The IMF has performed a quick
u-turn on its predictions for the Sierra Leonean economy. Up till not
very long ago the IMF was issuing optimistic reports from Sierra Leone,
even though there were many indications to show that all was not well.
This follows a now-familiar pattern from the world body of failing to
adequately analyze economic trends at country, regional and global
In April 2014 an IMF delegation visited Sierra Leone and at the
came out with a generally positive
assessment of the country's
prospects ("Economic activity
continues to expand robustly...Programimplementation remained good. At the end of
December 2013, all quantitative performance criteria were met; and all
quantitative indicative targets, but one, were observed.". Supporters of the IMF will argue that
this was before the
Ebola outbreak and no one could have
predicted the seriousness of it. Maybe, maybe not, but what could
easily have been assessed pre-Ebola was the strength of Sierra Leone's
health system. There were many, many indications (including the 2014
maternal mortality report, which we covered) to indicate that the
health system was in a parlous condition and vulnerable to a sudden
attack. Doctor and nurse/patient ratios were/are very poor. The Abuja
target (15% of government spending to go to the
health sector) was not being met, even as the IMF was endorsing huge,
uncontrolled expenditures on infrastructure contracts.
Well into the Ebola crisis, as late as June
26, 2014, the IMF issued a statement saying. "Program
performance has been strong. All PCs were met with comfortable margins,
and all indicative targets (ITs) were met, except for the one on
poverty-related spending that was missed owing to enhanced monitoring
of domestic investment execution and delayed budget support. Economic
growth momentum continued in 2013, with output expanding by 20 percent.
The IMF staff recommends completion of the first review under the ECF
The 2014 IMF Sierra Leone
well as previous positive assessments, also evidently failed to take
into account the country's education indicators. These crucial
predictors of development over the next few decades place Sierra Leone
woefully behind its neighbours and competitors (see Dysfunctional
on education spending show Sierra Leone to be close to the
bottom of the class in Africa . And yet the IMF was still looking
at this and essentially saying, "All is going well in this country."
Many other social services (housing, transportation) leave a lot to be
desired in Sierra Leone. In particular, the water and sanitation
situation is deplorable, even in the capital, let alone in the
countryside. This has a direct impact on health; in addition, with
proper investment, the country's plentiful rainfall could be used to
boost year-round agriculture, rather than the curent reliance on rainy
season planting. However, rather than productive rural
investments, the government was being supported with loans by the
IMF, enabling it to spend a large, and indeterminate amount on
exorbitant and hastily arranged contracts for the construction of a few
showcase, urban four-lane highways.
Various world disaster preparednes reports place Sierra Leone as one of
the most vulnerable countries to natural disasters. Tens of
thousands of Sierra Leoneans now live in hazardous low-lying coastal
areas beneath Freetown's looming mountains and torrential rain. A
recent storm left thousands displaced. Long-time Freetown residents
will readily tell you of the environmental degradation that Freetown
has suffered over the years and the flooding and change in drainage
patterns. The IMF evidently failed to take this into account when it
gave Sierra Leone a clean bill of health in 2014.
The IMF, like the Government of Sierra Leone, placed great faith in
revenue from newly-established iron-ore mining companies.
In 2013 we heard the oft-repeated phrase, "fastest growing economy in
the world" more times than we care to remember. This was based on
start-up revenue from these iron ore companies. The hype was folly at
its height, and the IMF above all should have known better. Commodity
prices are notoriously cyclical, and the historically high iron ore
prices then were certain to come down. This pattern has been ongoing
for at least the last 100 years. Yet the IMF bought into the hype as
the Government of Sierra Leone forecast high revenues stretching
several years into the future on the assumption of high iron ore
Now the iron ore prices have collapsed along with all the optimistic
predictions about government revenue and economic growth.
The IMF endorsed the Government's Agenda for Prosperity, with its lofty
infrastructure plans, justifying new air and seaports with a dreamer's
optimism and contorted logic (sample: "Our current airport is seriously
underutilized but in a few years time traffic will have increased. So
we need to start a new airport now"). The IMF's
June 19, 2014 press release on
Sierra Leone says, "The
scaling up of public investment, as envisaged in the implementation of
the country’s poverty reduction strategy, the Agenda for Prosperity
(AfP), should also help to catalyze private sector activity and
contribute to higher, sustainable growth in the non-resources sector."
What was a key component of the "scaling
up of public investment as envisaged in the ...Agenda for Prosperity"?
The new airport at Mammamah.
In June 2014,
the IMF was effectively saying, yes, this is a good thing, go ahead.
The Government accordingly went ahead with
plans to build a brand new airport at Mammamah and negotiated a loan
from the Chinese. We questioned this projectin
an article way back in 2013).
The projected cost was a whopping 350 million dollars, a huge chunk of
government budget. (Yes, we've heard how long grace periods and long
repayment periods can make a seemingly huge loan
affordable. In Sierra Leone politicians have used this argument to
run up massive, unsustainable debt, and the economy has been known
contract, so we prefer to
assess loans on current
ability to repay).
Now apparently, the IMF is having second thoughts. Its most
recent press release (Sept. 15) talks about the "very
difficult fiscal situation" and
the "need for expenditure restraint".
There are rumours of tensions
with the government over the Mammamah project.
Construction is at a standstill despite government assurances over many
months that the project
would soon go ahead and despite the presence on the site of the Chinese
construction crew. The IMF appears to be finally coming round to a
calculation it should have made years ago.