BY Mabinty M. Kamara
The International Monetary Fund (IMF) has approved US $21.13 million for disbursement to Sierra Leone as part of the Extended Credit Facility program. The fund, which was approved on the 3rd of April, comes at a time when the country is looking for resources to respond to the outbreak of the Coronavirus.
The decision by the Executive Board of the Fund comes after the completion of the second review of Sierra Leone’s performance under the US$172.1 million ECF that country signed up for in November 2018.
In a statement by the Review Mission at the end of its visit to Sierra Leone, the IMF praised the country’s progress in managing the funds they have received during the course of the ECF program, noting: “The Government of Sierra Leone’s continued reform efforts will help build the foundation necessary to support future development and tackle the exceptionally difficult external environment.”
“Completion of this review enables the IMF to immediately disburse about US$21.13 million, bringing total disbursements under the arrangement to about US$63.39 million. The Executive Board approved the authorities’ request for a waiver of non-observance of a performance criterion,” the statement adds.
Mr. Geoffrey Okamoto, Acting Chair and First Deputy Managing Director of the IMF, said in the statement that Sierra Leone continued to make good progress under the program, adding that the authorities had demonstrated firm commitment to their reform agenda.
“While the program’s medium‑term goals remain appropriate to enable future growth and development, the dramatic onset of the global COVID‑19 pandemic poses significant near‑term risks. Combating the economic fallout of the crisis and protecting the health of Sierra Leoneans should be the immediate priority. The authorities’ cautious fiscal policy has been important. They have made commendable progress in mobilizing domestic revenue and prudent execution of budgeted expenditures. This has stabilized domestic borrowing needs and allowed inflation pressures to ease,” Okamoto said.
Okamoto also said that Sierra Leone’s 2020 budget appropriately balances the tight fiscal position and meeting development needs and in line with the Government National Development Plan, adding that the budget prioritizes investing in education and provisions for repaying legacy arrears as part of a broader arrears clearance strategy.
The government aims to invest a huge chunk on this latest tranche of payment in to programs that will cushion the effect of the Coronavirus on the economy of the country.
The Ministry of Finance issued a statement in relation to the development. Finance Minister, Jacob Jusu Saffa, said the disbursement would give government the space to spend on key priorities of the government such as in its response to the Coronavirus disease that is ravaging the world.
The Ministry of Finance has already predicted that the country’s growth will drop to around 2.8% in the current fiscal year.
However, this new tranche of payment also comes with a firm warning from the IMF for Sierra Leone to stay on its trajectory before the outbreak of the virus.
“Continued revenue mobilization will require both tax administration and policy reforms. Deeper public financial management reforms will further improve budget planning and execution, including preventing new arrears. A strategic plan for the two state‑owned banks will be instrumental in addressing underlying fiscal risks. Monetary policy remains appropriately focused on reducing inflation to single digits over the medium term,” the Fund said.
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