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IMF Executive Board Concludes the 2013 Article IV Consultation with Sierra Leone
FREETOWN – The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Sierra Leone,1 and approved a three–year arrangement under the Extended Credit Facility (ECF) in support of the authorities’ economic and financial program for 2013-2016 (see Press Release No. 13/410).
Sierra Leone has made significant progress in macroeconomic stabilization over the last five years. Real Gross Domestic Product growth averaged some 7 percent, driven by output expansion in agriculture, mining, and services; as well as the scaling-up of infrastructure investment. Nonetheless, important impediments to broad-based growth remain, including large infrastructure gaps, insufficient energy supply, and limited access to safe water and sanitation on October 21, 2013.
To address the country’s remaining challenges, the authorities have prepared a new Poverty Reduction Strategy–Agenda for Prosperity–that focuses on measures to advance economic diversification, improve public service delivery and social protection for the most vulnerable, and increase employment opportunities. The new strategy aims to achieve economic transformation through increased investment in energy, roads, transportation, and agriculture; as well as growth-enhancing structural reforms.
Recent economic and financial developments were encouraging. The inflation rate (year-on-year) declined from 12.1 percent in 2012 to 9.1 percent at end-September 2013, partly reflecting a tighter monetary policy stance. With the onset of iron ore exports, and better terms of trade, the external position improved in 2012, and gross international reserves rose to about 3 months of imports. The fiscal deficit stood at 5.6 percent of non-iron ore GDP in 2012, well above the original budget target because of expenditure overruns partly linked to the November elections. However, the fiscal position improved in the first half of 2013 thanks to revenue-enhancing measures, expenditure restraint, and enhanced Treasury cash management. Monetary and banking sector developments have been broadly satisfactory and risks to financial sector stability appear contained.
Medium-term prospects are positive. Growth is projected to remain robust, mainly driven by iron ore production and continued high public investment; while inflation is expected to decline further as monetary and fiscal policies remain prudent. The main risks to the outlook are related to possible adverse fluctuations in global commodity prices and uncertainties on iron ore production.
Executive Board Assessment
Executive Directors welcomed the progress made by Sierra Leone in recent years but noted that poverty remains widespread and improvement in social indicators has been modest. Accordingly, Directors emphasized that strong commitment to sound policies and structural reforms under the new ECF-supported program will be important to consolidate macroeconomic stability, build policy buffers, and foster sustainable and inclusive growth.
Directors stressed the importance of continued efforts to strengthen the fiscal position. They welcomed the authorities’ renewed focus on revenue mobilization and their plans to improve expenditure controls and avoid further spending overruns. They looked forward to the authorities’ medium-term expenditure framework which should guide the implementation of the new Poverty Reduction Strategy, including giving priority to infrastructure investment and pro-poor spending. To boost revenue, Directors called for measures to increase efficiency in tax administration, broaden the tax base, and establish a comprehensive tax regime for the natural resources sector. Accelerating public financial reforms should help strengthen budget processes and expenditure management, especially management of capital expenditure.
Directors welcomed efforts to improve debt management capacity and urged the authorities to continue to cover Sierra Leone’s financing needs mainly with grants and concessional loans. They also called for a careful prioritization of large-scale infrastructure projects envisioned in their Poverty Reduction Strategy. Directors advised the authorities to ensure that large projects are consistent with macroeconomic stability and debt sustainability.
Directors encouraged the authorities to maintain a tight monetary policy to reduce inflation further. The monetary authorities should stand ready to raise the policy rate and mop up excess liquidity, if inflationary pressures intensify. Given Sierra Leone’s vulnerability to external shocks, Directors saw merit in increasing international reserves over the medium term and maintaining a flexible exchange rate.
Directors noted that, while the financial sector has expanded significantly, the provision of financial services remains limited. They encouraged the authorities to take additional steps to broaden access and facilitate intermediation. Addressing gaps in banking supervision and strengthening the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) framework will also be important.
Directors emphasized that deeper structural reforms remain necessary to foster broad-based growth and reduce poverty. Key priorities should focus on improving the business environment, investing in infrastructure, including energy sector and advancing economic diversification.
FREETOWN – The Executive Board of the T (IMF) concluded the Article IV consultation with Sierra Leone,1 and approved a three–year arrangement under the Extended Credit Facility (ECF) in support of the authorities’ economic and financial program for 2013-2016 on October 21, 2013.
Sierra Leone has made significant progress in macroeconomic stabilization over the last five years. Real Gross Domestic Product growth averaged some 7 percent, driven by output expansion in agriculture, mining, and services; as well as the scaling-up of infrastructure investment. Nonetheless, important impediments to broad-based growth remain, including large infrastructure gaps, insufficient energy supply, and limited access to safe water and sanitation.
