## IMF Executive Board Completes the Sixth and Seventh Reviews Under the Extended Credit Facility Arrangement for Sierra Leone _IMF News, June 5, 2023_ ## Source details **Canonical URL:** [IMF Executive Board Completes the Sixth and Seventh Reviews Under the Extended Credit Facility Arrangement for Sierra Leone](https://www.imf.org/en/news/articles/2023/06/05/pr23196-sierra-leone-imf-exec-board-completes-6th-7th-rev-under-ecf-arrangement) ## Other formats - [Markdown version](/en/news/articles/2023/06/05/pr23196-sierra-leone-imf-exec-board-completes-6th-7th-rev-under-ecf-arrangement/index.md) - [Structured JSON version](/en/news/articles/2023/06/05/pr23196-sierra-leone-imf-exec-board-completes-6th-7th-rev-under-ecf-arrangement/index.json) - [Bundle manifest](/en/news/articles/2023/06/05/pr23196-sierra-leone-imf-exec-board-completes-6th-7th-rev-under-ecf-arrangement/bundle-manifest.json) ## Bibliographic details - Published: June 5, 2023 --- ### Executive Board action and financing - 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. ### Program implementation, waivers, and fiscal framework - In completing the sixth and seventh reviews, the Executive Board approved waivers for nonobservance of: - the end-June 2022 performance criterion on the ceiling on the net domestic bank credit to the central government; - the end-December 2022 performance criteria on the ceiling on the net domestic bank credit to the central government; - the ceiling on the net domestic assets of the BSL; and - the floor on the gross international reserves of the BSL; - waivers were granted based on corrective actions taken by the authorities. - 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. ### Economic situation, shocks, and risks - Recent shocks and drivers of deterioration: - 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. - Inflation continued to rise, currency depreciated sharply, and debt related risks increased. - Soaring cost of living contributed to rising levels of food insecurity. - Foreign exchange reserves remain adequate but have declined; rebuilding reserve buffers is a priority. - Sierra Leone remains at high risk of debt distress; risks have risen given recent large fiscal deficits and the currency depreciation. - Key near-term risks to program success: - Larger-than-programmed domestic financing need and further deposit dollarization could intensify rollover risks. - Larger-than-programmed BSL purchases of government paper could spur an inflation-depreciation spiral and reignite deposit dollarization. - 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. ### Outlook and key macroeconomic projections (selected) - Growth: - 2022: 3.6 percent - 2023: 2.7 percent (expected deceleration from 3.6 percent in 2022) - 2024: 4.7 percent (expected recovery) - Inflation and prices: - 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 - 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 - External sector and reserves: - Gross international reserves (excl. swaps) (months of next year's imports): 2021: 5.5; 2022: 4.0; 2023: 3.5; 2024: 3.1 - Gross international reserves (excl. swaps) (US$ millions): 2021: 932; 2022: 689; 2023: 610; 2024: 600; 2025: 521; 2026: 490; 2027: 485; 2028: 512 - Net international reserves (excl. swaps) (US$ millions): 2021: 355; 2022: 120; 2023: 82; 2024: 71; 2025: -4; 2026: 25; 2027: 86; 2028: 183 - Public debt (selected): - 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 - 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 - 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 ### Policy guidance and recommendations (from Mr. Bo Li, Deputy Managing Director and Acting Chair) - Fiscal policy: - A decisive and frontloaded tightening of macroeconomic policies is required to restore stability and contain increasing risks to debt sustainability. - Recent efforts to bolster tax revenues represent important steps towards tightening the fiscal stance while creating space for priority social spending. - Implementation of the new Medium-Term Revenue Strategy will further strengthen revenue mobilization. - Efforts to raise revenues and curtail spending need to be backed by contingency measures given the large adjustment need. - Strengthening budget preparation and execution will be crucial in achieving a durable fiscal adjustment. - High risks to debt sustainability imply efforts are needed to bring down the debt service burden, while mobilizing additional grant support. - Monetary and exchange rate policy: - To bring down inflation and arrest the currency depreciation, monetary conditions need to tighten, including through reduced central bank purchases of government securities. - Exchange rate policy should focus on rebuilding foreign exchange reserves. - Reinforcing transparency in the currency redenomination will boost confidence in the currency. - Financial sector and governance: - 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. - Timebound action vis-à-vis banks in breach of regulatory requirements is key. - Further efforts to strengthen the AML/CFT framework are needed. - Structural reforms are essential to reduce vulnerabilities to corruption and foster private sector development. - 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. - Climate and sustainability: - Efforts to enhance climate resilience and foster sustainable green growth would be important. *Source: IMF Press Release No. 23/196, IMF Communications Department, June 5, 2023.* --- ## References - [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) _Source: https://www.imf.org/en/news/articles/2023/06/05/pr23196-sierra-leone-imf-exec-board-completes-6th-7th-rev-under-ecf-arrangement_