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TECHNICAL ASSISTANCE REPORT

SIERRA LEONE

Climate Policy Diagnostic

NOVEMBER 2024

Prepared By

Christine Richmond, Katja Funke, Henk Jan Reinders, Sunalika Singh, and Karlygash Zhunussova

Fiscal Affairs Department

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©2024 International Monetary Fund

The contents of this document constitute technical advice provided by the staff of the International Monetary Fund to the authorities of Sierra Leone (the "CD recipient") in response to their request for technical assistance. Unless the CD recipient specifically objects to such disclosure, this document (in whole or in part) or summaries thereof may be disclosed by the IMF to the IMF Executive Director for Sierra Leone, to other IMF Executive Directors and members of their staff, as well as to other agencies or instrumentalities of the CD recipient, and upon their request, to World Bank staff, and other technical assistance providers and donors with legitimate interest (see Staff Operational Guidance on the Dissemination of Capacity Development Information). Publication or Disclosure of this report (in whole or in part) to parties outside the IMF other than agencies or instrumentalities of the CD recipient, World Bank staff, other technical assistance providers and donors with legitimate interest shall require the explicit consent of the CD recipient and the IMF’s Fiscal Affairs department.

The analysis and policy considerations expressed in this publication are those of the IMF Fiscal Affairs Department.

This technical assistance (TA) was provided with financial support from the Government of Germany.

International Monetary Fund, IMF Publications

P.O. Box 92780, Washington, DC 20090, U.S.A.

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publications@IMF.org

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Contents

• Abbreviations and Acronyms

• Preface

• Executive Summary

• Recommendations

• I. Context

• A. The Impact of Climate Change

• B. Sierra Leone’s Climate Ambitions

• II. Expanding Energy Provision While Containing Emissions

• A. Access to Affordable and Reliable Electricity

• B. Cross-Cutting Energy Issues (Fuel Pricing)

• C. Forest Management and Climate Sensitive Agriculture

• III. Climate Sensitive Management of Water Resources and Waste

• A. Water Management

• B. Water Service Provision

• C. Waste Management

• IV. Resilience to Climate Change Implications

• A. Disaster Risk Management

• B. Land-Use Planning

• C. Disaster Resilient Construction

• D. Effective Response to Natural Disasters

• V. Enabling Institutions to Support Climate Action

• A. Assessment of Legal Framework

• B. Assessment of Policy Framework

• C. Assessment of Institutional Framework

• D. Information for Climate Sensitive Policy Design

• E. Climate Finance

• Boxes

• 1. GHG Related MRV Systems for Forestry

• 2. The Impact and Causes of the 2017 Freetown Landslide

• 3. Investment Decisions Under Increasing Uncertainty

• Figures

• 1. Sierra Leone Temperature (ºC) and Precipitation (mm/year) Timeseries

• 2. Extreme Climate Indices: Average Conditions and Recent Changes

• 3. Time Series of Average Annual Temperature (ºC) and Total Annual Precipitation (mm/year)

• 4. Projected Changes of Number of Hot Days and Extreme Precipitation by 2050 Under SSP2-4.5 (Current Trends)

• 5. Sea Level Rise Projections in Sierra Leone, Relative to 2000 (in meters)

• 6. Sierra Leone Reduction of Real GDP per Capita with Respect to Continuation of Present Temperature Trends (Percent)

• 7. Annual Average (2020-99) Welfare Cost of Sea Level Rise in Sierra Leone (Percent of GDP)

• 8. GHG Emissions Per Capita and GHG Intensity of GDP in Sub-Saharan Africa, 2022

• 9. GHG Emissions and Primary Energy Consumption

• 10. IMF Estimates of Historical and Projected GHG Emissions, 2021-2030

• 11. Fuel Imports and Government Subsidies for Fuel, 2019-2023

• 12. Estimates and Projections of Fossil Fuel Demand and Revenue, 2021-2030

• 13. Impact on Fiscal Revenues and Fuel Demand

• 14. Impact on GDP Growth, 2025-2030

• 15. Deforestation in Sierra Leone

• 16. Changes in Land Use in Freetown, Sierra Leone, 2007–2017

• 17. Upstream and Downstream Fiscal Instruments for the Waste Lifecycle

• 18. Disaster Risk Management Cycle

• 19. Competing Resource Requirements of Sectors

• Tables

• 1. Climate Policy, Legal, and Institutional Framework in Sierra Leone

• 2. PRA Pricing Formula as of September 2024, for Petrol and Diesel

• 3. Impact on Fuel Prices

• 4. Land Management Reforms in Sierra Leone

• 5. Key Components of Climate Change Laws in Different Countries

• Annexes

• I. Sea Level Rise and Costs

• II. Climate Policy Assessment Tool

• III. Payment for Environmental Service – Case of Tanzania

Abbreviations and Acronyms

Preface

At the request of the Ministry of Finance of Sierra Leone, a team from the IMF’s Fiscal Affairs Department (FAD) undertook an in-person mission from September 18 to October 1, 2024, in Freetown, for a comprehensive assessment of climate fiscal policies. The mission team was led by Ms. Christine Richmond and included Ms. Sunalika Singh, Ms. Karlygash Zhunussova (all FAD), Mr. Henk Jan Reinders (SPR), and Ms. Katja Funke (FAD short-term expert).

The mission benefitted from meetings with the teams under the purview of the Honorable Mr. Sheku Bangura (Ministry of Finance), Honorable Madam Kenyeh Barlay (Ministry of Planning and Economic Development (MoPED)), Honorable Mr. Jiwoh Abdulai (Ministry of Environment and Climate Change (MoECC)), Honorable Dr. Henry Musa Kpaka (Ministry of Agriculture and Food Security (MoAFS)), Honorable Dr. Eldred Tunde Taylor (Ministry of Energy), Dr. Kandeh K Yumkella (Presidential Initiative on Climate Change, Renewable Energy and Food Security), and Honorable Mrs. Princess Dugba (Ministry of Fisheries and Marine Resources), as well as representatives from Environment Protection Agency, Electricity Generation and Transmission Company (EGTC), Electricity Distribution and Supply Agency, Electricity and Water Regulatory Commission (EWRC), Sierra Leone Meteorological Agency (SL-MET), National Protected Area Authority (NPAA), National Disaster Management Agency (NDMA), Ministry of Internal Affairs (MIA), Office of National Security (ONS), Ministry of Lands and Housing, Freetown City Council, Ministry of Local Government and Community Affairs, Ministry of Employment, Labour, and Social Security (MELSS), Ministry of Social Welfare (MoSW), Sierra Leone Water Company (SALWACO), Ministry of Works and Public Assets, Ministry of Mines and Mineral Resources, Ministry of Transport and Aviation (MoTA), Ministry of Trade and Industry (MTI), Ministry of Foreign Affairs and International Cooperation, Ministry of Technical and Higher Education, Bank of Sierra Leone (BSL), Ministry of Information and Civic Education, Ministry of Water Resources, and National Commission for Social Action (NaSCA). The mission also met with representatives from the European Union, World Food Programme, United Nations Development Program, and World Bank.

The mission would like to particularly thank Mr. Sellu McCarthy (Ministry of Finance, Climate Finance Unit) and his staff for close collaboration, open exchanges, and support during the mission. In addition, the mission is grateful to the IMF Resident Representative, Wayne Mitchell, and his staff, Rashid Kargbo and Edison Juso, for their guidance, active participation, coordination, and administrative support provided before and during the mission.