By Franklin Sisabu Bendu
It has been two years since Jacob Jusu Saffa and Sahr Lahai Jusu were appointed as Minister of Finance and Financial Secretary respectively. Since their appointment, their obsession and scrupulousness with fiscal prudence has been evident. The Financial Secretary has been at the Ministry for over 20 years, while the Minister has been moving around – Social Action and Poverty Alleviation (SAPA) Programme, World Bank, lecturer and as a private consultant and politician.
Within two months of their appointment, the government announced Executive Orders 1 and 2 targeting domestic revenue mobilization and expenditure rationalization. In collaboration with the National Revenue Authority, domestic revenue has been on an upward trajectory and total expenditure did not exceed the estimates approved by Parliament in 2018 and 2019.
What has been really impressive has been how the Ministry of Finance has achieved so much success with our donor partners. It is never an easy job to negotiate programmes with development partners – the International Monetary Fund, the World Bank, the European Union, the African Development Bank and others. It is important that the public understands how these negotiations are conducted and the work that is undertaken to ensure the government is able to receive these grants.
On assumption of office, the country’s Extended Credit Facility (ECF) arrangement with the International Monetary Fund was off-track. The Minister and his team were able to get the programme on track within eight months. Between April and October 2018, several video conference meetings were held between the Ministry of Finance and the IMF team. These discussions focused on what needs to be done and the structural benchmarks and quantitative performance criteria that will inform the new arrangement.
In November 2018, the IMF Board approved US$172.1 million Arrangement Under the Extended Credit Facility for Sierra Leone. Since then, two reviews have been successfully completed – first in June 2019 with US$ 21.62 million disbursed to support the “government’s reform agenda to secure fiscal sustainability, create space for priority spending, and lay the foundation for inclusive growth and poverty reduction”. A key structural benchmark for the first review was the adoption of a plan for dealing with the outstanding stock of unpaid obligations to domestic suppliers.
The second review was completed in April 2020 with another US$ 21.13 million disbursed to “help the country tackle any potential economic fallout from the COVID-19 pandemic” and to support the “Government’s continued reform efforts to help build the foundation necessary to support future development and tackle the exceptionally difficult external environment”. A key structural benchmark for the second review was to complete the stocktaking of payment arrears to domestic suppliers to determine a comprehensive arrears figure.
The completion of each review means that the IMF is satisfied that the set of structural and quantitative benchmarks agreed over a period of time have been met. Recently, the IMF disbursed US$ 143 million under the Rapid Credit Facility to support the government to meet the urgent balance of payments and fiscal needs stemming from the COVID‑19 pandemic.
Another notable success story over the last two years has been the budget support disbursements from the World Bank. Prior actions to be implemented over a period of time are agreed between the government and the World Bank. These prior actions are aimed at strengthening institutional and policy reforms in various sectors of the economy. The Bank disburses its budget support after assessing the evidence provided by government on each prior action. In 2019, the Bank disbursed US$ 40 million in grants to support key policy reforms and inclusive growth in Sierra Leone.
Recently, the Bank disbursed US$ 100 million grant “to support the Government of Sierra Leone in promoting sustainable and inclusive growth and building economic resilience”. The story behind this shows how hard work and commitment can yield results. The Minister was able to convert this facility from a credit to a grant. However, it meant the government was to implement certain prior actions against a period of time for this to come to fruition. It was a personal agenda of the Minister’s to see this through – Ministries, Departments and Agencies who had triggers for which evidence was needed were given the financial support required to ensure prior actions were met.
Some of the prior actions that were met before these grants were disbursed include: (i) the approval and adoption by Cabinet of the rice sector development policy and implementation strategy and the roadmap to boost local production of rice; (ii) approval and adoption by Cabinet of the National Action Plan to prevent, deter and eliminate Illegal, unreported and unregulated fishing; (iii) the Board of Directors of the Electricity Distribution and Supply Authority (EDSA) approved and adopted a new organizational structure; (iv) development of a procurement regulation, which provides for the implementation of a nationwide e-procurement system; (v) enacted an amendment of the Anti-corruption Act (2008) to allow for the implementation of the Asset Disclosure Regulation; (vi) the adoption by cabinet of a new minerals policy; (vii) approval and adoption by the Teaching Service Commission (TSC) of a teacher deployment protocol and incentive strategy that promotes equitable deployment of teachers across the country; and (viii) establishment of a pilot for a nationwide teacher attendance monitoring system by the TSC.
