Sierra Leone: Staff Report for the 2019 Article IV Consultation, Second Review Under The Extended Credit Facility Arrangement, Request for a Waiver of Nonobservance of Performance Criterion, and Financing Assurances Review—Informational Annex

2019 Article IV Consultation, Second Review Under the Extended Credit Facility Credit Facility Arrangement, Request for a Waiver of Nonobservance of Performance Criterion, and Financing Assurances Review

Abstract

2019 Article IV Consultation, Second Review Under the Extended Credit Facility Credit Facility Arrangement, Request for a Waiver of Nonobservance of Performance Criterion, and Financing Assurances Review

Relations with the Fund

(As of January 31, 2020)

Membership Status: Joined 9/10/62; Article VIII

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Latest Financial Arrangements :

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Projected Payments to Fund2

(SDR million; based on existing use of resources and present holdings of SDRs):

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Implementation of HIPC Initiative:

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Implementation of Catastrophe Containment and Relief (CCR):

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As of February 4, 2015, the Post-Catastrophe Debt Relief Trust has been transformed to the Catastrophe Containment and Relief (CCR) Trust.

Safeguards Assessment:

The 2017 safeguards assessment found that the safeguards framework at the Bank of Sierra Leone (BSL) had deteriorated and that concerted efforts were needed to mitigate safeguards risks. Continuous capacity constraints and lack of coordination among departments had negatively impacted the control environment. The risks were further exacerbated by weak oversight and audit mechanisms. While financial statements continued to be prepared and audited in accordance with international standards, audits were not completed within the statutory deadline. A subsequent safeguard monitoring visit in 2018 found that while the BSL was taking steps to implement safeguards recommendations, greater efforts were needed to address control weaknesses. A forensic audit of foreign currency transactions between the BSL and government agencies was recommended to establish the magnitude of past misappropriations. A remedial action plan to address findings has been completed, but implementation of the plan has been slow.

Exchange Rate Arrangement:

For customs valuation purposes and for official transactions, the Bank of Sierra Leone (BSL) calculates an official exchange rate every Friday morning as the weighted average of the auction rate, the commercial bank mid-rate, and the bureau mid-rate in the previous week. Commercial banks may buy foreign exchange from and sell it to individual customers and may trade among themselves or with the BSL on a freely negotiable basis. As of end-December 2019, the BSL mid-rate was Le 9,716.7=US$1, which is also the new Program exchange rate.

Sierra Leone’s de jure exchange rate regime is classified as floating, with the value of the leone determined by the market. The de facto exchange rate arrangement is reclassified as ‘other managed’.

With effect December 14, 1995, Sierra Leone has accepted the obligations of Article VIII, Sections 2, 3, and 4, and maintains an exchange system free of multiple currency practices and restrictions on the making of payments and transfers for current international transactions.

Article IV Consultation:

The Executive Board concluded the last Article IV consultation on July 1, 2016.

Technical Assistance:

Sierra Leone—Technical Assistance, FY 2019–20

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Source: IMF TAIMS

Resident Representative:

Ms. Monique Newiak assumed responsibility for the Fund office in Freetown on September 3, 2019.

Joint World Bank-IMF Work Program, 2019–21

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Statistical Issues

(As of March 13, 2020)

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Sierra Leone: Table of Common Indicators Required for Surveillance

End-February 2020

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Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A); Irregular (I); Not Available (NA).

Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

1

Formerly PRGF.

2

When a member has overdue financial obligations outstanding for more than three months, the amount will be shown in this section.

3

Assistance committed under the original framework is expressed in net present value (NPV) terms at the completion point, and assistance committed under the enhanced framework is expressed in NPV terms at the decision point. Hence these two amounts cannot be added.

4

Under the enhanced framework, an additional disbursement is made at the completion point corresponding to interest income earned on the amount committed at the decision point but not disbursed during the interim.

5

The MDRI provides 100 percent debt relief to eligible member countries that qualified for the assistance. Grant assistance from the MDRI Trust and HIPC resources provide debt relief to cover the full stock of debt owed to the Fund as of 2004 that remains outstanding at the time the member qualifies for debt relief.

Sierra Leone: 2019 Article IV Consultation, Second Review Under the Extended Credit Facility Credit Facility Arrangement, Request for a Waiver of Nonobservance of Performance Criterion, and Financing Assurances Review
Author: International Monetary Fund. African Dept.