In its Country Report No. 18/371 for Sierra Leone, the International Monetary Fund (IMF) stated that to moderate the risk of debt distress, “the authorities remain committed to prudent debt management.” The was contained in the Statement of Dumisani Hebert Mahlinza, Executive Director for Sierra Leone and Willie Nakunyada, Advisor to the Executive Director which was part of the 18/371 Report. The statement noted that through the implementation of the Medium-Term Debt Management Strategy, the authorities will continue to prioritize concessional loans and grants to finance infrastructure development projects.  “They (Sierra Leone) have cancelled or put on hold huge infrastructure projects with planned financing from debt contracted on non-concessional terms. Going forward, the authorities will prioritize donor support, concessional financing and non-debt creating financing models such as PPPs, with appropriate safeguards,” Executive Director Mahlinza said. He went further to say that as part of the broad debt management framework, the authorities attach priority to institutional and legal reforms to guide the contracting of both domestic and foreign debt for the central government, local governments, and state-owned-enterprises (SOEs). “In this respect, they will vigilantly monitor the evolution of domestic debt to ensure that it remains within sustainable and affordable limits.” He noted, this will lessen the burden of domestic borrowing on private sector development. The authorities will prioritize grants and concessional external financing. Further efforts, he said, will be made to settle budget arrears to service providers with a view to boosting private sector activity and help improve bank asset quality. On the Financial, Monetary and Exchange Rate Policies, the Government are committed to constantly strengthen the bank regulatory and supervisory framework in order to safeguard financial stability.  Presently, they are transitioning to a risk-based supervision system, with more resources deployed towards banking institutions exhibiting greater risks. Moreover, the Bank of Sierra Leone (BSL) recently established the Financial Stability Department to help identify, assess and communicate emerging financial sector vulnerabilities. The on-going technical support from the IMF will help in the development of a robust financial stability regime supported by a strong macro-prudential toolkit. Further, the BSL considers financial sector development as important, and has focused the broad financial sector strategy on financial inclusion and the digital financial services sector. On Structural Reforms, the Government have promised to improve the business climate to attract foreign investment and diversify the economy, strengthen resilience to exogenous shocks, enhance competitiveness, and support inclusive and durable growth.  To this end, they plan to implement measures aimed to develop enabling infrastructure, increase access to affordable finance, invest in tertiary and vocational training under the government’s flagship Free Education Program, and automate systems to streamline business registration procedures.  “The new administration has also stepped up efforts to combat corruption and strengthen governance practices. In this connection, the Anti-Corruption Commission (ACC) has intensified its investigations and prosecution of offenders for both past and current cases” the IMF statement adds. In his conclusion, Executive Director Mahlinza said that the authorities reiterate their steadfast commitment to implement comprehensive reforms aimed at placing the economy firmly onto an accelerated growth path.  Accordingly, they remain determined to implement an appropriate mix of fiscal, monetary, and structural reform measures to unleash the economy’s growth potential and achieve the desired social outcomes.

ZJ/23/2/1

By Zainab Iyamide Joaque

Monday February 25, 2019.