This paper discusses key findings of the Second Review Under the Poverty Reduction and Growth Facility (PRGF) program for Sierra Leone. Performance under the IMF-supported program was mixed. Output growth was strong at 6.8 percent and broad-based, but key fiscal revenue and spending objectives were missed, and progress on the structural reform front was slow. The authorities’ program for 2008 aims to mobilize more domestic revenue; reorient public spending to infrastructure projects and poverty-reducing programs; prevent rapid accumulation of public debt; and accelerate implementation of structural reforms.

Abstract

This paper discusses key findings of the Second Review Under the Poverty Reduction and Growth Facility (PRGF) program for Sierra Leone. Performance under the IMF-supported program was mixed. Output growth was strong at 6.8 percent and broad-based, but key fiscal revenue and spending objectives were missed, and progress on the structural reform front was slow. The authorities’ program for 2008 aims to mobilize more domestic revenue; reorient public spending to infrastructure projects and poverty-reducing programs; prevent rapid accumulation of public debt; and accelerate implementation of structural reforms.

1. This statement reports on developments since the issuance of the staff report for the second review under the three-year arrangement under the PRGF. These developments do not alter the thrust of the staff appraisal.

2. Year-on-year headline inflation increased from 14.8 percent in March 2008 to 16.5 percent in May, following a marginal decline in April. The recent surge reflects an adjustment in domestic petroleum pump prices and continued higher import cost of food products. Underlying inflation (excluding food and energy) declined by 1.3 percentage points from its end-March level to 8.5 percent; thus the program inflation target for the year as a whole remains achievable.

3. The authorities indicate that the end-June 2008 structural performance criterion and structural benchmark have been met.

  • The Monetary and Policy Committee held its first monthly meeting in June and minutes of the meeting were received by the staff within the required reporting deadline.

  • The legislation for the introduction of the Goods and Services Tax has been adopted by the cabinet and submitted to parliament.

4. Other structural measures implemented by end-June include:

  • Adoption by the cabinet of a decree that forbids ministries, departments, and agencies from issuing local purchase orders or committing any other spending outside the established commitment control system at the Accountant General’s Department. A public notification informing vote controllers and domestic suppliers was issued to this effect.

  • The National Anti-Corruption Strategy and Action Plan was approved by the cabinet and launched in early June.

Sierra Leone: Second Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility, Financing Assurances Review, and Request for Waivers of Nonobservance of Performance Criterion, Extension of the Arrangement, and Rephasing of Disbursements-Staff Report; Staff Supplement and Statement; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Sierra Leone
Author: International Monetary Fund