The IMF’s executive board yesterday approved the three-year loan, of which $13.7m was immediately disbursed.
It said Sierra Leone had made some strong macroeconomic gains in recent years, but needed to strengthen its fiscal policy further, particularly around public financial management, spending controls and improved tax administration.
The IMF-backed programme aims to underpin the country’s development and poverty-reduction strategy by entrenching macroeconomic stability and promoting inclusive growth. High quality public investment is considered a key part of securing this.
Min Zhu, deputy managing director and acting chair of the IMF’s executive board, said the medium-term outlook for Sierra Leone was favourable.
But he added: ‘Continued efforts will be needed to strengthen policy implementation, particularly in the fiscal area. The authorities’ plans to strengthen public financial management appropriately aim to enhance revenue mobilisation, improve spending controls and reduce domestic debt.
‘Key revenue components in their fiscal strategy include improvements in tax administration, reductions in tax exemptions, and the adoption of a comprehensive fiscal regime for the natural resources sector. Timely implementation of these reforms will be critical to buttress macroeconomic stability and the credibility of fiscal policy.’
Sierra Leone’s economy grew by 15.2% last year, although this was largely fuelled by increased iron ore production. Excluding iron ore, growth was estimated a 5.3%, slightly down on the 5.8% recorded in 2011.
The country’s medium-term objectives are to: achieve real growth (excluding iron ore) of 7% by 2017; reduce inflation from 12% in 2012 to around 5.4% by 2017; improve gross reserve coverage to about four months of non iron-ore related imports by the end of the IMF programme period.
Challenges remain in the form of poverty, unemployment and lack of access to public and social services. Lack of road and energy infrastructure and limited access to financial services also hinder Sierra Leone’s growth prospects, the IMF said.
