Press Release No. 09/318

Press Release: Statement at the Conclusion of an IMF Staff Mission to Sierra Leone

September 22, 2009

An International Monetary Fund (IMF) mission led by Mr. Jan Mikkelsen visited the Republic of Sierra Leone during September 9-22, 2009 to conduct the fifth review under the Poverty Reduction and Growth Facility (PRGF) arrangement. The mission met with the Hon. Minister of Finance and National Planning, Dr. Samura Kamara; Governor of the Bank of Sierra Leone, Sheku Sesay; other senior government officials; representatives of the business community; civil society organizations; and development partners.

At the end of the mission, Mr. Jan Mikkelsen, Mission Chief for Sierra-Leone, issued the following statement in Freetown today:

“The global recession is adversely affecting Sierra Leone. Economic growth is slowing down and foreign exchange inflows have declined considerably due to a decline in export proceeds and remittances from abroad. This shortage of foreign exchange has led to a marked depreciation of the Leone against the US dollar in 2009. Despite the challenging economic environment, the authorities have pursued appropriate fiscal and monetary policies, and the Bank of Sierra Leone has aptly conducted limited interventions in the foreign exchange market to smoothen out short-term fluctuations.

“The worst of the global recession appears to be over, although the pace of the recovery is not yet well established. With a strengthening of the external environment, including for diamonds, the outlook for the Sierra Leonean economy is beginning to improve. A gradual recovery of mining exports and a better outlook for agriculture exports, along with the effects of the currency depreciation, are expected to strengthen the balance of payments in the remainder of 2009 and in 2010. Real GDP is projected to grow by 4 percent in 2009 and 4.7 percent in 2010. Inflation is projected to rise to 9-10 percent by the end of this year, mostly explained by the pass-through of the currency depreciation, and gradually decline in 2010.

“The fiscal policy performance for the first half of 2009 was in line with the program. Domestic revenue collections exceeded the target, while expenditures were within budget limits. The mission welcomed the decision to transfer all off-budget revenue to the Consolidated Revenue Fund. Looking ahead, the mission agreed with the authorities on a framework for the 2010 budget which maintains the focus on increased spending on priority capital projects and social sectors, while remaining consistent with macroeconomic stability. The introduction of the Goods and Services Tax (GST) on January 1, 2010 is a welcome and important step to broaden the tax base.

“The mission had a discussion on the IMF’s recent allocation to Sierra Leone of Special Drawing Rights (SDR) in an amount equivalent to about US$128 million, which, in the first instance, expands the country’s international reserves and provides a stronger foundation to withstand possible future shocks to the balance of payments.

“The mission determined that all performance criteria were met for end-June 2009. It is expected that the IMF’s Executive Board will consider the fifth review of Sierra Leone’s economic program under the PRGF arrangement in early December 2009.

“The mission would like to thank the authorities for their continued excellent cooperation.”