To combat slow economic growth and rising inflation, the International Monetary Fund (IMF) board has approved a new $172 million loan program for the West African country.
The new deal, which is a 43 month agreement, comes after a $240 million financing plan that was suspended in February over foot-dragging on reforms such as taxing luxury car imports, and removing subsidies on fuel and rice.
A statement released by the IMF said “the objectives of the previous program remain appropriate, but circumstances call for a recalibration. The main objectives of the current program are to safeguard macroeconomic stability, deepen structural reforms, and advance the country’s education for development and poverty reduction agendas”.
After the civil war in 2002, the West African country recovered and saw an impressive economic growth, but its economy was then battered by an Ebola epidemic and falling commodity prices. Economic growth has declined from 6.3 percent in 2016 to an estimated 3.75 percent in 2018.
The finance ministry and the central bank signed a memorandum of understanding with IMF highlighting the need for the new government elected in April to cooperate with the institution’s conditions on budget spending and accounting.
The IMF has reclassified Sierra Leone as a “high risk” for debt distress as a result of the economic slowdown.
During a visit to Sierra Leone in October, Brian Aitken, an IMF representative said “the economic environment remains challenging, with output growth still recovering from the recent loss in iron ore mining and reduced activity in the non-mining sectors”.