Sierra Leone: The medium-term fiscal framework underpinned in the Fiscal Strategy Statement (FSS) does not guide the budget process. The Public Financial Management (PFM) Act 2016 requires the government to submit the FSS to Parliament in July.
According to section 28. (1) it states that “The Minister shall, not later than the 31st of July of each financial year, prepare and submit to Parliament a mid-year fiscal policy review.”
The FSS should contain the macro-fiscal forecasts, and outline the government’s fiscal objectives, and policy priorities. This, together with the budget call circular, is expected to serve as the basis for budget preparation and discussion on both recurrent and capital spending.
Currently, the FSS is only made available at the time at which the budget is submitted for approval, as stated in the International Monetary Fund (IMF) Country Report No. 21/90.
Sierra Leone, the Fund says has adopted a fiscal responsibility framework, and has put in place a nominal debt ceiling of 70 percent of GDP. The Public Financial Management (PFM) Act 2016 requires the government to maintain a prudent level of debt, and an appropriate balance between revenues and expenditures, but does not specify permanent numerical rules. Instead, it requires any new government to set fiscal objectives for five years in its first Fiscal Strategy Statement (FSS).
“The FSS 2019—the first of the current government—targets an average deficit, including grants, of 2.8 percent of GDP for 2019−23, and sets a ceiling to nominal debt of 70 percent of GDP, in line with the country’s commitment under Economic Community of West African States.
“This ceiling however has neither constrained nor provided operational guidance to fiscal policy in recent years: government debt doubled from 30 percent of GDP in 2013 to 63 percent in 2018 (Figure 12).
“In the medium term, the targets agreed under the Extended Credit Facility Program with the IMF provide operational guidance to fiscal policy. These are a gradual reduction in domestic bank borrowing to around 2 percent of GDP over the program period to contain inflation and the interest bill; a quantitative performance criteria on the net credit to the government; and an indicative target on the domestic primary balance.
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