(Reuters) – Sierra Leone’s economy will contract by 21.5 percent this year, following growth of 4.6 percent in 2014, due to a crisis in the mining sector triggered by a collapse in iron ore prices and the impact of the ongoing Ebola epidemic, the IMF said.
A shortfall in government revenues due to a halt in mining production will push the budget deficit to 4.8 percent of gross domestic product (GDP).
The International Monetary Fund said the near- and medium-term outlook for Sierra Leone was challenging, with the economic situation in 2016 to remain relatively unchanged.
“Sierra Leone continues to battle the adverse impact of two severe exogenous shocks: the Ebola epidemic and the crisis in the mining sector that began with the collapse of iron ore prices and culminated in the cessation of production in April 2015,” the Fund said in a statement after its staff completed a visit to Freetown.
The IMF signed a $95.9 million, three-year Extended Credit Facility (ECF) with Sierra Leone in 2013 at a time when high commodities prices had given the West African country amongst the highest growth rates in Africa. Its roughly $4 billion economy grew by around 15 percent in 2012 as iron ore production ramped up.
The IMF praised authorities for forging ahead with reforms to public finances despite the difficult economic environment, and said it was considering a request by the government to expand its programme by a further $66 million.
The Fund said an influx of aid related to the Ebola epidemic would support Sierra Leone’s foreign reserves and current account balance. Despite a loss of iron ore revenues, the current account deficit would narrow to 13.8 percent of GDP, the IMF said.
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