VZCZCXRO0028
PP RUEHMA RUEHPA
DE RUEHFN #0684 3231410
ZNR UUUUU ZZH
P 191410Z NOV 07
FM AMEMBASSY FREETOWN
TO RUEHC/SECSTATE WASHDC PRIORITY 1518
INFO RUEHZK/ECOWAS COLLECTIVE
RUCNDT/USMISSION USUN NEW YORK 0264

UNCLAS FREETOWN 000684 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
FOR AF/W 
 
E.O. 12958: N/A 
TAGS: EMIN EFIN PREL SL
SUBJECT: IMF TEAM COMMENTS ON SIERRA LEONE ECONOMY 
 
1.(SBU) Summary: A visiting IMF team provided Embassy with an 
overview of the challenges facing the new government in 
Sierra Leone. The GOSL is considering revising existing 
mining contracts as well as introducing a Value Added Tax in 
the coming year. The IMF sees the inflation rate in Sierra 
Leone moving up to a little above 10 percent. GDP growth is 
down from earlier quarters and is now running at less than 7 
percent. Fuel prices are likely to be increased soon.  End 
summary. 
 
  2.(SBU) Two members of an IMF team, resident representative 
Alvin Hilaire, and Deputy Division Chief Norbert Toe, 
(protect) provided a briefing on the Sierra Leone economy to 
the Ambassador on November 14. 
The team was here to help Sierra Leone with the 2007 budget 
(where there are some projected shortfalls) and the 2008 
budget (which is still being developed). They met with the 
President earlier the same day. The President seems committed 
to anti-corruption efforts as well as other key issues. 
 
¶3. (SBU) They noted that revenue collection seems to be 
worsening, and that there is a need for revamping the 
National Revenue Authority (NRA). One of the first actions 
the new government of President Koroma took was to make 
adjustments for rising petroleum prices. The government chose 
to keep fuel prices at the pump stable by cutting fees for 
the Port Authority and fees for the Road Authority.  Other 
taxes were kept in place.  The IMF recommended that the fuel 
prices be allowed to move up as oil prices rise, to avoid 
cutting government revenues.  The GOSL officials will 
probably take the IMF recommendation, which will result in an 
increase in fuel prices in the near future. 
 
¶3. (U) The IMF team said they believe mining contracts should 
be reviewed.  The World Bank could assist the GOSL with this. 
 As an example, the team said that the rutile mining company 
re-entered Sierra Leone after the war with a contract on 
generous terms. This was agreed to in order to provide an 
incentive to restart operations quickly following the war. 
The team said the existing contract has a provision allowing 
the government to re-examine the contract if mineral prices 
rise, and so the review would be within the original 
contract. 
 
¶4. (SBU) The team said that the IMF will provide technical 
assistance in the effort to revamp the NRA, and to look at 
the introduction of a Value Added Tax (VAT), which the GOSL 
refers to as a Goods and Services Tax (GST).  A technical 
expert from IMF will probably come out to Sierra Leone in 
January. The introduction of the VAT will take time and 
probably will not happen until the first quarter of 2009 or 
the fourth quarter of 2008 at the earliest. 
 
¶5. (U) Overall, the IMF sees the current inflation rate in 
Sierra Leone as moving up, to a little above 10 percent. Up 
to now, the government had been successful in keeping 
inflation in the single digits.   The growth in GDP is down 
from earlier quarters and is now at less than 7 percent. On 
the budget, the GOSL is looking to the World Bank and UK to 
provide financial help to get through the rest of this 
calendar year.  The World Bank may be able to provide $10 
million in budget support, according to the team. The IMF 
team views the Peace Building Fund, (PBF) as playing an 
important role in stabilizing the country, and sees a 
connection between the PBF and the ability to collect 
revenue. 
 
¶6. (U) The Ambassador mentioned that the U.S. may provide 
technical assistance and experts on trade and agriculture 
projects, including the market at Koindu.  The IMF team was 
very pleased to hear about this and suggested it could 
compliment MDRI resources.  They suggested the Embassy 
coordinate this assistance with the Financial Secretary 
within the Ministry of Finance. 
 
PERRY