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International Monetary Fund. African Dept.
This paper discusses Sierra Leone’s 2019 Article IV Consultation, Second Review Under the Extended Credit Facility Arrangement, Request for a Waiver of Nonobservance of Performance Criterion. Sierra Leone continued to make good progress under the IMF-supported program. While the program’s medium-term goals remain appropriate to enable future growth and development, the dramatic onset of the global coronavirus disease 2019 pandemic poses significant near-term risks. Combating the economic fallout of the crisis and protecting the health of Sierra Leoneans should be the immediate priority. The authorities’ cautious fiscal policy has been important. They have made commendable progress in mobilizing domestic revenue and prudent execution of budgeted expenditures. This has stabilized domestic borrowing needs and allowed inflation pressures to ease. Managing fiscal risks and securing debt sustainability remain the medium-term priority. Continued revenue mobilization will require both tax administration and policy reforms. Deeper public financial management reforms will further improve budget planning and execution, including preventing new arrears. A strategic plan for the two state-owned banks will be instrumental in addressing underlying fiscal risks.
Céline Allard

Abstract

Growth momentum in sub-Saharan Africa remains fragile, marking a break from the rapid expansion witnessed since the turn of the millennium. 2016 was a difficult year for many countries, with regional growth dipping to 1.4 percent—the lowest level of growth in more than two decades. Most oil exporters were in recession, and conditions in other resource-intensive countries remained difficult. Other nonresource-intensive countries however, continued to grow robustly. A modest recovery in growth of about 2.6 percent is expected in 2017, but this falls short of past trends and is too low to put sub-Saharan Africa back on a path of rising living standards. While sub-Saharan Africa remains a region with tremendous growth potential, the deterioration in the overall outlook partly reflects insufficient policy adjustment. In that context, and to reap this potential, strong and sound domestic policy measures are needed to restart the growth engine.

International Monetary Fund. African Dept.
This 2016 Article IV Consultation highlights that economic outcomes in Sierra Leone have deteriorated sharply over the past two years. Growth declined dramatically from 20.7 percent in 2013, to 4.6 percent in 2014, and further to –21.1 percent in 2015. The budget is under severe pressure. Between mid-2014 and end-2015, the Leone depreciated 22 percent against the U.S. dollar. Banking sector vulnerabilities have increased. Living standards have also deteriorated significantly since late 2014. The medium-term outlook is somewhat positive, with growth projected to recover to 4.3 percent in 2016, increasing gradually to about 6.5 percent by 2020.
International Monetary Fund. African Dept.

This 2016 Article IV Consultation highlights that economic outcomes in Sierra Leone have deteriorated sharply over the past two years. Growth declined dramatically from 20.7 percent in 2013, to 4.6 percent in 2014, and further to -21.1 percent in 2015. The budget is under severe pressure. Between mid-2014 and end-2015, the Leone depreciated 22 percent against the U.S. dollar. Banking sector vulnerabilities have increased. Living standards have also deteriorated significantly since late 2014. The medium-term outlook is somewhat positive, with growth projected to recover to 4.3 percent in 2016, increasing gradually to about 6.5 percent by 2020.

International Monetary Fund. African Dept.

This paper discusses Sierra Leone's Third and Fourth Reviews Under the Extended Credit Facility Arrangement and Financing Assurances Review, Requests for Waivers for Nonobservance of Performance Criteria (PC) and Modification of PC. Program implementation has been good, notwithstanding the shocks that the economy has experienced. Despite missing several end-2014 PCs, owing to the Ebola outbreak, authorities have placed policies back on track. All end-June 2015 PCs, as well as most structural benchmarks, have been observed. The IMF staff supports the authorities' requests for waivers, as well as for additional financing from the IMF.

International Monetary Fund. African Dept.
This paper discusses Sierra Leone’s Second Review Under the Extended Credit Facility Arrangement and Financing Assurances Review. Economic output is set to contract by some 13 percent in 2015, comprising a decline in non-iron-ore activity of some 2 percent, and a 47 percent slump in iron-ore output as the dominant mining operator is not expected to resume activity until mid-year at the earliest. Policy discussions focused on generating fiscal space to tackle the Ebola emergency and contend with the effects of the slump in iron-ore production and prices. The IMF staff supports the authorities’ request for significant additional financing from the IMF.
International Monetary Fund. African Dept.

KEY ISSUES The Ebola outbreak and sharp drop in iron ore prices have dealt a severe blow to Sierra Leone’s economy. The Ebola epidemic, which continues to spread albeit at a lower rate than in latter parts of 2014, has exacted a heavy human toll (at least 3000 lives to date) and disrupted much economic activity. The sharp drop in iron ore prices has compounded these difficulties by shuttering the main mining operator. These twin shocks have prompted a sharp slump in activity. Following several years of robust economic growth as new mining activity came on stream in 2011, economic output is set to contract by some 13 percent this year, comprising a decline in non-iron ore activity of some 2 percent and a 47 percent slump in iron-ore output as the dominant mining operator is not expected to resume activity until mid-year at the earliest. Against this backdrop, policy discussions focused on generating fiscal space to tackle the Ebola emergency and contend with the effects of the slump in iron ore production and prices. The domestic primary deficit is set to widen from 0.7 percent of non-iron ore GDP in 2013 to 5.2 percent in 2015 because of Ebola-related priority spending and weakened revenue performance. Increased support from Sierra Leone’s development partners will contribute towards the financing of the higher deficit, but recourse to domestic borrowing will also be unavoidable. Staff supports the authorities request for significant additional financing from the IMF. Program implementation has been good, notwithstanding the severe shocks that the economy has been subjected to and all continuous and end-June 2014 performance criteria, as well as most structural benchmarks have been observed. The authorities’ policy commitments are also commensurately strong with the challenges they face. Consequently, staff supports the authorities’ request for the completion of the second ECF review, 50 percent of quota augmentation of access, and 20 percent of quota debt relief under the catastrophe containment window of the Catastrophe Containment and Relief Trust.

International Monetary Fund. African Dept.
All end-June performance criteria and indicative targets under the ECF arrangement were met, and all structural benchmarks were completed, albeit with minor delays. However, there was a nonobservance of the continuous performance criterion on the ceiling on new nonconcessional external debt in July with the issuance of the US$750 million Eurobond (exceeding the US$500 million program ceiling).
International Monetary Fund. African Dept.
This paper discusses Sierra Leone’s First Review Under the Extended Credit Facility (ECF) Arrangement, Request for Modification of Performance Criteria (PC), and Financing Assurances Review. Program performance has been strong. All PCs were met with comfortable margins, and all indicative targets (ITs) were met, except for the one on poverty-related spending that was missed owing to enhanced monitoring of domestic investment execution and delayed budget support. Economic growth momentum continued in 2013, with output expanding by 20 percent. The IMF staff recommends completion of the first review under the ECF arrangement.