By Zainab Joaque, Reporting from Washington DC
Washington DC, USA – Sierra Leone aims to initiate a program with the International Monetary Fund (IMF) in the third quarter of 2024 following encouraging discussions on the contours of a new Extended Credit Facility. Several productive meetings with Fund authorities were held during the Spring Meetings in Washington in April 2024, yielding positive outcomes.
Minister of Finance, Sheku A.F. Bangura, expressed optimism about the negotiations, stating, “The discussions signal a positive trajectory and provide comfort regarding the financing environment, setting the stage for constructive engagement.”
In his exit interview with Awoko Newspaper, as the meetings concluded in Washington DC last Friday, Minister Bangura emphasized the government’s commitment to macroeconomic stability, which serves as the cornerstone of the IMF program. He highlighted the importance of ongoing discussions as Sierra Leone prepares to present its case to the Board in October 2024.
“It’s been very tight, intense, but very productive engagement for the last five days, with both the IMF and the World Bank, both on the parts of country engagement with them but also regional engagements that have to do with the continent broadly on other issues of concern,” he said. “On the IMF in particular, we almost concluded with an understanding of the parameters of a new program … there are few issues that still have to be resolved but it was productive on the part of engagement for our country with these institutions.”
In addition to dialogues with the IMF, the Sierra Leone delegation engaged with the World Bank to discuss the country’s portfolio and potential Budget Support Operations. Minister Bangura noted significant progress in reaching an understanding of budget support parameters, focusing on macroeconomic stability, budget credibility, financial sector stability, and climate financing risk management schemes.
Discussions also centred on structural shifts within the economy, which were very positive in terms of the rebasing of the country’s GDP which shows that now it is more of a service-driven economy and that they need to service the industrial base which is picking up strongly.
When the GDP is rebased it means their (SL Govt.) efforts at revenue need to be ramped up, “we have less revenue before, so whilst our debt-to-GDP ratio may improve our debt service is challenged because of our low revenue efforts, so on the points of solvency and liquidity management we may have to put more efforts to make sure that the situation is very sustainable to take us away from risk of debt distress” he said.
The replenishment of the World Bank Group’s International Development Association (IDA), which is the arm that provides concessional and grant finance to low-income countries (LICs) is done every three years and will take place this year.
Minister Bangura said they are trying to mobilise $100 billion with a minimum of $30 billion to be generated annually.
Former Central Bank Governor Sheku Sambadeen Sesay was selected in November 2023 as the Independent Co-chair for the IDA’s twenty-first (IDA21) Replenishment Summit which will take place on 28 – 29 April 2024 in Nairobi, Kenya. Heads of State will be at these meetings to advocate for resources to support IDA operations. The Finance Minister says he will be accompanying the President to this meeting
Minister Bangura put the IDA’s total funding package for Sierra Leone at $1 billion, across various sectors such as agriculture, infrastructure, energy, and youth empowerment.
“We are very supportive of their transformational impact, all our transport sector investments like the Waka Fine Bus were done with IDA funds and we are very supportive of them because of the impact they have on our economy” he said. “I am very proud that we are going back home with something that will unlock the economy for us.”
Beyond bilateral discussions, Minister Bangura participated in regional and global dialogues, notably on the establishment of the Third Chair for Sub-Saharan Africa (SSA) within the IMF.
The Third Chair will basically support the voice and representation of these groups of countries on the policy agenda, and agenda setting but also decision making on the policies that these institutions will take, that will affect SSA countries or the global economy itself generally.
He explained that they were able to structure the three different groups that the three Chairs will represent, and Sierra Leone is sharing a Chair with ECOWAS countries. The Minister says that he is part of the committee that is going to reorganise the rotation, schedules and the responsibility of every country to be represented in the Board as Executive Directors, Advisors and the role that the Governors will play in the International Monetary and Financial Committee (IMFC). ZIJ/22/4/2024