Sierra Leone: 2013 Article IV Consultation and Request for a Three-Year Arrangement Under the Extended Credit Facility

KEY ISSUESContext. Against the background of challenging economic and social conditions,Sierra Leone has been making progress since the end of the civil conflict in 2002. Theeconomy has been growing at a solid pace, inflation has been trending down, and sociopoliticalstability is taking hold. Going forward, the authorities need to strengthen policyimplementation particularly in the fiscal area to entrench macroeconomic stability, supportprivate sector development and job creation, and develop social policies to protect themost vulnerable groups in the population.Consultation focus. Policy discussions focused on fiscal consolidation and public financialmanagement reforms; monetary policy and price stability; borrowing policies and long-termdebt sustainability; private sector development and structural reforms to enhance inclusivegrowth.Staff views. Staff recommends the approval of the authorities' request for a three-yeararrangement under the Extended Credit Facility (ECF) in an amount of SDR 62.22 million(60 percent of quota). In May 2013, the authorities decided to cancel the three-year ECFarrangement approved by the Board in June 2010 because key objectives under theprogram supported by the arrangement were no longer achievable. The new arrangementis aimed at supporting the authorities' efforts to consolidate macroeconomic stability,strengthen the fiscal position, build external buffers, and promote broad-based economicgrowth in the context of their new Poverty Reduction Strategy (PRS).Safeguards assessment. The latest safeguards assessment was updated in 2010. The nextupdate will be completed by the time of the first review of the proposed ECF arrangement.The new Poverty Reduction Strategy. The Joint IMF-World Bank Staff Advisory Note onthe new PRS will be circulated to the Board in early November.