Sierra Leone: For many countries, the main source of crisis financing has been the new World Bank (WB) or International Monetary Fund (IMF) emergency lending.
In 2020, WB announced $160 billion in additional lending capacity without a specific timeline on spending it (roughly $60 billion were committed in 2020). A recent study analysed spending in nine countries, India, Kenya, South Africa, Sierra Leone, Bangladesh, Nepal, Honduras, Guatemala and El Salvador
According to the findings by the Financial Transparency Coalition (FTC), in gross domestic product (GDP) terms, and within the context of the nine countries included in this research, the most significant source of financing was to Sierra Leone.
“IMF financing during 2020 was 4.87% of GDP, or roughly one third of the 2020 Sierra Leonean government budget. The IMF also extended debt cancellation during 2020 for Sierra Leone ($35.5 million or 0.8% of GDP) and Nepal ($8.9 million or 0.03% of GDP); both of which were wholly insufficient.
Two WB’s public sector windows (International Development Association (IDA) for low-income countries) and International Bank for Reconstruction and Development for middle-income countries) had approved Covid-19 related operations in 108 countries.
“These loans were critically important for Sierra Leone (5.3 percent of GDP), El Salvador (2.9 percent of GDP), and Nepal (3.7 percent of GDP) in terms of recovery spending during 2020. Much more was spent on dams and building roads than supporting people in economic crisis. In Sierra Leone, some World Bank loans were used for public works purposes with a dual social protection function, i.e. employing unemployed youth.”
The Tracker stated that between April and June 2020, the Sierra Leonean government provided cash transfers of Le4 billion to 11,000 persons which included persons living with disabilities, orphans and children who face greater poverty and inequality, and economically poor households. These initiatives are being scaled down afterwards in order to cut budget costs and will reduce coverage and allocation.
Similarly, as with many other national responses, support for social protection was a very small proportion of the overall country expenditure, however, there was a strong focus to support SMEs with some support for tackling youth unemployment.
The government’s flagship recovery plan was a 5-pillar Quick Action Emergency Response Programme (QAERP). The total resource envelope was SLL9.21 trillion. QAERP faced challenges to it implementation due to a projected shortfall in tax revenues of SLL965 billion.
However, with WB assistance ($US 7.5 million)71, the Sierra Leonean Government had, by the end of 2020, spent $US 115.05 million on the Covid-19 response which included the implementation of QAERP and social security measures for most marginalised groups. Additionally, the government prepared a comprehensive Covid-19 Health Sector Response Plan, including and allocation of Le7.2 billion for 11,039 health care workers.
The Tracker made a breakdown in the case of Sierra Leone and South Africa between announced and actual spending, while in the remaining 7 countries such distinction was not yet available across the board.
This report, the authors said presents only an initial step towards the comparative analysis of these bailouts, and more work will be needed to understand the differential impacts of recovery packages.
ZIJ/26/04/2021