Wednesday, 9 December 2015

S/Leone: IMF approves USS46.14m disbursement

The Executive Board of the International Monetary Fund (IMF) has approved US$64.59 million(equivalent of SDR 46.665 million of the local country’s currency) to be distributed in three tranches.

The augmentation of access was approved after the Executive Board completed the third and fourth review of Sierra Leone’s performance under a three-year arrangement by the Extended Credit Facility (ECF).

IMF said: “The completion of the third and fourth review enables the immediate disbursement of US$46.I4 million (SDR 33.335 million). This amount includes the first tranche of the augmentation in an amount of about US$2 l .53 million (SDR 15.555 million).”

The Executive Board also approved the authorities’ request for the re-phasing of the fifth and sixth disbursements under the arrangement.

Christine Lagarde, IMF Chief
In completing the review, the Executive Board additionally approved the authorities’ request for waivers of non-observance of the end December 2014 performance criteria on the ceiling on Net Domestic Bank Credit to Government.

“The ECF arrangement for SDR 62.22 million (about US$95.9 miIIion) was approved in October and was augmented twice,” the Fund said.

Following the Executive Board’s discussion on Sierra Leone, Min Zhu, Deputy Managing Director and Acting Chair, made the following statement: “With the World Health Organization declaring Sierra Leone Ebola free on November 7, the country now faces the difficult challenge of economic recovery.

Complicating that task, the decline in iron ore prices has led to the shutdown of the main iron ore mines, with consequent sharp declines in GDP and exports, and reduced fiscal revenues.”

He said, “As a result, the fiscal challenges in 2016 will be substantial. It will be critical for the authorities to ensure sufficient revenues and financing to priority spending, especially for the post Ebola Economic Recovery Strategy (ERS).”

“This will require strong moves on tax policies and continued efforts on tax administration.

“The Bank of Sierra Leone should continue targeting price stability in support of economic recovery.

With depreciation pressures stemming the lost iron ore exports, BSL should enhance monetary policy instruments and liquidity forecasting to increase its ability to respond to any second round inflationary pressures.

BSL should also enhance supervision of the financial sector, understand and resolve any underlying stress through a timely diagnostic of key troubled bank.

“The updated debt sustainability analysis shows that while Sierra Leone’s risk of debt distress is moderate, the economy is increasingly vulnerable to further shocks. Thus, borrowing policies should remain prudent in view of the narrow export base and fragile fiscal position.

Financing needs, particularly for investment projects should continue to be covered mostly with grant and concessional loans.”

This story was published in Newswatch Times on November 28, 2015.

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