To address the country’s remaining challenges, the authorities have prepared a new Poverty Reduction Strategy–Agenda for Prosperity–that focuses on measures to advance economic diversification, improve public service delivery and social protection for the most vulnerable, and increase employment opportunities. The new strategy aims to achieve economic transformation through increased investment in energy, roads, transportation, and agriculture; as well as growth-enhancing structural reforms.
Recent economic and financial developments were encouraging. The inflation rate (year-on-year) declined from 12.1 percent in 2012 to 9.1 percent at end-September 2013, partly reflecting a tighter monetary policy stance. With the onset of iron ore exports, and better terms of trade, the external position improved in 2012, and gross international reserves rose to about 3 months of imports. The fiscal deficit stood at 5.6 percent of non-iron ore GDP in 2012, well above the original budget target because of expenditure overruns partly linked to the November elections. However, the fiscal position improved in the first half of 2013 thanks to revenue-enhancing measures, expenditure restraint, and enhanced Treasury cash management. Monetary and banking sector developments have been broadly satisfactory and risks to financial sector stability appear contained.
Medium-term prospects are positive. Growth is projected to remain robust, mainly driven by iron ore production and continued high public investment; while inflation is expected to decline further as monetary and fiscal policies remain prudent. The main risks to the outlook are related to possible adverse fluctuations in global commodity prices and uncertainties on iron ore production.
Executive Board Assessment
Executive Directors welcomed the progress made by Sierra Leone in recent years but noted that poverty remains widespread and improvement in social indicators has been modest. Accordingly, Directors emphasized that strong commitment to sound policies and structural reforms under the new ECF-supported program will be important to consolidate macroeconomic stability, build policy buffers, and foster sustainable and inclusive growth.
Directors stressed the importance of continued efforts to strengthen the fiscal position. They welcomed the authorities’ renewed focus on revenue mobilization and their plans to improve expenditure controls and avoid further spending overruns. They looked forward to the authorities’ medium-term expenditure framework which should guide the implementation of the new Poverty Reduction Strategy, including giving priority to infrastructure investment and pro-poor spending. To boost revenue, Directors called for measures to increase efficiency in tax administration, broaden the tax base, and establish a comprehensive tax regime for the natural resources sector. Accelerating public financial reforms should help strengthen budget processes and expenditure management, especially management of capital expenditure.
Directors welcomed efforts to improve debt management capacity and urged the authorities to continue to cover Sierra Leone’s financing needs mainly with grants and concessional loans. They also called for a careful prioritization of large-scale infrastructure projects envisioned in their Poverty Reduction Strategy. Directors advised the authorities to ensure that large projects are consistent with macroeconomic stability and debt sustainability.
Directors encouraged the authorities to maintain a tight monetary policy to reduce inflation further. The monetary authorities should stand ready to raise the policy rate and mop up excess liquidity, if inflationary pressures intensify. Given Sierra Leone’s vulnerability to external shocks, Directors saw merit in increasing international reserves over the medium term and maintaining a flexible exchange rate.
Directors noted that, while the financial sector has expanded significantly, the provision of financial services remains limited. They encouraged the authorities to take additional steps to broaden access and facilitate intermediation. Addressing gaps in banking supervision and strengthening the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) framework will also be important.
Directors emphasized that deeper structural reforms remain necessary to foster broad-based growth and reduce poverty. Key priorities should focus on improving the business environment, investing in infrastructure, including energy sector, and advancing economic diversification.
Following the marginal reduction of the pump prices of premium motor spirit (PMS) by the Dangote Petroleum Refinery and the Nigerian National Petrol Company Limited (NNPC Ltd), civil society groups have reacted by calling for further downward review.
Recall that the Dangote Petroleum Refinery had announced a partnership with MRS Oil and Gas to offer petrol at N935 per litre at retail outlets, while it reviewed the ex-depot price from N970 to N899.50 per litre.
The move, saw state oil major, the Nigeria National Petroleum Company peg its retail prices at N965/litre.
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However, the civil society groups are of the opinion that the price reduction, fall short of expectations.
According to the Chairman, Centre for Accountability and Open Leadership, Debo Adeniran, the reduced price of N935/litre was still expensive and unsatisfactory.
He pointed out that petrol was just one of the products coming out of crude and that both government and private business could still give out free petrol to citizens while making huge profits from the other products.
In his words, “Well, we believe that if NNPC and the private sector actually give out PMS for free, they will still not run their business at a loss, because the other derivatives of petroleum products can still serve them, and can still make them to break even. So, even at that N900 and something, it’s still expensive.
“Dangote has kind of mooted the idea that it could drop to as low as N650. And if he has mulled this, then it means that it is the state, it is the NNPC that will have been the clog in the wheel of such progress. And you know also that we expected that fuel prices, especially PMS prices, will drop below N200 when Dangote was expected to come on stream.
“So, it’s unfortunate that we are still talking about over N900 and they want us to jump up and rejoice for that. That is not satisfactory. They should just let us see the breakdown of their production cost and why it’s still there. I mean, there are countries like Libya under Gaddafi that gave out PMS for free and they didn’t run anything at any loss. So, I believe that it can still go further down.”
