Sierra Leone president Bio opens talks with IMF and development partners

Sierra Leone Telegraph: 13 April 2018:

Sierra Leone’s newly elected president Julius Maada Bio was today granted a vote of confidence by the IMF and the country’s international development partners at a High-Level Forum on Economic Policy Priorities, jointly organised by the IMF and the ministry of finance in Freetown.

Early this year, the IMF was forced to suspend its loan agreement with the Koroma APC government, following the government’s failure to achieve key milestones agreed with the IMF, such as control of government spending and raising revenue.

But it was the decision of the APC government to utilize public funds, including taxes raised by the National Revenue Authority (NRA) to pay for its expensive elections campaign, that was to shatter the confidence of the IMF, leading to the suspension of its loan agreement with the Koroma government. (Photo: President Koroma).

And as confidence in the Koroma government fell dramatically on the eve of the country’s general and presidential elections, international development partners also suspended their financial support for the Koroma government – including foreign aid, until the results were announced.

With the declaration of the Sierra Leone Peoples Party (SLPP) as the winner of the presidential election, comes renewed efforts by the IMF and international partners, to work with the new government of Sierra Leone so as to stabilise the economy and expand economic growth.

The aim now is to support president Julius Maada Bio and his SLPP government to start the hard task of rebuilding Sierra Leone’s economy, that has been battered by ten years of rampant corruption in high places and poor governance.

Speaking at the forum today, which was attended by members of the international diplomatic and consular corps, the IMF Team for Sierra Leone, development partners, Sierra Leone government officials and heads of ministries, departments and agencies, this is what President Julius Maada Bio (Photo) said:

“I am delighted that the International Monetary Fund has resumed their engagement with my new administration by organizing this High-Level Forum on Economic management. You all may be aware that on March 7 and 31, Sierra Leoneans went to the polls and voted for change in the New Direction.

“In the days following my assumption of power, Sierra Leoneans have shown a high level of maturity towards one another. Winners have been magnanimous in victory and losers have accepted their loss with serenity.

“This election has therefore solidified our credentials as a peace-loving people who have put the past few weeks behind them and ready to move forward. I very much thank the leadership of all political parties especially the All People’s Congress for quickly coming to terms with the change of Government.

“As you may be aware, my Government has been in power for less than two weeks, and our transition team was formed only a week ago. The team has been busy engaging key stakeholders on policy issues, and during this period, we have come to realize the enormous challenges that the country faces.

“At the same time, we are cognizant of the hopes and aspirations of our people, who gave us the mandate to lead this country for the next five years. As we gradually settle down and take stock of the state of the nation, we will form some views on how we can navigate these difficult circumstances.

“In that regard, I very much appreciate the focus of this seminar on discussing the present economic vulnerabilities and challenges and suggesting ways to quickly bring back sanity to the policy environment.

“During the Presidential campaign, I told the people of Sierra Leone that the economic situation is appalling and requires hard choices, which I am strongly committed to deliver on. Initial assessment by the Governance Transition Team reveals that my administration will be faced with the worse economic situation since independence.

“Before now, Government cannot pay monthly salaries without borrowing or heavy reliance on overdraft facility at the Bank of Sierra Leone which now stands at over 160 billion Leones. More serious is that today, Sierra Leone’s external debt is at the level of $2 billion (Two billion dollars) and domestic debt is 4.9 trillion Leones.

“With the signing of new agreements on the eve of the elections, Sierra Leone is already in a debt crisis, which in collaboration with our development partners we must urgently address. In addition, the health of the banking system is significantly challenged by the financial conditions of two state owned banks that have huge non-performing loans, some to politically exposed persons.

“This, coupled with low levels of economic growth, high incidence of poverty, lack of economic diversification, high unemployment and challenging business environment for private sector development, have further exacerbated the problems.

“It is in light of these challenges I pledged to the People of Sierra Leone, which are well articulated in my Manifesto, that we must restore economic discipline by substantially reducing leakages in domestic revenue mobilization and controlling expenditures to finance development programmes.

“As a demonstration of my Government’s commitment, we have initially taken the following revenue measures:

“Suspended all duty waivers except those covered under the Vienna Convention

“Directed all Ministries, Departments and Agencies that collect and retain Government revenues to transfer all revenues into the Consolidated Revenue Fund with immediate effect consistent with provisions of the Fiscal Management and Control Act 2017

“Suspended the export of timber logs with immediate effect

“For the first time in two years, Government will pay salaries of 150 billion Leones including payment of NASSIT contributions without recourse to domestic borrowing. We would broaden revenue enhancing measures towards achieving our target of at least 20 percent of GDP.

“In addition, we will soon put in place measures to harmonize public sector wage bill including state owned enterprises, limit excessive overseas and local travels, control procurement and maintenance of vehicles

“It is clear that we cannot deliver on these without the support of our development partners. I hope that the Forum will provide us with the opportunity to deepen our understanding of the challenges ahead of us, and guide us to take the urgently required measures, a key part of which is resumption of the dialogue with both the IMF and other development partners.

“Ladies and gentlemen, I believe we won this election on the strength of our programmes and ideas for the future of this country as systematically presented in the New Direction. As we take on the reins of government and match towards economic recovery, we will be guided by the promises we made to Sierra Leoneans.

“We promised change through our New Direction to the people, a change that restores sanity in economic and financial management, a change that provides quality service delivery to the people of Sierra Leone. This change would only be realized when we make progress on transforming the economy, improving governance and human development, and by improving on value for money on infrastructural development.

“Finally, let me affirm my commitment to renegotiate with the IMF to resume implementation of Extended Credit Facility Programme, aimed at restoring economic stability,” says president Bio.

Massive investment capital urgently needed

It is clear from the tone and tenor of that statement to the IMF and Sierra Leone’s international development partners, that president Julius Maada Bio means business and takes his job of transforming the misfortunes of the country very seriously.

There is no doubt now, that the IMF will move towards lifting its suspension of its loan agreement with the government of Sierra Leone, after having been assured today of good governance and a campaign to tackle corruption and economic mismanagement by president Julius Maada Bio.

In 2011 alone, former president Koroma allowed the loss of over $200 million from the country’s revenue, as a result of giving  massive tax and import duty waivers to members of his family, political and business associates, and a  few foreign companies.

Although hundreds of millions of dollars were spent on infrastructure development, it is estimated that 70% of that money went into the pockets of contractors and public officials as corrupt sweeteners and contract kickbacks. President Bio must quickly bring an end to this culture of corruption in Sierra Leone and end financial leakages.

But Sierra Leone needs massive investment of about $500 million, to improve its electricity, water supply, fishing sector, agro-based processing industry, and to manufacture as well as add value to forestry products for exports.

This investment, if it can be leveraged, will help the Bio government diversify the economy, end its reliance on mining export – especially iron ore and rutile, create hundreds of thousands of jobs for its 4 million unemployed youths, and widen the country’s taxation base.

That is the challenge for president Julius Maada Bio in his first term in office. If he succeeds, he can look forward to staying in office until 2023, when his constitutional fixed terrn tenure comes to an end.

Listen to president Bio here: