Journal Issue

In the news: Sierra Leone’s better security buoys economic growth

International Monetary Fund. External Relations Dept.
Published Date:
February 2005
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Sierra Leone’s improved security situation helped lay the foundation for broad-based economic growth in recent years, while inflation remained moderate. In 2003, the economy enjoyed a robust recovery, reflecting healthy activity in agriculture, mining, manufacturing, and services, the IMF said in its regular economic assessment. As part of Sierra Leone’s post-conflict transition, in February 2004 the government concluded the disarmament, demobilization, and reintegration of more than 72,000 former combatants. The IMF’s Executive Board endorsed the medium-term growth and poverty reduction strategy, which focuses on strengthening state security, attaining a more sustainable fiscal position, raising domestic savings and investment, strengthening infrastructure, further developing agriculture and rural areas, and promoting the private sector.

Medium-term growth projections of 6-7 percent annually in 2005-07 are largely based on some mining projects, agricultural expansion, and service-related activities. The Board said the main risk to medium-term growth was insufficient savings and investment. It encouraged the government to continue implementing structural reforms and improving governance to attract domestic and foreign investors.

Inflation is expected to revert to low single digits, and the current account deficits are expected to narrow. The Board expressed concern that inflation, initially resulting from higher fuel costs, was later driven by expansionary monetary policy and a depreciating currency. It recommended tightening monetary policy, including a reduction in government bank borrowing, and supported maintaining the floating exchange rate system.

Fiscal performance in 2003 was marked by higher-than-programmed domestic financing of the budget resulting from a large shortfall in external financing. The Board encouraged the government to tighten fiscal policy, but to preserve, as much as possible, spending for poverty alleviation.

Sierra Leone20012002200320042005
(percent change)
Real GDP17.927.
Consumer prices (period average)2.6-
(percent of GDP)
Government budget
Domestic revenue13.012.112.412.212.9
Total expenditure and net lending29.528.626.928.826.3
Data: IMF staff report.
Data: IMF staff report.

Kyrgyz Republic’s economy grows steadily, but debt still high

Solid economic growth, low inflation, and sound fiscal and monetary policies in the Kyrgyz Republic helped to put poverty on a downward path in recent years, the IMF said in its regular economic assessment. But external public debt has remained high despite a gradual reduction to below 100 percent of GDP. Outside the Kumtor gold mine and the energy sector, real GDP has grown steadily around 4 percent since 2000, while the official poverty rate has fallen to 41 from 52 percent.

Annual inflation has declined since 2000, and the external current account deficits in 2002 and 2003 were about 2.5 percent of GDP with imports and exports growing rapidly. The IMF’s Executive Board urged the government to continue fiscal discipline, while ensuring adequate spending on poverty reduction. The 2001-04 Paris Club debt rescheduling had allowed for more pro-poor and social spending. However, further Paris Club debt relief may be necessary. The Board stressed that reaching and maintaining debt sustainability also required a prudent debt strategy, sound macroeconomic policies, and structural reforms. Energy sector reform needs to be accelerated to improve cost recovery, in particular through further measures such as tariff increases.

Kyrgyz Republic2000200120022003
(percent change)
Real GDP growth5.
Consumer prices (period average)
Poverty rate52484441
(percent of GDP)
External public debt1111009994
Data: IMF staff report.
Data: IMF staff report.

The general government fiscal deficit gradually declined from 5.5 percent in 2002 toward the 4.5 percent target in 2004, in part thanks to higher tax revenues. The Board encouraged the government to broaden the tax base, improve tax administration, overhaul the tax code, simplify small business taxation, and gradually reduce the payroll tax rate. The exchange rate has been broadly stable, and the Board praised the central bank’s monetary and exchange rate management. While the managed float exchange rate regime remains currently appropriate, the Board encouraged the authorities to allow more exchange rate flexibility if warranted by market forces. Further, it stressed the need for strengthening central bank independence and deepening financial markets.

For more information, refer to Public Information Notices No. 05/4 (Kyrgyz Republic) and 05/5 (Sierra Leone) on the IMF’s website (

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