The Executive Board of the International Monetary Fund has completed the first and second reviews of Sierra Leone’s programme under its Extended Credit Facility, unlocking an immediate disbursement of about US$79.8 million to support the West African country’s reform agenda.
The decision brings total IMF disbursements to Sierra Leone under the facility to roughly US$127.8 million, the Fund said in a statement issued in Washington on Tuesday.
The Extended Credit Facility arrangement was approved in October 2024 to help Sierra Leone restore debt sustainability, rein in inflation, rebuild foreign exchange reserves and strengthen governance, institutions and the rule of law. The first review was delayed after programme slippages last year, including spending overruns partly financed by central bank purchases of government securities, a depletion of reserves and delays in key reforms.
IMF officials said programme performance has since improved, allowing the reviews to be concluded. The board approved waivers for the non-observance of several performance criteria, including those related to net credit to government, net domestic assets and net international reserves, citing corrective measures taken by the authorities.
Sierra Leone’s economic outlook remains broadly stable, the IMF said, with growth projected at 4.4 percent in 2025, supported mainly by the mining and agriculture sectors. Inflation has eased sharply, falling to 4.4 percent in October this year following tighter macroeconomic policies and a stabilisation of the leone. Inflation is expected to remain in single digits over the medium term.
Despite the improvements, vulnerabilities remain pronounced. Foreign exchange reserves fell to the equivalent of 1.5 months of imports by the end of September, while public debt remains at a high risk of distress. The IMF warned that the outlook faces significant risks, including the possibility of reform fatigue given the scale of fiscal adjustment required.
Speaking after the board discussion, IMF Deputy Managing Director and acting chair Bo Li said the authorities had brought the programme “back on track” following last year’s setbacks.
“The economy is reacting favourably,” Bo Li said, pointing to lower inflation, a stable currency, growth close to potential and reduced borrowing costs. However, he cautioned that debt risks remain elevated and reserve buffers uncomfortably low.
The IMF underscored the need for a stronger-than-previously-planned fiscal tightening to correct earlier slippages. It said steadfast implementation of recent revenue measures, combined with improvements in tax compliance and administration, would be critical to meeting programme objectives. Public financial management reforms are also needed to prevent future overruns and support spending restraint, while safeguarding social expenditure.
Maintaining debt sustainability will require strict adherence to the agreed fiscal adjustment path, supported by stronger debt management practices, the Fund said. It urged the authorities to intensify efforts to secure grants and concessional financing, lengthen debt maturities, broaden the investor base and ensure government securities are issued at sustainable interest rates.
On monetary policy, the IMF said the central bank could continue its gradual transition towards a neutral stance, given subdued inflation and ongoing fiscal consolidation. It also called for continued efforts to strengthen central bank safeguards and the monetary policy framework.
Rebuilding foreign exchange reserves was described as an urgent priority. The IMF said the authorities should allow the exchange rate to adjust flexibly to external shocks and rein in foreign currency spending by the government.
The Fund also highlighted the importance of reinforcing financial sector oversight, regulation and safety nets to bolster stability, while continuing to address solvency challenges within the banking system.
Progress on structural reforms will be essential to lifting Sierra Leone’s growth potential, the IMF said. It welcomed the publication of a governance and corruption diagnostic report and urged the authorities to focus on its implementation to address governance weaknesses and corruption risks.
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The Extended Credit Facility is one of the IMF’s main concessional lending tools for low-income countries, providing financing alongside policy support aimed at fostering macroeconomic stability and sustainable growth.
