Statement by the IMF Staff Mission to the Republic of Sierra LeonePress Release No. 08/218
September 23, 2008
An International Monetary Fund (IMF) mission visited the Republic of Sierra Leone during September 9-23, 2008 to conduct discussions for the 2008 Article IV consultation and the third review under the Poverty Reduction and Growth Facility (PRGF) arrangement. The mission met with His Excellency President Ernest Bai Koroma, the Honorable Justice Abel Stronge, Speaker of Parliament, Minister of Finance and Economic Development David O. Carew, Governor of the Bank of Sierra Leone Dr. Samura M.W. Kamara, other senior officials of the government and the central bank, representatives of the business community, nongovernmental organizations, and development partners.
The following statement was issued today in Freetown by Norbert Toé, IMF Mission Chief for the Republic of Sierra Leone:
"Consolidation of peace in Sierra Leone is creating a favorable environment for economic reforms needed to sustain macroeconomic stability, accelerate growth, and reduce poverty.
"Real GDP grew by 6.4 percent in 2007 and growth is expected to decelerate slightly in 2008 as result of a deterioration in the external economic environment—still better than many other fragile sub-Saharan African countries. Inflation has reverted to double digits since 2007, largely due to global food and oil price developments. International reserves of the central bank, though declining, stand at a relatively comfortable level.
"Going forward, the main challenge is to generate fiscal space to raise growth-enhancing public spending as well as sustainable poverty-reducing expenditures. The mission noted the progress in modernizing the National Revenue Authority and the authorities' effort to enhance the efficiency of public spending by strengthening governance, accountability, and transparency. In this regard, the mission welcomed the recent enactment into law of the revised Anti-Corruption Act 2008 and encouraged the authorities to increase oversight over the operations of parastatals, including the National Power Authority.
"The mission concurred with the Bank of Sierra Leone on the need for greater exchange rate flexibility to enhance the effectiveness of monetary policy and contain the second-round effects of the global food and fuel crisis. The mission welcomed the establishment of the new Monetary Policy Committee and the ongoing progress in implementing the financial sector development plan.
"With regard to the PRGF-supported program, performance against the quantitative targets has been mixed; notably, the domestic revenue and fiscal deficit targets for the first half of 2008 were breached. However, progress on the structural front continued, including with steps to strengthen monetary policy implementation and advance tax policy reforms. Successful conclusion of the discussions in the coming weeks would allow IMF Executive Board consideration of the staff report for the third review and the Article IV consultation before end-2008.
"The mission would like to thank the authorities for their excellent cooperation."