By Jariatu S. Bangura
The International Monetary Fund (IMF) has on 5h June 2023, approved the disbursement of about USS20.8 million under the Extended Credit Facility Programme which will trigger an immediate disbursement of the sum.
IMF granted the approval based on the Economic Performance Programme of the government
This decision was made on June 5th, 2023, following the evaluation of Sierra Leone’s economic performance under the extended credit facility programme.
The Ministry of Finance announced this news through a press release issued on the same date.
“The Ministry of Finance, in conjunction with the Bank of Sierra Leone and the National Revenue Authority, would like to inform the public that the IMF’s Executive Board has approved the Government of Sierra Leone’s Economic Performance Program. This approval will lead to the immediate disbursement of approximately $20.8 million”, the release reads.
It is important to recognize that the global economy is currently grappling with multiple overlapping crises, which have significantly impacted countries’ economic structures.
These crises have resulted in high inflation, currency depreciation, deteriorating external accounts, elevated interest rates, rising debt levels, and increased vulnerabilities. Additionally, there has been a worsening of food and energy security.
Against that backdrop, the IMF’s approval of Sierra Leone’s economic program demonstrates a strong recognition and vote of confidence in the government’s commitment to restore macroeconomic stability, achieve long-term debt sustainability, and enhance transparency and accountability in public funds.
During the Executive Board meeting, in light of the global multiple crises, Mr. Bo Li, Deputy Managing Director and Acting Chair, made the following statement, which the government welcomes:
That Sierra Leone continues to face significant economic challenges, exacerbated by various shocks, including the conflict in Ukraine. However, the government’s commitment to boosting tax revenues represents an important step towards tightening fiscal measures while creating room for essential social spending.”
The IMF’s approval of the economic program will facilitate increased support from other international financial institutions for the government’s priority programs, including Human Capital Development.
“In this regard, we are pleased to announce that the government is in advanced negotiations with the World Bank to receive $65 million in budget support for 2023. Similarly, the approval will provide a foundation for ongoing negotiations with the European Union to restore budget support amounting to approximately €100 million over a four-year period, starting from 2023,” the release further highlighted.
It is also important to note that an effective economic program with the IMF will provide confidence for the negotiation of the US Millennium Challenge Corporation (MCC) Compact, which is expected to be signed by the end of 2023.
The Government noted it will reaffirms its commitment to implementing agreed-upon reforms with development partners, including prudent fiscal consolidation, effective management of exchange rates and monetary policies to reduce inflation and stabilize the exchange rate, and efforts to boost international reserves. These measures are aimed at promoting macroeconomic and financial stability, laying the groundwork for inclusive, green, and sustainable growth.