November 29, 2016 By Patrick Jaiah Kamara
Contrary to public perception that the Country Representative of the International Monitory Fund (IMF), Dr. Iyabo Masha, had said in an interview with the BBC Media Action stated that the removal of subsidy was a prerequisite during the IMF country review, she has in a press release reiterated her institution’s continual support to the country in removing the fuel subsidy.
“The IMF strongly supports the government’s decision, announced by the Minister of Finance in the recent budget statement, to eliminate fuel subsidies,” she said.
She said the fuel subsidies were unreasonably benefiting the wealthiest in society, thus missing its targeted beneficiaries.
She noted that in the context of the Executive Board of IMF forthcoming consideration of the final review under Sierra Leone supported program, fiscal sustainability was an essential condition, which could not have been assured without a decisive action such as the elimination of fuel subsidies.
“The IMF supports the steps that the government has announced to mitigate the adverse impact of their removal on low income households by expanding social safety nets, with increased expenditure on the pro-poor programs, as detailed in Budget 2017,” she said.
It could be recalled that the IMF, under the Extended Credit Facility (ECF) supported program, had disbursed some millions of dollars to Sierra Leone and Dr.Masha had said in the BBC Media Action interview that: “The removal of fuel subsidy was not a condition for IMF disbursement. The $30 million they may be referring to is the final disbursement in the current program with the IMF. The program started with a Le100 but because of Ebola and the shock in the iron ore mining, the IMF has increased the value of that financing to $260 million.
She noted in the interview that the remaining $30 million would be disbursed next month, adding that all that was required for the disbursement, has been done.
She had said that they have required the country to maintain reserve accumulation, limit domestic borrowing from the banking system to a certain amount and to maintain an external debt of not more than $70 million net present value.
“Whether or not the government removes the subsidy, we would still have gone to the board with this program. So, removal of subsidy is not a condition for this last review of the program,” Dr.Masha had told BBC Media Action.
She however reiterated in the press release IMF’s commitment to supporting the decision of the removal of fuel subsidy by the government.