The Executive Board of the International Monetary Fund (IMF) approved a three-year arrangement under the Extended Credit Facility (ECF) for Sierra Leone for about US$224.2 million, in support of the authorities’ economic development efforts.
The program will build on the lessons from the previous ECF arrangement. It aims at supporting important policies targeted at reducing inflation and significantly increasing domestic revenues, including by eliminating numerous tax and duty exemptions, while increasing infrastructure spending and bolstering the social safety net.
The ECF program is also expected to play a catalytic role to maintain external support. In the medium-term, the arrangement will provide the framework for structural progress on revenue mobilization, public financial management and financial sector reforms, as well as increased reserves.
The Executive Board’s decision will enable a first immediate disbursement of SDR39.166 million (about US$54.3 million). The remaining amounts will be phased over the duration of the program, subject to semi-annual reviews.
Following the Executive Board discussion on Sierra Leone, IMF Deputy Managing Director Mr. Tao Zhang and Acting Chair, said:
“The new program provides support on three broad fronts: (i) provide financing space in the short-run to fund critical spending; (ii) make a strong contribution to the reduction of poverty; and (iii) support a medium-term structural reform framework, most critically in domestic revenue mobilization, public financial management (PFM), and financial sector reform.
“For the medium-term, the new program focuses on forceful revenue mobilization supported by a medium-term Revenue Mobilization Strategy (RMS), which the authorities will design and implement. On the expenditure front, the authorities are in the process of finalizing the regulatory framework for the recently passed PFM Act. The PFM Act will enhance the efficiency of spending, support medium-term budget planning, and consolidate the cash resources of various ministries, departments and agencies under the roof of the Treasury Single Account (TSA).
“In the short-run, the ECF arrangement will help create fiscal space, which will be used to scale up infrastructure and social spending to support higher and inclusive growth. To further this goal, the authorities’ decision to prioritize public investment, consistent with a moderate risk of debt distress rating, is welcome. The authorities’ efforts to expand the social safety net are also to be commended.
Source: Africafeeds.com / Fred Dzakpata
