IMF, Sierra Leone Reach Staff-Level Agreement to Unlock $78.8m Under ECF Programme
An International Monetary Fund (IMF) mission led by Christian Saborowski has concluded discussions with Sierra Leonean authorities on the first and second reviews of the country’s Extended Credit Facility (ECF) arrangement, reaching a staff-level agreement that, once approved by the Fund’s Management and Executive Board, will make available about US$78.8 million in financing.
The mission took place from October 3–10, 2025, marking the first assessment of Sierra Leone’s performance since the US$240 million ECF programme was approved in October 2024.
Fiscal Slippages Underscore Urgent Need for Consolidation
According to the IMF, fiscal policy tightened by 1.9 percentage points of GDP less than anticipated in 2024 due to “substantial unbudgeted spending,” primarily on road construction. These overruns increased the government’s demand for domestic financing and contributed to elevated borrowing costs.
Authorities are now targeting a domestic primary surplus of 0.6% of GDP in 2025—a substantial fiscal consolidation of 3.3 percentage points of GDP compared to 2024. However, commitments to increase social spending under the programme have not been met.
The IMF stressed that a “larger fiscal effort” will be essential to bring the programme back on track and ensure debt sustainability. Revenue mobilisation measures equivalent to 1.5% of GDP will form the core of this adjustment, supported by strengthened tax compliance and expenditure restraint.
Monetary Policy Eases as Inflation Declines
The report noted that monetary policy has begun shifting toward a neutral stance amid falling inflation and tightening fiscal conditions. The Bank of Sierra Leone (BSL) has lowered its monetary policy rate by a cumulative 6 percentage points to 18.75% since May, with reserve money growing in line with programme targets.
Inflation fell sharply to 4.4% in October, while T-bill rates have dropped from over 40% to about 17% since mid-year. Despite these improvements, the IMF flagged a sharp drop in external reserves—now at 1.5 months of import cover—as a major vulnerability.
Rebuilding reserve buffers, it said, must become “an urgent priority,” requiring increased FX purchases, reduced government imports, and continued exchange rate flexibility.
Growth Shows Resilience but External Buffers Remain Weak
Despite tight macroeconomic policies, Sierra Leone’s economy has continued to expand, with GDP growth projected at 4.4% in 2025 and 4.6% over the medium term. Inflation is expected to remain in single digits.
Nonetheless, the IMF warned that risks remain elevated. Reform fatigue, a challenging external environment, and tighter global financial conditions could undermine the authorities’ adjustment efforts.
Structural Reforms Remain Central to Programme Success
The mission emphasised the need to accelerate structural reforms to strengthen fiscal governance, debt management and financial stability. Persistent solvency challenges in the banking sector require urgent attention, while governance reforms should prioritise implementation of the Governance and Corruption Diagnostic recommendations.
The Fund also encouraged continued improvements in public financial management and a more robust monetary policy framework to enhance policy credibility.
Engagement with Authorities and Stakeholders
During the mission, IMF staff held discussions with Finance Minister Bangura, Central Bank Governor Stevens, senior government officials, as well as representatives of civil society, the private sector and development partners.
The Fund expressed appreciation for the “open and productive discussions” and reaffirmed its commitment to supporting Sierra Leone’s reform agenda under the ECF programme.
