Washington, DC – The International Monetary Fund (IMF) has reached a staff-level agreement with Sierra Leone for a new Extended Credit Facility (ECF) arrangement, potentially worth US$253 million.
This was confirmed following a mission led by Christian Saborowski from September 4 to 13, 2024, as part of the 2024 Article IV consultation.
The proposed 38-month ECF program is designed to support Sierra Leone’s economic reforms. However, the agreement remains subject to approval by the IMF’s Management and Executive Board.
In a statement today, Mr. Saborowski emphasized the significance of the reform efforts by Sierra Leone’s economic team, which took charge in 2023.
“The authorities reduced the domestic primary deficit by 2.8 percent of GDP in 2023 and are on track to reduce it by another 2.1 percent this year,” he said, noting the bold measures taken to stabilize the country’s macroeconomic challenges.
The agreement comes at a time when inflation has seen a significant decline, dropping from a peak of 55 percent in October 2023 to 25 percent in August 2024.
“The reform momentum has borne fruit,” Saborowski added, highlighting the progress made in stabilizing the exchange rate, though challenges remain, such as persistently high T-bill rates and low international reserves.
The IMF also underscored the importance of the ECF arrangement in addressing key economic concerns.
“The new ECF arrangement would aim to restore stability by bolstering debt sustainability, addressing fiscal dominance, bringing down inflation, and rebuilding reserves,” Saborowski explained. Additionally, the program will focus on inclusive growth, poverty reduction, gender equality, and strengthening governance.
The IMF praised Sierra Leone’s recent economic growth, which exceeded 5 percent in both 2022 and 2023, largely due to strong mining activity. However, the country still faces fiscal pressures, particularly due to losses from the electricity distribution company (EDSA) and risks of external debt distress.
In discussions with Sierra Leone’s top officials, including President Julius Maada Bio and Finance Minister Bangura, the IMF team addressed the need for sustained reforms.
According to Saborowski, “Restoring stability in the Sierra Leonean economy will require a continued ambitious macroeconomic adjustment.”
The agreement marks a crucial step in Sierra Leone’s efforts to advance its poverty reduction and growth strategies outlined in the country’s Medium-Term National Development Plan (MTNDP) for 2024-2030.
