IMF Executive Board Completes First Review Under the Extended Credit Facility Arrangement for Sierra Leone and Approves US$13.69 Million Disbursement

First Review Under the Extended Credit Facility Arrangement


First Review Under the Extended Credit Facility Arrangement

The Executive Board of the International Monetary Fund (IMF) today completed the first review of Sierra Leone’s economic program under a three-year arrangement under the Extended Credit Facility (ECF) for Sierra Leone.1 The completion of the review enables the disbursement of an amount equivalent to SDR 8.89 million (about US$13.69 million), bringing the total disbursements under the arrangement to SDR 17.78 million (about US$27.39 million). The decision was taken without a formal Board meeting.2

The Executive Board approved the ECF arrangement for Sierra Leone on October 21, 2013 for the equivalent of SDR 62.22 million (about US$95.84 million) (see Press Release No. 13/410).

Sierra Leone’s economic growth momentum continued in 2013, with output expanding by 20 percent on account of new iron ore production coming on stream, as well as strong growth in agriculture and the services sector. Inflation declined to single digits, mainly reflecting increased food supply. The surge in iron ore exports contributed to the improvement in the external and fiscal positions.

Real Gross Domestic Product (GDP) growth is projected to remain in double-digits at 11.3 percent in 2014, in line with the expected higher iron ore and other mining production, continued strong output expansion in agriculture, services, and construction, and a recovery in manufacturing as energy supply improves in 2014. The scaling up of public investment, as envisaged in the implementation of the country’s poverty reduction strategy, the Agenda for Prosperity (AfP), should also help to catalyze private sector activity and contribute to higher, sustainable growth in the non-resources sector. Consumer price inflation is expected to continue trending downward as food supply benefits from government-sponsored programs in agriculture, and non-food inflation would remain moderate thanks to continued prudent monetary policy. An improving trade balance coupled with expected capital inflows will help strengthen the external position and gross international reserves buildup.

Fiscal policy for 2014 will continue to focus on reducing duty waivers and increasing audit capacity in tax administration to support revenue mobilization, containing non-priority spending to create space for public investment, and strengthening budget execution and controls through public financial management reforms. Continued prudent borrowing policies will be important to support growth-enhancing investment while maintaining debt sustainability.

Reform measures and policies put in place in recent years have helped improve macroeconomic stability, advance social policies, and enhance prospects for broad and inclusive growth. Nonetheless, the country faces important challenges. Poverty and unemployment remain high, and access to important public and social services is limited. In addition, growth prospects are hindered by numerous obstacles, including insufficient power supply and road networks, and limited access to financial services, particularly for small- and medium-sized enterprises. The fiscal position remains fragile, despite improvement in 2013, due to the relatively low and volatile revenue base and pressure for higher spending in wages and infrastructure.

Looking ahead, the authorities need to sustain the implementation of structural reform measures aimed at strengthening the fiscal position further, developing financial intermediation, advancing civil service reforms and creating an environment conducive to private sector development.

Program performance has been strong. The authorities met all six quantitative performance criteria for the first program review, and two out of three indicative targets. All structural benchmarks programmed for end-December 2013 were also met.


The ECF is a facility under the Poverty Reduction and Growth Trust. Financing under the ECF currently carries a zero interest rate, with a grace period of 5½ years, and a final maturity of 10 years. The IMF reviews the level of interest rates for all concessional facilities every two years.


The Executive Board takes decisions without a meeting (based on lapse of time procedures) when it is agreed by the Board that a proposal can be considered without convening formal discussions.