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Statement at the Conclusion of an IMF Mission to Sierra Leone

Statement at the Conclusion of an IMF Mission to Sierra Leone

An International Monetary Fund (IMF) mission visited Sierra Leone during August 23-September 6, 2011 to conduct discussions for the combined second and third reviews of the program supported under the Extended Credit Facility (ECF) 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; 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 CSOs, and development partners.

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

“Following a 5 percent growth in real GDP in 2010, economic activity has remained robust in 2011, supported by continued expansion in agriculture and mining. Consumer price inflation increased, however, to 20.9 percent (year-on-year) in July 2011 on account of food and fuel price increases, as well as the effect of expansionary monetary policy in the second half of 2010. Gross international reserves remain at a comfortable level. The Leone has been relatively stable, depreciating by about 4 percent in the first half of 2011, and Treasury bill interest rates have declined. In this respect, the mission commends the authorities for their efforts in containing spending and tightening the monetary policy stance.

“The main policy challenges facing the authorities remain to close the infrastructure gap, expand social services, and reduce unemployment while maintaining macroeconomic stability. In this respect, the mission supports the authorities’ efforts to mobilize domestic revenue and underscores the need for constraining nonpriority expenditures in the second half of 2011. To that effect, the mission recommends that the Government gives due consideration to gradually restoring fuel excises, which were significantly lowered earlier this year. This would enhance fiscal space for necessary capital and social spending.

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

“With regard to performance relative to the ECF-supported program, the tightening of fiscal and monetary policies contributed to meeting all quantitative criteria for end-June, with the exception of the ceiling on contracting of nonconcessional external debt. Discussions with the authorities will continue, to allow the Executive Board’s consideration of the combined second and third reviews of the ECF-supported program later this year.

“The mission would like to thank the authorities for their continued excellent cooperation.”


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