The International Monetary Fund said Monday it has reached a staff-level agreement with Sierra Leone on the third review of its economic reform programme and on a new arrangement aimed at strengthening the West African nation’s resilience to climate change.
The agreement covers Sierra Leone’s programme under the Extended Credit Facility (ECF) and a request for access under the IMF’s Resilience and Sustainability Facility (RSF), which supports countries facing long-term climate-related vulnerabilities.
The IMF mission, led by Christian Saborowski, visited Sierra Leone from April 20 to May 1, 2026, and said the country’s economic adjustment programme had delivered “tangible results,” including stronger fiscal performance and improved macroeconomic stability.
According to the IMF, Sierra Leone recorded a domestic primary surplus of 1.3 percent of GDP in 2025, driven by higher tax revenues and tighter spending controls. The Fund said these measures, alongside a restrictive monetary policy stance, had helped stabilise the exchange rate, reduce inflationary pressures and ease borrowing costs.
However, it warned that the reform environment was becoming more challenging due to weaker-than-expected revenue performance earlier in the year and rising expenditure pressures.
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The IMF said that while Sierra Leone had some fiscal space to absorb shocks linked to global developments, including the ongoing Middle East conflict, continued fiscal consolidation would be essential to maintaining debt sustainability.
“In the absence of a strong social safety net to provide targeted relief, the authorities introduced fuel price subsidies in April to avoid disruptive price movements,” IMF mission chief Saborowski said in a statement.
He said the subsidy should remain temporary and be implemented transparently within agreed fiscal limits, while efforts continue to strengthen donor-supported social protection systems.
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The IMF warned that inflation in Sierra Leone was expected to rise to about 11.6 percent by the end of 2026 before gradually easing back to single digits in 2027. It said monetary policy might need to be tightened further if global energy price shocks persist.
The Fund also noted that the banking sector remained broadly stable and profitable, but cautioned that vulnerabilities persisted due to exposure to government debt.
“Continued efforts to strengthen financial sector oversight will help safeguard stability and support credit to the private sector,” Saborowski said.
Growth in Sierra Leone accelerated in 2025 but is projected to slow to 4.0 percent in 2026 due to spillovers from global geopolitical tensions, before recovering to around 4.5 percent in the medium term.
The IMF identified several downside risks, including a prolonged Middle East conflict, potential delays in reforms, election-related uncertainty and climate-related shocks.
The proposed RSF arrangement, the Fund said, would help Sierra Leone build long-term resilience to climate change through reforms in public investment management, climate adaptation planning and financial sector stability.
It said the programme could also help attract additional financing for sustainable development, supported by IMF technical assistance and cooperation with other development partners.
At the end of the mission, the IMF said it held discussions with President Julius Maada Bio, Finance Minister Sheku Fantamadi Bangura, central bank governor Ibrahim Stevens and other senior officials, as well as representatives from civil society, the private sector and international partners.
The Fund thanked the authorities for what it described as “open and productive discussions” on both the economic programme review and climate-related reforms.
