasing and extension of the ECF arrangement by 12 months.\n- The Board had approved Sierra Leone’s 43-month ECF arrangement for SDR124.44 million (about US$172.1 million) on November 30, 2018."
    },
    {
      "heading": "Economic developments and outlook",
      "content": "- There are early signs of economic recovery, but Sierra Leone continues to face COVID risks and a tight financing situation amidst substantial development and priority expenditure needs.\n- Economic activity dipped sharply in the second and third quarter of 2020 with inter-district lockdowns and disruptions to international trade and travel.\n- Depressed activity saw inflation trending downwards, though food price inflation remains elevated.\n- Higher frequency indicators suggest a moderate pick-up of activity began in the fourth quarter of 2020.\n- Mining is expected to drive the recovery in 2021 (growth of 3.2 percent) and 2022 on the back of normalization of production at existing mines and favorable prices.\n- Over the medium term, non-mining growth is projected to average around 4.5 percent.\n- The external position would remain vulnerable as international reserve coverage is expected to decline."
    },
    {
      "heading": "Risks to the outlook",
      "content": "- Significant risks include:\n  - unexpected global shifts in the COVID-19 pandemic or an intensification of the third wave;\n  - difficulties in vaccine rollout delaying a return to pre-crisis growth;\n  - uncertainties in the mining sector;\n  - lower-than-expected support from development partners;\n  - slower-than-expected reform implementation."
    },
    {
      "heading": "Policy findings and authorities’ response (from Mr. Tao Zhang’s statement)",
      "content": "- The COVID-19 pandemic has strained Sierra Leone’s effort to address its large development needs and exacerbated a difficult financing situation.\n- Authorities’ strong economic and health responses, and exceptional external support (including from the Fund), helped mitigate the immediate impact of the crisis.\n- The 2021 budget continues to prioritize health and other priority spending under the National Development Plan while allowing for a significant improvement in the primary balance.\n- Authorities remain committed to securing fiscal and debt sustainability through:\n  - enhanced domestic revenue mobilization;\n  - improved expenditure efficiency and controls;\n  - reliance on external grants and concessional financing.\n- Governance measures being strengthened include progress with the fraud prevention policy and the internal audit function at the Bank of Sierra Leone, and transparent reporting of COVID-19 related spending.\n- The Extended Credit Facility arrangement is described as a critical policy anchor to help meet external and fiscal financing needs and support the reform agenda.\n- Monetary and exchange rate policy guidance:\n  - Remain flexible to support the recovery while rebuilding external buffers and monitoring closely financial stability risks.\n- With a high risk of debt distress, continued strong policy efforts are needed to help the recovery while safeguarding macroeconomic stability.\n\nPress Release No. 21/231 — July 27, 2021, 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- Extended Credit Facility\n- Press Release No. 18/446\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2021/07/27/pr21231-sierra-leone-imf-executive-board-completes-third-fourth-reviews-ecf"
    }
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    "Published: July 27, 2021",
    "The Executive Board completed the third and fourth reviews of Sierra Leone’s program under the Extended Credit Facility (ECF).",
    "IMF approved disbursement of US$ 44.2 million (SDR 31.11 million) to Sierra Leone to support the government’s policy and reform efforts.",
    "Total disbursements under the arrangement are SDR 77.775 million (about US$ 111 million).",
    "The Executive Board approved the authorities’ request for a waiver of non-observance of two performance criteria.",
    "The Board approved the rephasing and extension of the ECF arrangement by 12 months.",
    "The Board had approved Sierra Leone’s 43-month ECF arrangement for SDR124.44 million (about US$172.1 million) on November 30, 2018.",
    "There are early signs of economic recovery, but Sierra Leone continues to face COVID risks and a tight financing situation amidst substantial development and priority expenditure needs.",
    "Economic activity dipped sharply in the second and third quarter of 2020 with inter-district lockdowns and disruptions to international trade and travel.",
    "Depressed activity saw inflation trending downwards, though food price inflation remains elevated.",
    "Higher frequency indicators suggest a moderate pick-up of activity began in the fourth quarter of 2020.",
    "Mining is expected to drive the recovery in 2021 (growth of 3.2 percent) and 2022 on the back of normalization of production at existing mines and favorable prices.",
    "Over the medium term, non-mining growth is projected to average around 4.5 percent.",
    "The external position would remain vulnerable as international reserve coverage is expected to decline.",
    "Significant risks include:",
    "The COVID-19 pandemic has strained Sierra Leone’s effort to address its large development needs and exacerbated a difficult financing situation.",
    "Authorities’ strong economic and health responses, and exceptional external support (including from the Fund), helped mitigate the immediate impact of the crisis.",
    "The 2021 budget continues to prioritize health and other priority spending under the National Development Plan while allowing for a significant improvement in the primary balance.",
    "Authorities remain committed to securing fiscal and debt sustainability through:",
    "Governance measures being strengthened include progress with the fraud prevention policy and the internal audit function at the Bank of Sierra Leone, and transparent reporting of COVID-19 related spending.",
    "The Extended Credit Facility arrangement is described as a critical policy anchor to help meet external and fiscal financing needs and support the reform agenda.",
    "Monetary and exchange rate policy guidance:",
    "With a high risk of debt distress, continued strong policy efforts are needed to help the recovery while safeguarding macroeconomic stability.",
    "[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/)",
    "[Extended Credit Facility](https://www.imf.org/en/About/Factsheets/Sheets/2016/08/02/21/04/Extended-Credit-Facility)",
    "[Press Release No. 18/446](https://www.imf.org/en/News/Articles/2018/11/30/pr18446-imf-executive-board-approves-arrangement-under-the-extended-credit-facility-for-sierra-leone)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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