The second review of the Poverty Reduction and Growth Facility (PRGF) programme has pleased the International Monetary Fund (IMF) and this has opened the gateway for more funding, from the fund and other international agencies.
Financial Secretary Sheku Sesay disclosed that “shortfalls in domestic revenue collection” led to” fiscal deterioration” and as such Sierra Leone was unable to meet the IMF benchmarks of April 2007. But with the Finance Ministry’s “corrective measures” positive impact was made, which reflected on the second review of the PRGF.
Addressing media practitioners at the Ministerial building 6th floor conference room at George Street, yesterday Mr Sesay revealed that the executive board of the IMF has completed the second review of PRGF arrangement and has approved a one-year extension of the PRGF arrangement.
He disclosed that the completion of the review allows for the disbursement of about $7.2 million, which will bring total disbursement under the arrangement to about $22.1 million.
Mr Sesay stressed, “the commitment by government to those reform measures in addressing the problems was what led the IMF to approve the July 7th second review.”
He pointed out that before other agencies disburse funds they assess whether that country was able to meet IMF conditionalities.
The Financial Secretary pointed that with this positive acknowledgement other agencies will now be willing to fund the government in order to carry-out its objectives.
The IMF’s Republic of Guinea and Sierra Leone resident representative, Alvin Hilaire explained that the PRGF is the IMF’s concessional facility for low-income countries, adding that “the PRGF loans carry an annual interest rate of 0.5% and are repayable over 10 years with a 5 years 6 months grace period on principal payments.”
“We have quarterly targets that have been established for 2008 and this amount for whole of the year to about Le 326.7 billion that the government is hoping to be able to put in to poverty reduction spending. This is quite important because at the end of the day what matters is what happens on the ground to the people,” he said.
Nevertheless the IMF Resident Representative noted that “one challenge the government continues to face is the heavy reliance on foreign aid, [and hoped that] the country will try to continue its reliance on domestic revenue”
In his statement, Finance Minister David Carew stated that the current PGRF came in to force on 10th May, 2006.
He disclosed that, “immediately after the approval of the arrangement, approximately $7.9million was made available. Following the completion of the first review on 21st December of the same year, another disbursement of approximately $7.42 million was effected.”
He went on, “the conclusion of the first review also enables Sierra Leone to reach HIPC completion point which automatically qualified it for the Multilateral Debt Relief Initiative (MDRI).”
“On July 7th, this year the second review of the current PRGF was completed by the IMF in which our request for waiver of non-observance of performance criteria, extension of the arrangement and rephrasing of disbursement were approved. In addition a disbursement of about $7.0 million is being effected by the IMF” the Minister said.
By Ophaniel Gooding