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Govt initiates out of the box solutions to economic stability

May 20, 2020

Finance Minister, Jacob Jusu Saffa

The Government of Sierra Leone, through the Ministry of Finance, has initiated and launched the Quick Action Economic Response Programme (QAERP) to maintain macro-economic and financial stability and mitigate the impact of the COVID-19 shock on businesses and households.

Government developed the Quick Action Economic Response Programme (QAERP), bearing in mind that the cumulative impact of the COVID-19 will adversely affect the effective implementation of the country’s Medium-Term National Development Plan and the 2020 Budget.

Overall, the programme is estimated to cost US$166.5 million and through the Government’s 2020 budget, a total of $16.1 million, representing 10% of resources is committed.

‘‘However, this commitment is at risk as funding the budget is largely dependent on the domestic revenue situation. The Bank of Sierra Leone will also provide US$50 million estimated at 30.1% of the total programme cost leaving a financing gap of US$96.4 million,’’  states the ministry of finance.

The initiative will focus on five thematic areas including building and maintaining an adequate stock level of essential commodities at stable prices, providing support to hardest-hit businesses to enable them to continue operations, avert lay-offs of employees and reduce non-performing loans, providing safety nets to vulnerable groups, supporting labour-based public works, providing assistance for the local production and processing of staple food items.

 In the area of building and maintaining an adequate stock level of essential commodities at stable prices,government,through the National Revenue Authority, will provide tax deferments to importers and manufacturers of locally consumed goods, support the private sector for the importation of essential commodities, provide a special loan facility at concessional interest rates to support the production, importation and distribution of essential goods and services, and establish and maintain a stock and price monitoring system for essential commodities.

In order to support hardest-hit businesses to enable them continue operations and avert lay-offs of employees, government, though the Bank of Sierra Leone, will provide special loan facility (local and foreign currency) to businesses at concessional interest rates, de-risk lending through guarantees to Small and Medium-Scale Enterprises (SMEs), negotiate with Commercial Banks to suspend interest to SMEs in the tourism sectors, and commence the National Micro-Credit Scheme.

Expanding safety nets to vulnerable groups, government will expand on existing cash transfer programme implemented by the National Commission for Social Action, and provide food assistance to vulnerable groups.

Supporting labour-based public works, government will rehabilitate 1000 kilometres of unpaved trunk and feeder roads across the country, and carry out minor repairs on 200 km of Township roads

Providing assistance for the local production and processing of staple food items, government will provide farm inputs including implements, chemicals and seedlings to small scale farmers, support farmers’ access to tractors and other farm machinery, and provide extension services to farmers.

The Health Response Programme, according to the Ministry of Finance, will cost US$6.6 million and that due to the reduction in economic activities, domestic revenue will drop by US$58.3 million.

‘‘The total cost of the Quick Action Economic Response Programme plus the Health Response under this scenario, therefore, amounts to US$ 231.4 with a financing gap of US$161.3 million. Under Scenario 2, the cost of the QAERP is estimated at US$199.7 million, with a financing gap of US$115.7 million.’’

Sector heads including the Commissioner General of the National Revenue Authority, Ministers of Trade and Agriculture, Governor of the Bank of Sierra Leone, head of the National Commission for Social Action, all made commitment towards the success of the programme.