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Wednesday, June 29, 2022

KALANGBA ECHO: Between the deep blue sea and the devil

By Alusine Sesay

Prior to the 2018 elections, the then All People’s Congress (APC) fell out with the International Monetary Fund (IMF)  which suspended funding to the country because the then government was dragging  foot on reforms such as taxing luxury car imports, and removing subsidies on fuel and rice. The then government, according African Confidential, was spending IMF money on trying to win the 2018 election, not on agreed measures for economic recovery.

Fuel is a no doubt a political commodity because any increase in the pump prices of petroleum products can have a telling effect on the livelihood of all citizens. Whether the then government had been reluctant to remove fuel subsidies to win the 2018 elections or had done so to protect the interest of the masses, that is all together a different ball game. What was glaring was that the then APC administration had preferred putting the relationship between the government and the IMF on the altar of sacrifice than risk losing votes in the 2018 elections, albeit they lost the elections.

In their 2018 political campaign, the Sierra Leone Peoples Party (SLPP) used the bitter relationship between the then APC administration and the IMF as one of the key campaign messages, telling the gullible public that the international community has lost trust in the APC and that people should not vote for the APC.

When they assumed power in 2018, according to the IMF, the New Direction administration took a number of corrective actions to shore up public finances, in particular to raise revenue and control spending commitments, which could help limit the budget’s borrowing needs and support deficit reduction.

The IMF stated that the New Direction administration eliminated subsidies on retail fuel and moved toward more fully operationalizing the Treasury Single Account, collected dividends from profitable SOEs, and reviewed and streamlined duty and tax waivers. It was based on those measures that the IMF started disbursing funds under the Extended Credit Facility.

For the past four years in governmenance, the New Direction administration has been boasting of restoring the country’s image in the eyes of the international community through the astute leadership of President Julius Maada Bio. Even the justification behind the frequent questionable international travels undertaken by the president is that his mission is to reach out and restore the lost confidence and trust the international community had in the country.  

As a developing country, we cannot afford stay aloof from donor partners, but the government must bear in mind that, IMF conditionality has not only helped to bring down governments in developing nations, but also fueled civil unrest in several countries.

In 2018, thousands of Jordanians took to the streets in utter protest against some austerity measures including a new income tax draft law and possible price hikes. The Jordanian government had secured a $723m (£542m) three-year credit line from the International Monetary Fund in 2016 and the only option they had to maintain a cordial relationship with the IMF and attract more funding was to implement the austerity measures. It was either the government had risk losing the relationship with IMF or allowed it citizens bear the brunt of the austerity measures.  

With regards the fuel price increase in Sierra Leone, the New Direction administration is currently caught between the deep blue sea and the devil. Having maintained a cordial relationship over the years with the IMF, the New Direction administration of President Bio cannot risk putting such relationship on the altar, especially when elections are drawing closer. In my argument, I believe that government has solution to the fuel price increase. But they would rather prefer seeing people going through bondage than to paying subsidies on fuel and stabilize the price in the interest of the poor masses.

Innately, the government would not want the pump prices of petroleum products to sky rocket but they have no choice because they cannot risk attracting the wrath of the IMF as it happened to the previous APC administration. One may say that happenings across the world, especially the invasion of Ukraine by Russia, are  necessitating the action of the government, but they should also bear in mind that not everybody will understand that language and that they should be prepared because  the people are ready to take their pound of flesh in the near future.

The government is in a difficult situation with limited options open to them –either to risk losing the cordial relationship with IMF or allow citizens to suffer. They are caught between the deep blue sea and the devil.

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