IMF confirms suspension of funding as APC government fails to generate revenue

Sierra Leone Telegraph: 01 February 2018:

The government of Sierra Leone has reacted angrily over yesterday’s report of the IMF suspending its funding support to the Koroma government, after the government failed to meet key targets agreed with the IMF.

Speaking to the BBC reporter Umaru Fofanah last night, finance minister – Momodu Koroma who is no stranger to making economic gaffs, said that he is unaware of any decision by the IMF to suspend funding.

But the IMF have been quick to clear air. Last night it issued a statement using what policy analysts say is semantics to describe the current breakdown in relationship between the IMF and the APC government.  This is what the head of IMF in Sierra Leone  – Ms. Iyabo Masha said:

“The government of Sierra Leone’s Extended Credit Facility program with the IMF is ongoing, and government continues to meet its debt service obligations on both current and outstanding loans to the IMF.

“The IMF mission that visited Freetown during September 15–29, 2017 to conduct the first review focused on performance under the program, economic developments, the outlook for growth and progress on structural reforms.

“As part of this review, the mission based its fiscal assessment on broad macroeconomic aggregates, including the overall government revenue and expenditure envelope.

“The completion of the review, which would have enabled the disbursement of the second tranche of program financing, has been delayed relative to the anticipated timetable of December 2017.

“The key reason for this delay is due to a weak budget revenue outlook, where measures that were to be taken under the program to increase revenue did not yield.

“The IMF is currently working with the government to identify appropriate corrective measures that can be taken and when.”

This huge embarrassment for the APC government comes, as confidence in the ability of the government to manage the affairs of the country drops sharply, amid accusations of rampant corruption and abuse of public office.

With the APC presidential candidate – Samura Kamara, being held responsible for the economic mess Sierra Leone is suffering, it is clear that the international community have lost faith in the APC party and would rather see change at the polls next month.

According to report by Africa Confidential, the IMF has “suspended disbursements of the four-year Extended Credit Facility (ECF) in December, citing delinquency, according to the US State Department cable to Washington. Other major donors, including the European Union, have similarly withheld budgetary support and are channelling aid to distinct projects instead.”

“The withheld funds are part of a four-year, $224.4 million package, negotiated in June 2017, to assist Sierra Leone to offset balance-of-payments shortfalls, control inflation and build foreign reserves. The agreement governing the use of the money required Koroma’s government to increase domestic revenue by collecting market-rate royalties on Sierra Leone’s mineral exports, eliminating ‘discretionary waivers’ of import taxes on multiple goods and services, and imposing a 20% import tax on imported vehicles worth more than $25,000.

“The deal also committed the government to removing subsidies on rice and on fuel by allowing petroleum products to be taxed at real market values. Both subsidies are potentially politically explosive.

“The IMF made its first ECF disbursement, of $54.3 mn., immediately after the agreement in June. In October, Koroma chose his Foreign Minister, Samura Kamara (Photo), as his preferred successor and the presidential candidate for his All People’s Congress (APC), setting Sierra Leone in campaign mode,” reports Africa Confidential.

Sierra Leoneans have been reacting to the government’s response to this damning news. These are some of the comments:

“The government wants us to believe that all is well with the IMF and the government spokesman spent a lot of time on 98.1 this morning trying to discredit the Africa Confidential story claiming that the statement by the IMF representative supports his claim.

Bayraytay needs to understand that not all Sierra Leoneans are stupid or cannot understand English. The final paragraph of the IMF release says: “The completion of the review, which would have enabled the disbursement of the second tranche of program financing, has been delayed relative to the anticipated timetable of December 2017. The key reason for this delay is due to a weak budget revenue outlook, where measures that were to be taken under the program to increase revenue did not yield. The IMF is currently working with the government to identify appropriate corrective measures that can be taken and when.”

This clearly states that disbursement which should have been done towards the end of the year has been suspended. So what is the government disputing. The Africa Confidential story focussed on the reasons for the suspension of the disbursement which border on the lack of sincerity on the part of government to implement the measures agreed with the IMF.

The APC should stop treating Sierra Leoneans like fools. Now we know that if the APC is returned to power the price of fuel and rice will almost double. It’s time to get rid of this bunch of inept, dishonest and corrupt individuals with no concern for the common man.”

Another commentator said: “The press release of the IMF did not debunk the claims of the Africa Confidential. All the IMF did was to use the normal diplomatic language to arrive at the conclusion. Of course, the IMF has not stopped to continue with the loan agreement they signed with the Sierra Leone Government.

“However, in their press release she concludes by admitting what the African Confidential stated, that the IMF has stopped the process because Sierra Leone failed to implement the conditions of the loan. Instead of using the word “stop” the diplomat used a softer diplomatic word “delay” and gave reasons for the delay which is in line with what the Africa Confidential stated.

“What the APC spin doctors, including the Minister of Finance and Baratay are doing is spin the fact. They intend to massage the situation until the elections which is just one month ago; I suspect they will use China to help massage the situation.

“In the unlikely event that they win the elections, they will now begin to implement the IMF conditions at the detriment of the ordinary people. In the first place, they agreed on the conditions at the detriment of the ordinary people of this country; their only motive was to receive the money for themselves and use the remainder to fund the elections so that they can stay in to continue their organised criminal actives. Sierra Leoneans wake up.”

Another commentator said that: “In November 2016 the government of Sierra Leone as part of it austerity measures announced the removal of subsidy on petroleum products. There was a 60% increase in fuel prices from 3,750 to 6,000 Leones. And Finance Minister Momodu Kargbo was on the BBC saying they were going to start the implementation of the IMF conditions in March 2018. Who is fooling who? Where is the money? Am sharing stories from two credible media outlets, Awoko and Politico Newspapers that carried the story then:”

http://politicosl.com/articles/sierra-leone-end-fuel-subsidy

https://awoko.org/2016/11/14/sierra-leone-news-government-stops-fuel-subsidy-price-increases-by-60-percent/

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