By Glenn Decker
The International Monetary Fund (IMF) has urged Sierra Leone’s government to further reduce its foreign exchange spending, warning that continued pressure on foreign currency reserves could undermine macroeconomic stability despite recent economic gains.
In a statement following a staff-level agreement on the third review of Sierra Leone’s Extended Credit Facility (ECF) programme, the IMF said progress in rebuilding foreign exchange reserves must continue and government spending in foreign currency should be curtailed further.
The Fund said Sierra Leone’s economic outlook remains challenging amid rising spending pressures and the impact of the conflict in the Middle East, which has contributed to higher global energy prices and inflationary risks. It projected inflation to rise to about 11.6% by the end of 2026 before returning to single digits in 2027.
“Progress in reserve accumulation needs to continue while the government’s FX spending needs to be further curtailed,” the IMF said.
The Washington-based lender noted that revenue collection in the early months of 2026 had been weaker than expected while expenditure pressures had increased. It nevertheless said fiscal consolidation remained critical to maintaining debt sustainability and protecting priority social spending.
The IMF said authorities had introduced temporary fuel subsidies in April to cushion consumers from rising fuel prices but stressed that the measure should remain temporary and within agreed spending limits.
The staff-level agreement, reached after discussions in Freetown and Washington, is subject to approval by the IMF Executive Board. Approval would unlock approximately $17 million under the ECF arrangement and provide Sierra Leone access to additional climate-related financing under the Fund’s Resilience and Sustainability Facility.
Sierra Leone has been working with the IMF under a multi-year reform programme aimed at reducing inflation, strengthening public finances, rebuilding reserves and safeguarding debt sustainability. The IMF has previously flagged reserve depletion and fiscal overruns as key risks to the country’s economic stability.
Headline:
IMF warns Sierra Leone to rein in foreign exchange spending as reserve pressures persist