On his part, the Executive Director of the Civil Society Legislative Advocacy Centre, Ibrahim Rafsanjani, commended the reduction of fuel prices by the NNPC and Dangote, but said the government could still reduce the price.
“Dangote’s own is about N899 or something like that. Well first and foremost, we are happy that there is a little reduction in the prices. But also based on analysis and based on facts and evidences, we believe that it is possible for the Nigerian government to further reduce the prices.
“Because if a private company can reduce the price and it still makes profit, we wonder why government-owned enterprises cannot really pity its citizens,” he said.
The Central Bank of Nigeria (CBN) has announced a significant growth in the country’s economy, with a 3.46% increase in gross domestic product (GDP) in the third quarter of 2024.
This marks the third consecutive quarter of expansion, up from 3.19% in Q2 2024 and 2.54% in Q3 2023.
According to the newly published Q3 economic report, Nigeria’s GDP output rose to ₦20.115 trillion, reflecting a notable improvement from ₦18.285 trillion in the previous quarter.
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The CBN attributed this growth primarily to the performance of the non-oil sector, which grew by 3.37% compared to 2.80% in Q2 2024.
The report highlighted transportation, crop production, and other sub-sectors such as financial & insurance services, information & communication, trade, and real estate as major contributors to the expansion.
The non-oil sector accounted for 3.18 percentage points of the total growth rate.
“The expansion of the non-oil sector was driven by the performance of the financial & insurance, information & communication, crop production, trade, transportation & storage, and real estate sub-sectors,” the report stated.
Despite the economic growth, challenges persist. Inflation, particularly in food prices, remains a significant concern, standing at 39.93% as of November 2024.
Rising food and energy costs have also impacted transportation expenses, with intercity bus fares increasing by 20.23% year-on-year to ₦7,117.17 in July 2024, according to the National Bureau of Statistics.
Furthermore, the cost of petroleum, now exceeding ₦1,000 per litre, has driven up logistics and transportation expenses, adding pressure to households and businesses alike.
The CBN acknowledged these challenges, noting that the growth was achieved despite headwinds such as high inflation and rising operational costs.
Enhanced security measures in the Niger Delta have boosted domestic crude oil production, while restrictive monetary policies have helped moderate inflation in some areas.
“The growth recorded in the country is a result of continued efforts to improve the business environment, streamline cumbersome business processes, and deepen the quality of business infrastructure,” the CBN noted.
However, the report comes amid concerns over businesses exiting Nigeria due to persistent economic challenges.
Asharami Synergy, a leading downstream energy solutions provider, has demonstrated its commitment to community development and education by donating essential furniture to Gaskiya Junior School in Ijora, Lagos, Nigeria.
Biztellers reports that the social responsibility initiative was executed in collaboration with Sahara Group Foundation – the social impact vehicle of global energy conglomerate, Sahara Group.
It was gathered that the initiative is part of Asharami Synergy’s ongoing efforts to support education in communities.
The donation includes classroom desks and chairs for the JSS1 classes.
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CEO of Asharami Synergy, Nomnso Dike, said the project will create a more comfortable and functional learning environment and enhance student performance.
“We are delighted at the opportunity to support the attainment of Sustainable Development Goal (SDG) 4, which focuses on ensuring inclusive and equitable quality education. It has been a privilege to collaborate with the management and students of Gaskiya Junior School to deliver this project, and we look forward to future opportunities to enhance academic performance in this historic institution,” Dike said.
According to him, Asharami Synergy’s education-focused social impact initiatives have benefitted over 10,000 individuals. They focus on building capacity and providing the resources necessary to help students learn and grow sustainably.
“Education is the foundation of a brighter future, and at Asharami Synergy, we believe that every child deserves a learning environment that inspires and empowers them” he noted, adding, “This donation is not just about providing furniture; it’s a reminder to the students that their dreams are valid, and we are committed to helping them achieve their goals.”
Vice Principal Academic of Gaskiya Junior School, Sola Oladokun, commended Asharami Synergy for the donation, noting that it would inspire students to perform better with “increased concentration and fewer distractions”.
“These desks and chairs are a game-changer for our students. It’s heartwarming to see their excitement, and as teachers, we are equally thrilled because this will make teaching and learning more effective. We are incredibly grateful to Asharami Synergy and Sahara Group Foundation for this thoughtful intervention,” she added.
Two representatives of the students, Akin Moses and Chukwudi Gift, at the event said the donation would increase their “desire to dream bigger and concentrate better during lessons”.
Also speaking at the commissioning, COO at Asharami Synergy, Adekanmi Adesola, said, “What started as an opportunity to support the communities that host our operations has now come full circle. This donation directly impacts the lives of these students, and we are proud to bring smiles to the faces of the students and teachers.”
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