The Executive Board of the International Monetary Fund (IMF) has expressed satisfaction with Sierra Leone’s Economic policy, after completing the second review of Sierra Leone’s performance under a Poverty Reduction and Growth Facility (PRGF) arrangement.
The IMF board has also approved a one-year extension of the PRGF arrangement to 2010, according to a statement issued here Wednesday.
It said the completion of the review allowed for the disbursement of SDR 4.4 million (about US$7.2 million), which would bring total disbursements under the arrangement to SDR 13.5 million (about US$22.1 million).
“The Executive Board also granted waivers for the non-observance of three quantitative performance criteria on the basis of corrective measures taken and the temporary nature of the deviations from the quantitative targets,” the statement said.
The PRGF arrangement for Sierra Leone was approved on 10 May 2006 in an amount equivalent to SDR 31.1 million (about US$50.9 million); to support the government’s 2006-08 economic programmes.
According to the statement, the extension of the programme from three years to four years should provide sufficient time to achieve its objectives.
Following the Executive Board’s discussion, Mr. Murilo Portugal, Deputy Managing Director and Acting Chair, said: ”Economic growth in Sierra Leone remained robust in 2007 and early 2008, led by solid agriculture and mining production and buoyant activity in the construction and service sectors.”
He said inflation, though rising, was relatively contained in the face of surging global food and energy prices.
Performance under the PRGF-supported programme was mixed in the second half of 2006 through much of 2007.
The IMF official said: “Significant revenue shortfalls, exacerbated by delayed external budgetary assistance, complicated budget execution.
“These developments contributed to a severe compression of priority spending and the accumulation of domestic arrears.”
He therefore said the strong commitment of the authorities was a welcome move to address the sources of these setbacks to enable forward movement with key structural reforms in the period ahead.
‘The proposed fiscal stance for 2008 seeks to recapture the momentum lost in mobilizing domestic revenue, and strikes a good balance between expanding poverty-reducing and infrastructure spending and preventing the accumulation of public debt,” he said.
IMF expressed confidence that the authorities are committed to staying the course, with wide-ranging measures to make the National
Revenue Authority more efficient and broaden the tax base.
It praised President Ernest Koroma’s firm control over expenditure commitments by ministries, departments and agencies, saying it would provide critical support to the objective of domestic arrears clearance while creating fiscal space to address essential social needs.
Mr. Portugal said further: ”The Bank of Sierra Leone will focus on strengthening its management of liquidity and monitoring closely developments in the monetary aggregates, given the need to contain the second-round effects of rising import prices for food and fuel.
”First steps have been taken to advance structural reforms, in particular in public financial management and the financial sector.
“The authorities will work to ensure transparency in all public procurement contracts, strengthen the Anti-Corruption Commission, and improve the financial viability of public utilities in order to promote good
governance, accountability, and sustained high growth.”