Sierra Leone
Sierra Leone receives African debt relief

afrol News, 12 June - After a US$ 950 million debt relief by the International Monetary Fund (IMF) for Sierra Leone in March, the African Development Bank (ADB) today announced it had approved an additional debt relief amounting to US$ 43 million. 

Sierra Leone, listed as the world's poorest country, is heavily indebted and in the process of starting a costly reconstruction after ten years of civil war. On 20 March, Sierra Leone was included in the enhanced Heavily Indebted Poor Countries (HIPC) Initiative, meaning a significant debt relief given Sierra Leone's government fulfils IMF-defined structural reforms.

Today's debt relief by the ADB - given as a response to Sierra Leone's inclusion in the HIPC Initiative - signifies that the country "will be released from up to 80 percent of its annual debt service obligations to the ADB during the interim period and will thus have more resources for poverty reduction." 

According to a release by the Abidjan-based financial institution, the main objective of ADB's assistance strategy in Sierra Leone is "the improvement of governance, revival of the economy, extension of social services and consolidation of peace." This corresponds with the structural reforms agreed upon with the IMF.

ADB says this strategy relies on "a programme that focuses on improving the living standards of the most vulnerable groups, such as the returnees, refugees and the most vulnerable victims of war." The strategy also was said to involve "resettling the displaced population and designing long-term development programmes." 

- This programme will be achieved through the adoption of measures to enhance growth, provide opportunity for the poor to participate in income-generating activities and better service delivery to the poor, the Bank added. 

The ADB Group's participation in the enhanced HIPC framework is financed from its own internal resources and contributions from bilateral donors and the European Union. "The provision of debt relief to Sierra Leone brings to 22 the number of countries that have benefited from the ADB Group debt relief under the enhanced HIPC framework," the Bank states. 

Meanwhile, the IMF's conditional assistance is to be delivered to Sierra Leone when several conditions have been met, according to the Fund. These conditions include "continued commitment by Sierra Leone" to the IMF's financial and economic programmes; completion of a poverty reduction strategy paper endorsed by the IMF; and implementation a set of measures in areas of governance, decentralisation, structural reforms, education and health. 

Sierra Leone's economic performance in 2000 was fairly good, with real GDP recovering to 3.8 percent growth in 2000 from -8.1 percent in 1999, and price inflation declining sharply to -0.9 percent from 34.1 percent in 1999. The momentum of economic recovery continued in 2001, according to the IMF. Real GDP growth was estimated at 5.4 percent in 2001 slightly above-programmed, and inflation averaged 3 percent compared with the program target of 8 percent. With a per capita GDP of about US$ 134 in 2000, Sierra Leone however is expected to remain a deeply impoverished country for the foreseeable future. 

Sources: Based on ADB and afrol archives

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