IMF employees and the Sierra Leonean authorities have reached a staff-level settlement on financial insurance policies and reforms that might be supported by a brand new 38-month Prolonged Credit score Facility (ECF) association, with requested entry of SDR 187 million (about US$253 million); The ECF would assist restoring stability by way of continued macroeconomic adjustment to handle debt vulnerabilities, scale back inflation, and rebuild worldwide reserves; bolster inclusive development and poverty discount by way of structural reforms and focused social spending; and revitalize the reform agenda to strengthen governance and establishments – all advancing the poverty discount and development aspirations outlined within the nation’s Medium Time period Nationwide Growth Plan (MTNDP) 2024-30; The Article IV session targeted on fiscal and debt sustainability, financial coverage operations, drivers of inflation, exterior sector stability, commerce facilitation, macroeconomic implications of gender inequality, climate-related dangers, and the adequacy of social insurance policies.
An Worldwide Financial Fund (IMF) mission, led by Mr. Christian Saborowski, visited Sierra Leone from September 4 to 13, 2024, to conduct the 2024 Article IV session and focus on with the Sierra Leonean authorities financial and monetary insurance policies that might be supported by a brand new 38-month ECF association, with requested entry of SDR 187 million (about US$253 million). The staff-level settlement is topic to approval by the IMF’s Administration and Government Board.
Right now, Mr. Saborowski made the next assertion:
“A brand new financial crew took over final 12 months and has since taken daring measures to deal with Sierra Leone’s macroeconomic imbalances together with a extreme cost-of-living disaster. The authorities decreased the home major deficit by 2.8 % of GDP in 2023 and are on monitor towards decreasing it by one other 2.1 % this 12 months. In addition they tightened financial coverage sharply by decreasing year-on-year base cash development from a peak of 63.4 % in June 2023 to eight.8 % in June 2024, and elevating the coverage fee by 7.25 proportion factors since end-2022.
“The reform momentum has borne fruit. Inflation declined to 25 % in August 2024, down from a peak of 55 % in October 2023, and the sharp alternate fee depreciation skilled in 2022 and early 2023 was arrested. Nonetheless, T-bill charges stay stubbornly excessive at over 40 %, worldwide reserves have fallen to lower than two months of imports, and the electrical energy distribution firm (EDSA) continues to make losses, leading to vital fiscal pressures.
“Financial development reached greater than 5 % in 2022 and 2023, buoyed by sturdy mining exercise. Sierra Leone’s public debt continues to be assessed as sustainable however at excessive threat of misery, whereas its exterior place in 2023 is assessed as broadly according to the extent implied by fundamentals and fascinating insurance policies.
“The brand new ECF association would goal to (i) restore stability by bolstering debt sustainability, addressing fiscal dominance, bringing down inflation, and rebuilding reserves; (ii) assist inclusive development by way of reforms—together with to slender gender gaps—and focused social spending; and (iii) confront corruption, in addition to strengthen governance, establishments, and the rule of legislation. These targets would advance the poverty discount and development aspirations outlined in Sierra Leone’s Medium Time period Nationwide Growth Plan (MTNDP) 2024-30.
“Restoring stability within the Sierra Leonean economic system would require a continued bold macroeconomic adjustment over this system interval. Enhancing income mobilization, boosting spending effectivity, and managing fiscal dangers will likely be crucial to make room for precedence spending on social insurance policies and funding. Strengthening the financial coverage framework and sustaining appropriately tight financial circumstances will likely be vital to safeguard inner and exterior stability.
“Making sturdy progress in preventing poverty and elevating requirements of dwelling would require a dedication to reform, sustained political and social consensus, and well-targeted social insurance policies. Selling gender equality and rising girls’s financial participation are essential to boosting Sierra Leone’s development potential. So too are reforms to reinforce the enterprise atmosphere by bettering EDSA’s operational and technical effectivity, strengthening customs administration and transparency, and addressing local weather change dangers. Guided by the MTNDP 2024-30, steadfast progress in addressing these challenges will likely be crucial.
“The employees crew is grateful to the authorities for the open and productive discussions. The crew met with President Bio, Finance Minister Bangura, Deputy Finance Ministers Alie and Kalokoh, Monetary Secretary Dingie, Financial institution of Sierra Leone (BSL) Governor Stevens, Deputy Governors Tucker and Sesay, Commissioner Common Bangura of the Nationwide Income Authority, and senior authorities and BSL officers. The mission additionally had fruitful discussions with representatives from the personal sector and growth companions.”
Extra details about ECF: Extended Credit Facility
Distributed by APO Group on behalf of Worldwide Financial Fund (IMF).