- The IMF Executive Board today completed the first and second reviews of Sierra Leone's arrangement under the Extended Credit Facility. The decision allows for an immediate disbursement of about US$79.8 million.
- The first review was delayed following program slippages last year. These included fiscal overruns-financed in part by central bank purchases of government securities-reserve depletion, and reform delays, but performance has since improved.
- Plans to strengthen the fiscal effort, reinforce debt management, and protect the most vulnerable will be key to the success of the program. Program policies will also support macroeconomic and financial stability, help rebuild reserves, and reinforce governance.
Washington, DC: The Executive Board of the International Monetary Fund (IMF) today completed the first and second reviews of Sierra Leone's arrangement under the Extended Credit Facility (ECF). The completion of the reviews enables the immediate disbursement of SDR 58.3 million (about US$79.8 million), bringing total disbursements under the ECF arrangement to SDR 93.3 million (about US$127.8 million).
The ECF arrangement was approved by the IMF Board on October 31, 2024, to maintain debt sustainability, address fiscal dominance, reduce inflation, rebuild reserves, support growth, and strengthen governance, institutions, and the rule of law (see Press Release No. 24/432 ). The first review was delayed amid spending overruns in 2024—financed in part by central bank purchases of government securities—as well as reserve depletion, and reform delays. However, program performance has since improved.
In completing the first and second reviews, the Executive Board approved waivers of non-observance of the end-December 2024 performance criteria pertaining to net credit to government, net domestic assets, and net international reserves, and the end-June 2025 performance criterion on net international reserves, all based on corrective actions carried out by the authorities.
Sierra Leone's economic outlook remains stable, with growth projected to reach 4.4 percent in 2025, supported by the mining and agriculture sectors. Inflation declined to 4.4 percent in October 2025 amid the ambitious macroeconomic policy tightening and a stable leone and is projected to remain in single digits over the medium term. However, reserves dropped to 1.5 months of imports as of end-September, and debt remains at high risk of distress. The outlook faces considerable risks, including from potential reform fatigue due to the sizable magnitude of the required fiscal adjustment.
At the conclusion of the Executive Board's discussion, Mr. Bo Li, Acting Chair and Deputy Managing Director, made the following statement:
"The authorities have brought the ECF back on track following program slippages in 2024, and the economy is reacting favorably. Inflation declined to 4.4 percent by October 2025, the leone remains stable, growth is near potential, and the cost of borrowing has dropped to sustainable levels. However, debt remains at high risk of distress and reserves have fallen to 1.5 months of imports in September.
"The authorities' plans to tighten fiscal policy more than previously anticipated given the previous fiscal slippages is imperative. Steadfast implementation of recent revenue measures will be key, alongside improvements in tax compliance and administration. Public financial management reforms will help avoid fiscal overruns and support expenditure restraint, but social spending needs to be protected.
"Maintaining debt sustainability will require adhering to the ambitious fiscal adjustment path, supported by robust improvements in debt management practices. Efforts should be intensified to secure grants and concessional financing, lengthen debt maturities, broaden the investor base, build buffers, and ensure that debt securities are issued at sustainable rates.
"Monetary policy can continue transitioning to a neutral stance given low inflation and continued fiscal consolidation. Efforts to enhance central bank safeguards and the monetary policy framework should continue. Rebuilding reserves is an urgent priority, and the authorities should continue to allow the exchange rate to adjust flexibly to shocks. FX spending by the government needs to be curtailed.
"Ongoing efforts to strengthen financial sector oversight, regulation, and safety nets will improve financial stability. Meanwhile, the authorities should continue to proactively address solvency issues in the banking system.
"Progress with structural reforms will underpin Sierra Leone's growth potential. The publication of the Governance and Corruption Diagnostic report is welcome. The authorities should now focus on its steadfast implementation to enhance governance and address corruption vulnerabilities."
Sierra Leone: Selected Economic Indicators |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
