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Sierra Leone: IMF approves USS46.14m disbursement

Executive Board of the International Monetary
Fund (IMF) has approved US$64.59 million
(equivalent of SDR 46.665 million of the local
country’s currency) to be distributed in three
tranches to Sierra Leone.

The augmentation of access was approved after the
Executive Board completed the third and fourth
review of Sierra Leone’s performance under a
three-year arrangement by the Extended Credit
Facility (ECF).

IMF said: “The completion of the third and fourth
review enables the immediate disbursement of US
$46.I4 million (SDR 33.335 million). This amount
includes the first tranche of the augmentation in an
amount of about US$2 l .53 million (SDR 15.555

The Executive Board also approved the authorities’
request for the re-phasing of the fifth and sixth
disbursements under the arrangement.

In completing the review, the Executive Board
additionally approved the authorities’ request for
waivers of non-observance of the end December
2014 performance criteria on the ceiling on Net
Domestic Bank Credit to Government.

“The ECF arrangement for SDR 62.22 million (about
US$95.9 miIIion) was approved in October and was
augmented twice,” the Fund said.

Following the Executive Board’s discussion on
Sierra Leone, Min Zhu, Deputy Managing Director
and Acting Chair, said: “With the World Health
Organization declaring Sierra Leone Ebola free on
November 7, the country now faces the difficult
challenge of economic recovery.

“Complicating that task, the decline in iron ore
prices has led to the shutdown of the main iron ore
mines, with consequent sharp declines in GDP and
exports, and reduced fiscal revenues.”

He said; “As a result, the fiscal challenges in 2016
will be substantial. It will be critical for the
authorities to ensure sufficient revenues and
financing to priority spending, especially for the
post Ebola Economic Recovery Strategy (ERS).

“This will require strong moves on tax policies and
continued efforts on tax administration.

“The Bank of Sierra Leone should continue
targeting price stability in support of economic

“With depreciation pressures stemming the lost
iron ore exports, BSL should enhance monetary
policy instruments and liquidity forecasting to
increase its ability to respond to any second round
inflationary pressures.

“BSL should also enhance supervision of the
financial sector, understand and resolve any
underlying stress through a timely diagnostic of
key troubled bank.

“The updated debt sustainability analysis shows
that while Sierra Leone’s risk of debt distress is
moderate, the economy is increasingly vulnerable
to further shocks. Thus, borrowing policies should
remain prudent in view of the narrow export base
and fragile fiscal position.

“Financing needs, particularly for investment
projects should continue to be covered mostly with
grant and concessional loans.”

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