In a statement on Thursday, the Fund attributed the economic turbulence to a decline in mining activities and slowdown in the non-iron ore sector.
The statement comes at the end of a visit by an IMF mission to the country between June 4 and 12. The mission, headed by Brian Aitken, was tasked with assessing economic conditions and lay the basis for a follow-up mission, which has been temporary slated for late summer.
Officials say these meetings are all geared towards reaching a revised program arrangement for the country. Mr Aitken and team met with President Julius Maada Bio and Vice President Mohamed Juldeh, as well as the Minister and Deputy Minister of Finance, Financial Secretary, Governor and Deputy Governor of Bank of Sierra Leone and other senior government officials.
According to the IMF statement issued by the office of the Country Representative, Ms Iyabo Masha, economic growth slowed down to 3.5 percent in 2017, from 6.3 percent in 2016. It also said inflation,
which peaked at 20 percent in March 2017, fell to 15 percent in April 2018, partly reflecting the moderation in exchange rate depreciation.
“The outlook for 2018 is mixed. Following a slow start due to uncertainties about the general elections, economic activity has picked up somewhat in the second quarter. However, the economy will continue to face headwinds from the closure of the main iron ore mine early in the year, with annual growth currently projected at 3.7 percent,” it states.
IMF identified a ‘challenging’ macro-financial environment in the country, attributing it to inadequate budget revenue and weak spending discipline which are said to have led to a sizeable increase in the
stock of budget arrears over the last year. It said this represented the main threat to near-term macroeconomic stability.
The Fund then acknowledged the efforts been made by the new administration, which include the rolling out of the Treasury Single Account, a reduction in duty waivers and exemptions, stronger
oversight over ministries, departments and agencies, and expenditure restraint.
It added that while these steps have helped ease somewhat the short-run pressures on the budget’s borrowing need, additional steps were needed to boost revenue and control expenditure to ensure
that public finances can be put on a sustainable basis. Meanwhile, the process toward reaching agreement on a revised IMF-supported program is ongoing. During this mission, the IMF team
and Sierra Leone authorities reached a common understanding on the key areas where additional progress are needed, according to the statement.
Some of these areas include a plan for financing the 2018-2019 budget; increasing accountability, transparency and oversight of ministries, departments and agencies; and advancing the legislative reform agenda in the areas of banking, public financial management, and revenue administration.
“If progress in these areas continues in the coming weeks as anticipated, a mission would return to Freetown in September with the goal of finalizing agreement on a new program arrangement,” it said.