IMF Approves $248.5 Million Credit to Support Sierra Leone’s Economic Recovery

The International Monetary Fund (IMF) Executive Board approved a new 38-month, $248.5 million credit arrangement for Sierra Leone under its Extended Credit Facility (ECF), aiming to stabilize the country’s economic conditions and foster inclusive growth.

This arrangement, equivalent to SDR 186.663 million, will immediately disburse SDR 34.999 million (about $46.6 million) to help Sierra Leone address critical financial challenges and implement reform-focused programs.

The new ECF arrangement aligns with Sierra Leone’s National Development Plan (2024-2030), focusing on bolstering debt sustainability, addressing fiscal imbalances, reducing inflation, and rebuilding the country’s depleted international reserves. The program also seeks to stimulate inclusive growth through structural reforms and targeted social investments, combat corruption, and enhance governance and institutional integrity.

Sierra Leone has grappled with high inflation and substantial debt risks, with recent data showing inflation dropping from 55 percent in October 2023 to 25 percent in August 2024 after a series of policy measures. Since 2023, Sierra Leonean authorities have implemented significant fiscal and monetary tightening, cutting the domestic primary deficit and sharply reducing money growth and raising interest rates to stabilize the exchange rate.

Deputy Managing Director and Acting IMF Chair Mr. Bo Li acknowledged the progress made, highlighting the authorities’ efforts to reduce inflation and stabilize the economy. However, he noted that “debt remains at high risk of distress,” and the IMF emphasized the importance of sustained reform to bring inflation down further, strengthen reserves, and protect the most vulnerable populations.

The IMF’s Article IV consultation, also completed on October 31, focused on Sierra Leone’s social policies, climate vulnerabilities, gender disparities, trade facilitation, and the country’s heavy reliance on mining revenues. This consultation underscores the ongoing structural challenges Sierra Leone faces despite its natural resource wealth and growth of over 5 percent in 2022 and 2023.

The approved funding will support Sierra Leone in addressing these systemic issues by enhancing public financial and debt management, strengthening financial sector oversight, and promoting efficiency in public spending. Through these measures, Sierra Leone aims to reduce poverty and foster a stable environment for sustainable, inclusive economic growth.