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The International Monetary Fund (IMF) has approved a new 38-month loan for Sierra Leone, aimed at helping the country recover from economic challenges and promote sustainable growth.
The loan, under the Extended Credit Facility (ECF) arrangement, is valued at SDR 187 million (approximately US$253 million).
The IMF’s decision follows a staff-level agreement reached with the Sierra Leonean authorities on a set of economic policies and reforms. These reforms focus on restoring stability, boosting inclusive growth, and strengthening governance and institutions.
The loan will support the country’s efforts to address debt vulnerabilities, reduce inflation, and rebuild international reserves. It will also provide funding for structural reforms and targeted social spending to promote poverty reduction.
The IMF’s mission, led by Christian Saborowski, praised the Sierra Leonean government for its progress in tackling macroeconomic imbalances and reducing inflation. However, the mission also highlighted the need for continued reforms to address remaining challenges, such as high T-bill rates and electricity sector losses.
The loan is expected to help Sierra Leone achieve its economic growth and poverty reduction objectives outlined in its Medium Term National Development Plan (MTNDP) 2024-30.
Saborowski said: “A new economic team took over last year and has since taken bold measures to tackle Sierra Leone’s macroeconomic imbalances including a severe cost-of-living crisis. The authorities reduced the domestic primary deficit by 2.8 percent of GDP in 2023 and are on track toward reducing it by another 2.1 percent this year. They also tightened monetary policy sharply by reducing year-on-year base money growth from a peak of 63.4 percent in June 2023 to 8.8 percent in June 2024, and raising the policy rate by 7.25 percentage points since end-2022.
“The reform momentum has borne fruit. Inflation declined to 25 percent in August 2024, down from a peak of 55 percent in October 2023, and the sharp exchange rate depreciation experienced in 2022 and early 2023 was arrested. However, T-bill rates remain stubbornly high at over 40 percent, international reserves have fallen to less than two months of imports, and the electricity distribution company (EDSA) continues to make losses, resulting in significant fiscal pressures.
“Economic growth reached more than 5 percent in 2022 and 2023, buoyed by strong mining activity. Sierra Leone’s public debt continues to be assessed as sustainable but at high risk of distress, while its external position in 2023 is assessed as broadly in line with the level implied by fundamentals and desirable policies.
“The new ECF arrangement would aim to (i) restore stability by bolstering debt sustainability, addressing fiscal dominance, bringing down inflation, and rebuilding reserves; (ii) support inclusive growth through reforms—including to narrow gender gaps—and targeted social spending; and (iii) confront corruption, as well as strengthen governance, institutions, and the rule of law. These objectives would advance the poverty reduction and growth aspirations outlined in Sierra Leone’s Medium Term National Development Plan (MTNDP) 2024-30.
“Restoring stability in the Sierra Leonean economy will require a continued ambitious macroeconomic adjustment over the program period. Enhancing revenue mobilization, boosting spending efficiency, and managing fiscal risks will be critical to make room for priority spending on social policies and investment. Strengthening the monetary policy framework and maintaining appropriately tight monetary conditions will be important to safeguard internal and external stability.
“Making durable progress in fighting poverty and raising standards of living will require a commitment to reform, sustained political and social consensus, and well-targeted social policies. Promoting gender equality and increasing women’s economic participation are crucial to boosting Sierra Leone’s growth potential. So too are reforms to enhance the business environment by improving EDSA’s operational and technical efficiency, strengthening customs administration and transparency, and addressing climate change risks. Guided by the MTNDP 2024-30, steadfast progress in addressing these challenges will be critical.
“The staff team is grateful to the authorities for the open and productive discussions. The team met with President Bio, Finance Minister Bangura, Deputy Finance Ministers Alie and Kalokoh, Financial Secretary Dingie, Bank of Sierra Leone (BSL) Governor Stevens, Deputy Governors Tucker and Sesay, Commissioner General Bangura of the National Revenue Authority, and senior government and BSL officials. The mission also had fruitful discussions with representatives from the private sector and development partners.”
And fools will celebrate this as an Achievement whist this Government keeps running the country in to Big debts. Later when they’re out of power, the next opposition government will inherit this huge debt. With all the Loans and what have you… It have never reflected on the poor or mercies. We still continue to starve, price of food commodities keep soaring, High crime rate due to very low Job opportunities. This country is in mess.
Another HARDSHIP is coming for us😭
Despite the statement, there are no concrete reasons given for the loan. How will the governmebt reduce inflation with the money, how will they strengthen governance? Nonsense, 50 million to half of the amount will end up in their pockets and taxpayers will have to repay the loan. A quarter of a billion dollars, but gron go still dry next year. IMF, this is foolishness. Will you be auditing to see how the money is being spent?
Sierra Leone recorded a Government Debt to GDP of 88.90 percent of the country’s Gross Domestic Product in 2023. Government Debt to GDP in Sierra Leone averaged 105.14 percent of GDP from 1990 until 2023, reaching an all time high of 247.38 percent of GDP in 1999 and a record low of 30.50 percent of GDP in 2013.
The present drunken sailors are on course to take us back to a debt level of over 100 per cent of GDP – the worst in peace time.