{
  "title": "IMF Executive Board Completes the Sixth and Seventh Reviews Under the Extended Credit Facility Arrangement for Sierra Leone",
  "publication": "IMF News, June 5, 2023",
  "sourceUrl": "https://www.imf.org/en/news/articles/2023/06/05/pr23196-sierra-leone-imf-exec-board-completes-6th-7th-rev-under-ecf-arrangement",
  "canonical": "https://www.imf.org/en/news/articles/2023/06/05/pr23196-sierra-leone-imf-exec-board-completes-6th-7th-rev-under-ecf-arrangement",
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  "summary": "The Executive Board of the International Monetary Fund (IMF) completed the Sixth and Seventh Reviews of Sierra Leone’s Extended Credit Facility (ECF) arrangement, and approved the authorities’ request for a rephasing, and extension of the ECF Arrangement by five months to November 29, 2023.",
  "publishDate": "2023-06-05",
  "sections": [
    {
      "heading": "Executive Board action and financing",
      "content": "- The Executive Board completed the Sixth and Seventh Reviews of Sierra Leone’s Extended Credit Facility (ECF) arrangement.\n- The Board approved the authorities’ request for a rephasing and extension of the ECF Arrangement by five months to November 29, 2023.\n- The completion of the reviews enables the immediate disbursement of SDR 15.555 million (about US$20.7 million).\n- Total disbursements under the ECF Arrangement to date: SDR 108.89 million (about US$144.6 million).\n- Original ECF approval: SDR 124.44 million (about US$172.1 million at that time) for 43 months; program was further extended by 12 months on July 27, 2021."
    },
    {
      "heading": "Program implementation, waivers, and fiscal framework",
      "content": "- In completing the sixth and seventh reviews, the Executive Board approved waivers for nonobservance of:\n  - the end-June 2022 performance criterion on the ceiling on the net domestic bank credit to the central government;\n  - the end-December 2022 performance criteria on the ceiling on the net domestic bank credit to the central government;\n  - the ceiling on the net domestic assets of the BSL; and\n  - the floor on the gross international reserves of the BSL;\n  - waivers were granted based on corrective actions taken by the authorities.\n- Program objectives: reduce inflation, mobilize revenue to allow for necessary spending consistent with debt sustainability, safeguard financial stability, and maintain external resilience to shock.\n- The macro framework reflects a scenario in which the authorities take the necessary measures to ensure a credible medium term fiscal framework."
    },
    {
      "heading": "Economic situation, shocks, and risks",
      "content": "- Recent shocks and drivers of deterioration:\n  - Economic recovery interrupted amid high energy and food prices in the context of Russia’s war in Ukraine; reduced household purchasing power; lower than expected mining output.\n  - Inflation continued to rise, currency depreciated sharply, and debt related risks increased.\n  - Soaring cost of living contributed to rising levels of food insecurity.\n  - Foreign exchange reserves remain adequate but have declined; rebuilding reserve buffers is a priority.\n  - Sierra Leone remains at high risk of debt distress; risks have risen given recent large fiscal deficits and the currency depreciation.\n- Key near-term risks to program success:\n  - Larger-than-programmed domestic financing need and further deposit dollarization could intensify rollover risks.\n  - Larger-than-programmed BSL purchases of government paper could spur an inflation-depreciation spiral and reignite deposit dollarization.\n  - An abrupt global slowdown, tighter global financial conditions, a more protracted Russia’s war in Ukraine, geographical fragmentation, a worse-than-anticipated terms of trade shock, and higher inflation could deteriorate fiscal and external accounts."
