ADF Supports Economic Recovery in Sierra Leone
Tunis, 27 July 2005 – The Board of Directors of the African Development Fund approved in Tunis on Wednesday a grant of 10,7 million Units of Account* (US$16 million) to finance the Third Economic Rehabilitation and Recovery Programme (ERRP-III) in Sierra Leone.
The main objective of the Programme is to support the on-going initiatives of the Government to improve the economic governance situation in Sierra Leone.
The Programme will therefore focus on improving transparency and accountability in two main areas of economic governance: improving public financial management, and improving and strengthening decentralization and local government reform. At the same time, it will provide relief to the expected weak balance of payments situation, for 2005-2007, and provide for the importation of essential commodities and intermediate inputs required for reviving the economy, including private sector activities. The local currency generated from ERRP-III will be credited to the Government’s Consolidated Revenue Fund in the Bank of Sierra Leone and will therefore help in maintaining a stable macroeconomic environment, which is crucial for growth and poverty reduction.
The ERRP-III will complement the on-going reforms initiative now being undertaken by the Government with the support of other development partners, especially the World Bank, the International Monetary Fund, the Department for International Development (U.K.) and the European Union. ERRP-III is an integral part of the ADB’s strategy to assist Sierra Leone, which has embarked on a transition from a nation focused primarily on post-conflict needs to a country poised for long-run growth. The strategy focuses preliminarily on reviving the economy, reducing poverty and corruption while concomitantly promoting good governance practices, especially in the management of public sector resources. By focusing on these areas, the proposed ERRP-III would significantly contribute to facilitating the creation of an enabling environment for promoting private sector activities, which is crucial in reviving economic activities, and reducing poverty through the provision of gainful employment opportunities to the unemployed youths.
The Bank Group’s operations in Sierra Leone started in 1967. To date, the Group has committed a total of US$ 353 million (1000 billion leones) on 37 operations in the country.
Programme objectives and outputs:
- Reduce the poverty headcount from 70 percent of the population in 2004 to 57 percent by 2007, and to 35 percent by 2015
- Reduce the unaccounted for items in the fiscal budget from 7.6 percent of total Government spending in 2004 to below 3.0 percent by 2006 and eliminate it by 2008
- Reduce wastage estimated at US$ 40 million in 2004 to below US$ 20 million by 2007 and eliminate it thereafter
- Increase the proportion of public procurement undertaken through the transparent tender process from 10 percent in 2004 to 25 percent by 2006 and to over 70 percent after 2007
- Improve Real GDP Growth from 6.4 percent in 2004 to 7.0 percent by 2006
- Reduce and stabilize the average annual consumer price inflation from 13.6 percent in 2004 to 7.3 percent by 2005 and further to below 6.0 percent thereafter
- Increase expenditure on education from 9.8 percent of total Government expenditure in 2004 to 12.0 percent by 2006 and thereafter to above 16 percent
- Increase expenditure on health from 6.5 percent in 2004 to 8.5 percent by 2006 and to above 12 percent thereafter
- Reduce the current account of the balance of payments from a deficit of 11.5 percent of GDP to 5.3 percent in 2007 and stabilize it at below 5.0 percent of GDP thereafter
UA1 = US$ 1.45661 as at 01/07/05