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Statement at the Conclusion of IMF Mission to Sierra Leone

Statement at the Conclusion of IMF Mission to Sierra Leone

An International Monetary Fund (IMF) mission visited Sierra Leone during March 2-15, 2011 to conduct discussions for the second review of the program supported under the Extended Credit Facility (ECF) which was approved by the IMF Executive Board in June 2010. The mission met with His Excellency, President Ernest Bai Koroma; Minister of Finance and Economic Development, Dr. Samura Kamara; Minister of Mines and Mineral Resources, Mr. Minkailu Mansaray; Minister of Trade, Dr. Richard Konteh; the Governor of the Bank of Sierra Leone, Mr. Sheku Sesay; other senior officials of the government and the central bank, representatives of the business community, and development partners.

The following statement was issued in Freetown by Jan Mikkelsen, IMF Mission Chief for Sierra Leone:

“Real gross domestic product growth picked up from 3.2 percent in 2009 to 5 percent in 2010, reflecting higher activity in manufacturing, mining, and construction. While consumer prices rose by 18.4 percent in 2010, on account of the introduction of the goods and services tax and expansionary monetary policy in the second half of the year, inflation is expected to decline in 2011. Gross international reserves remain at a comfortable level, equivalent to about five months of imports. Interest rates on Treasury bills rose significantly in recent months because of fiscal expansion in the latter part of 2010.

“The main challenge facing the authorities is the need to accelerate investment in basic infrastructure and social services while maintaining macroeconomic stability. To this end, the mission welcomes the authorities’ commitment to tighten fiscal policy in 2011, including significantly lowering budgetary domestic financing, including from the Bank of Sierra Leone. This is expected to contribute to lowering Treasury bill interest rates and inflation. The mission also supports the commitment to significantly reduce domestic fuel subsidies and subsequently implement an automatic monthly pricing mechanism.

“The mission concurred with the Bank of Sierra Leone on the need to tighten monetary policy to contain inflation and maintain exchange rate stability.

“With regard to the ECF-supported program, while the floor for foreign exchange reserves was met for end-December 2010, the two ceilings for fiscal and monetary policy were exceeded. Discussions with the authorities will continue, to allow the IMF Executive Board to consider the second review of the ECF-supported program later this year.

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