    },
    {
      "heading": "Outlook and key macroeconomic projections (selected)",
      "content": "- Growth:\n  - 2022: 3.6 percent\n  - 2023: 2.7 percent (expected deceleration from 3.6 percent in 2022)\n  - 2024: 4.7 percent (expected recovery)\n- Inflation and prices:\n  - Consumer prices (end-of-period): 2021: 22.1; 2022: 37.1; 2023: 19.6; 2024: 36.4; 2025: 21.7; 2026: 16.8; 2027: 12.3; 2028: 9.8\n  - Consumer prices (average): 2021: 11.9; 2022: 27.2; 2023: 21.0; 2024: 41.9; 2025: 29.1; 2026: 19.3; 2027: 14.6; 2028: 11.1\n- External sector and reserves:\n  - Gross international reserves (excl. swaps) (months of next year's imports): 2021: 5.5; 2022: 4.0; 2023: 3.5; 2024: 3.1\n  - Gross international reserves (excl. swaps) (US$ millions): 2021: 932; 2022: 689; 2023: 610; 2024: 600; 2025: 521; 2026: 490; 2027: 485; 2028: 512\n  - Net international reserves (excl. swaps) (US$ millions): 2021: 355; 2022: 120; 2023: 82; 2024: 71; 2025: -4; 2026: 25; 2027: 86; 2028: 183\n- Public debt (selected):\n  - Public debt (percent of GDP): 2021: 79.8; 2022: 80.8; 2023: 98.9; 2024: 80.4; 2025: 92.2; 2026: 84.3; 2027: 79.6; 2028: 72.9\n  - External public debt (including IMF) (percent of GDP): 2021: 51.1; 2022: 57.9; 2023: 67.7; 2024: 58.2; 2025: 67.0; 2026: 60.3; 2027: 56.0; 2028: 50.1\n- Current account balance (including official grants) (percent of GDP): 2021: -8.7; 2022: -13.6; 2023: -9.2; 2024: -10.9; 2025: -7.3; 2026: -5.8; 2027: -3.1; 2028: -2.7"
    },
    {
      "heading": "Policy guidance and recommendations (from Mr. Bo Li, Deputy Managing Director and Acting Chair)",
      "content": "- Fiscal policy:\n  - A decisive and frontloaded tightening of macroeconomic policies is required to restore stability and contain increasing risks to debt sustainability.\n  - Recent efforts to bolster tax revenues represent important steps towards tightening the fiscal stance while creating space for priority social spending.\n  - Implementation of the new Medium-Term Revenue Strategy will further strengthen revenue mobilization.\n  - Efforts to raise revenues and curtail spending need to be backed by contingency measures given the large adjustment need.\n  - Strengthening budget preparation and execution will be crucial in achieving a durable fiscal adjustment.\n  - High risks to debt sustainability imply efforts are needed to bring down the debt service burden, while mobilizing additional grant support.\n- Monetary and exchange rate policy:\n  - To bring down inflation and arrest the currency depreciation, monetary conditions need to tighten, including through reduced central bank purchases of government securities.\n  - Exchange rate policy should focus on rebuilding foreign exchange reserves.\n  - Reinforcing transparency in the currency redenomination will boost confidence in the currency.\n- Financial sector and governance:\n  - Ensuring financial sector stability will require building on recent progress in improving bank supervision and regulation, while strengthening the financial sector safety net and crisis management frameworks.\n  - Timebound action vis-à-vis banks in breach of regulatory requirements is key.\n  - Further efforts to strengthen the AML/CFT framework are needed.\n  - Structural reforms are essential to reduce vulnerabilities to corruption and foster private sector development.\n  - Efforts to improve the business climate and strengthen the governance of key institutions need to continue, including to support the public accountability framework, anti-corruption efforts and the effective rule of law.\n- Climate and sustainability:\n  - Efforts to enhance climate resilience and foster sustainable green growth would be important.\n\nSource: IMF Press Release No. 23/196, IMF Communications Department, June 5, 2023.\n\n---\n\n\n References\n\n- Sierra Leone and the IMF\n- Special Drawing Rights (SDRs) -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- on November 30, 2018\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2023/06/05/pr23196-sierra-leone-imf-exec-board-completes-6th-7th-rev-under-ecf-arrangement"
    }
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    "Published: June 5, 2023",
    "The Executive Board completed the Sixth and Seventh Reviews of Sierra Leone’s Extended Credit Facility (ECF) arrangement.",
    "The Board approved the authorities’ request for a rephasing and extension of the ECF Arrangement by five months to November 29, 2023.",
    "The completion of the reviews enables the immediate disbursement of SDR 15.555 million (about US$20.7 million).",
    "Total disbursements under the ECF Arrangement to date: SDR 108.89 million (about US$144.6 million).",
    "Original ECF approval: SDR 124.44 million (about US$172.1 million at that time) for 43 months; program was further extended by 12 months on July 27, 2021.",
    "In completing the sixth and seventh reviews, the Executive Board approved waivers for nonobservance of:",
    "Program objectives: reduce inflation, mobilize revenue to allow for necessary spending consistent with debt sustainability, safeguard financial stability, and maintain external resilience to shock.",
    "The macro framework reflects a scenario in which the authorities take the necessary measures to ensure a credible medium term fiscal framework.",
    "Recent shocks and drivers of deterioration:",
    "Key near-term risks to program success:",
    "Growth:",
    "Inflation and prices:",
    "External sector and reserves:",
    "Public debt (selected):",
    "Current account balance (including official grants) (percent of GDP): 2021: -8.7; 2022: -13.6; 2023: -9.2; 2024: -10.9; 2025: -7.3; 2026: -5.8; 2027: -3.1; 2028: -2.7",
    "Fiscal policy:",
    "Monetary and exchange rate policy:",
    "Financial sector and governance:",
    "Climate and sustainability:",
    "[Sierra Leone and the IMF](http://www.imf.org/external/country/SLE/index.htm)",
    "[Special Drawing Rights (SDRs) -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/special-drawing-rights-sdr)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[on November 30, 2018](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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