Similarly budget support disbursement from the European Union has been impressive. As is the case with the World Bank, government and the EU have to agree on certain triggers to be implemented over a period of time. The EU disburses a fixed tranche and a variable tranche. In order to get the fixed tranche, the government must meet the following criteria: a programme with the IMF, a progress implementation report on the national development strategy, and an ongoing public financial management programme.
The variable tranche is based on performance on a set of triggers agreed between the government and the European Union. Bilateral discussions are held between the specific MDA and the EU on each trigger and a technical note which describes the evidence to be provided on each trigger is prepared.
Another issue worth noting is that the EU variable tranche triggers are assessed in a binary manner, that is: a score of 1 when a trigger is met and a score of 0 when the trigger is not met. Each trigger has a certain amount tied to it and the government will either get the full disbursement when the trigger is met or none when the trigger is not met.
Over the last two years, the Ministry dedicated specific staff to work with MDAs to monitor progress and identify challenges in meeting the triggers (EU) and prior actions (World Bank). This takes the form of monthly meetings at the Ministry of Finance where each MDA will undertake an in-house assessment of the evidence provided by each trigger by the responsible MDA. The Ministry of Finance will then provide monthly assessments to the EU and the World Bank for their own comments. At the end of the implementation period, a joint assessment is done by the government and the EU on all the triggers and the World Bank on the prior actions. This assessment will determine the amount of funds to be disbursed.
In 2018, total budget support agreed was €25 million, made up of €10 million fixed tranche and €15 million variable trance. The government was able to get the entire amount as a result of meeting all the conditions for both the fixed and variable tranches. In 2019, the same amount of €25 million was agreed and the government was able to get €23.5 million. Some of the policy measures achieved include: (i) at least 90% of procurement transactions, for 2018, solely funded by the Government of Sierra Leone (GoSL) undertaken under national procedures above the competitive threshold are conducted through open competition; (ii) the adoption of a Technical and Vocational Education and Training policy; (iii) the adoption of the National Agriculture Policy; and (iv) the Teaching Service Commission is fully staffed and its organogram approved. The EU recently disbursed €10 million of their fixed tranche budget support and discussions are ongoing to ensure the €15 million variable tranche is disbursed. Similar successes were achieved with the African Development Bank, with budget support disbursement of US$ 18 million in 2018 and US$ 20.7 million in 2019.
At the project level, the Ministry led by the Chief Economist, Alimamy Bangura, successfully concluded negotiations with the World Bank for various projects totaling US$ 166 million in grants. These include: (i) US$ 66 million for the free education project (World Bank contributed US$ 50 million and other development partners contributed US$ 16 million); (ii) US$ 40 for the economic diversification project; (iii) US$ 30 million to support the harmonization and improvement of statistics; and (iv) US$ 30 million as additional financing for the Smallholder Commercialization and Agribusiness Development Project (SCADeP).
What is needed now is to carefully prioritize policies for the good of the country. Being a Minister of Finance is never an easy job and the occupant becomes a hated figure even among cabinet colleagues and members from the same party. However, it is his responsibility to give the correct economic advice to the President, keeping in mind that over 7 million people want their social and economic conditions to improve – education, health, water, sanitation, environment and many more are all areas that require attention.
The COVID-19 pandemic will continue to pose an enormous challenge to economic management. Clearing domestic arrears, especially those that have been audited, is an important issue that needs to be addressed as some contractors have been waiting for over two years for their payments. The government has articulated its response to the COVID-19 pandemic through its Quick Action Economic Response Programme. The donors who gave the funds are looking. The citizens are also looking and expecting things to improve. In the meantime, the Minister, the Financial Secretary and their staff deserve commendation for a job well done. Keep it up and deliver. The reward for hard work is more work.
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