World Bank Documentdocuments.worldbank.org/curated/en/898811468102870059/pdf/543400PGD0… · 1.2 At the time the GRGC-3 was negotiated in late 2009, the international financial and

Document of The World Bank

FOR OFFICIAL USE ONLY

Report No. 54340-SL

INTERNATIONAL DEVELOPMENT ASSOCIATION

PILOT CRISIS RESPONSE WINDOW

PROGRAM DOCUMENT

FOR A PROPOSED SUPPLEMENTAL FINANCING

IN THE AMOUNT OF SDR4.7 MILLION

(US$7.0 MILLION EQUIVALENT)

TO THE

REPUBLIC OF SIERRA LEONE

FOR THE

THIRD GOVERNANCE REFORM AND GROWTH CREDIT

May 25,2010

Poverty Reduction and Economic Management 4 Africa Region

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

BSL CRW DfID DPO EC ECF GDP

GST IDA IMF MOFED NPL NR4 PRSP-2 U.K. VAT

GRGC-3

CURRENCY EQUIVALENTS (Exchange Rate Effective as of May 20,20 10)

Currency Unit = Leone US$1 = Le3,925

FISCAL YEAR January 1 - December 3 1

ABBREVIATIONS

Bank of Sierra Leone Crisis Response Window Department for International Development (United Kingdom) Development Policy Operation European Commission Extended Credit Facility Gross Domestic Product Third Governance Reform and Growth Credit Goods and Services Tax International Development Association International Monetary Fund Ministry of Finance and Economic Development Nonperforming Loans National Revenue Authority Second Poverty Reduction Strategy Paper United Kingdom Value-added Tax

Vice President: Obiageli Katryn Ezekwesili

Sector Director: Sudhir Shetty Acting Sector Manager: Philip English

Task Team Leaders: Douglas Addison

Country Director: Ishac Diwan

Cvrus Talati

i

FOR OFFICIAL USE ONLY

SIERRA LEONE

SUPPLEMENTAL FINANCING FOR THE THIRD GOVERNANCE REFORM AND GROWTH CREDIT

TABLE OF CONTENTS

... CREDIT AND PROGRAM SUMMARY ................................................................................................ 111

1 . BACKGROUND ................................................................................................................................. 1 2 . IMPACT OF THE GLOBAL ECONOMIC CRISIS ...................................................................... 1 3 . GOVERNMENT’S RESPONSE TO THE GLOBAL ECONOMIC CRISIS ............................... 3 4 . BANK RESPONSE AND STRATEGY ............................................................................................. 5 5 . THE REFORM PROGRAM: AN UPDATE .................................................................................... 6 6 . RATIONALE FOR PROPOSED SUPPLEMENTAL FINANCING ............................................. 7

7 . IMPLEMENTATION ARRANGEMENTS ..................................................................................... 8

A . BENEFITS ........................................................................................................................................ 8

C . FIDUCIARY ASPECTS ...................................................................................................................... 8

B . TERMS OF THE SUPPLEMENTAL FINANCING ................................................................................ 8

D . FUNDS FLOW AND AUDITING REQUIREMENTS FOR THE SUPPLEMENTAL FINANCING ............. 9

E . POVERTY AND SOCIAL IMPACT ..................................................................................................... 9

F . ENVIRONMENTAL ASPECTS ......................................................................................................... 10

G . RISKS AND RISK MITIGATION ..................................................................................................... 10

Tables

Table 2.1: Key Economic Indicators. 2008-12 .......................................................................................... 2 Table 4.1: Sierra Leone: Additional Financing Gap, 2010 ..................................................................... 6

Boxes . Box 3.1: Ongoing Revenue Reforms ......................................................................................................... 5

Annexes

Annex 1: Fund Relations Note ................................................................................................................ 12 Annex 2: Sierra Leone at a Glance ......................................................................................................... 15 Annex 3: Millenium Development Goals ............................................................................................... 17 Annex 4: Map Number IBRD 33478 ...................................................................................................... 18

This document has a restricted distribution and may be used by recipients only in the performance of their official duties . Its contents may not be otherwise disclosed without World Bank authorization .

SIERRA LEONE

SUPPLEMENTAL FINANCING THIRD GOVERNANCE REFORM AND GROWTH CREDIT

I Borrower: Implementing 1 Agency:

Amount:

Main Policy Areas:

Key Outcome Indicators:

Program Development Objectives and Contribution to CAS:

Partnerships:

I Operation ID:

CREDIT AND PROGRAM SUMMARY

Republic of Sierra Leone.

Ministry of Finance and Economic Development (MOFED).

SDR4.7 million (US$7.0 million equivalent) in pilot Crisis Response Window resources.

IDA credit terms, forty year maturity including a grace period of ten years.

Single tranche supplemental financing.

Public Financial Management, Public Sector Reform, Decentralization, Energy.

Same as for Third Governance Reform and Growth Credit: deviations in pro-poor spending relative to the deviations in non-pro-poor spending; number of procurement plans produced by public entities for MOFED approval and share of procurement conducted through open competition; ability to verify selected payroll entries; share of budgetary funds transferred to local councils in total discretionary non-salary, non-interest recurrent spending; public provision of electricity to Freetown in megawatts, and National Power Authority sales collection.

The supplemental credit will help address the financing gap that has emerged as a result of the effects of the global economic and financial crisis and is thus critical to achieving the development objectives of the Third Governance Reform and Growth Credit which supports government efforts to maintain and deepen growth and structural reforms in the transition from post-conflict recovery. Specific objectives in this context are to: (i) preserve fiscal space for poverty reduction; (ii) promote efficiency, transparency and accountability in the use of public resources; and (iii) improve the investment climate through provision of electricity in a fiscally sustainable manner. The operation is fully consistent with the new Joint Country Assistance Strategy covering FY 10-13 and its pillar to promote inclusive growth.

The overall reform program is being supported by the IMF, African Development Bank, U.K., and the European Commission.

The reform program faces a number of risks which could disrupt it:

Macroeconomic risksffom exogenous shocks due to a prolonged global recession, leading to deterioration in the terms of trade or the incurring of unavoidable expenditures from a natural disaster. Government track record provides comfort in this regard on the former as does the ongoing IMF program and related dialogue. Bank is also monitoring closely. Financing risk due to failure to secure adequate donor financing for 20 10 budget. Mitigated by Government track record of satisfactory macroeconomic performance, and intensive donor dialogue on the budget. Fiduciary risk due to weak institutional capacity could undermine the reform program. Mitigated by government and donor efforts to build capacity and strengthen the fiduciary environment.

PI21 056

iii

INTERNATIONAL DEVELOPMENT ASSOCIATION

SUPPLEMENTAL FINANCING DOCUMENT FOR THE THIRD GOVERNANCE REFORM AND GROWTH CREDIT

TO THE REPUBLIC OF SIERRA LEONE

1. BACKGROUND

1.1 The Third Governance Reform and Growth Credit (GRGC-3)? in the amount of SDR6.4 million (US$10 million equivalent) to the Republic of Sierra Leone was approved by the Board on November 24,2009, to support implementation of the country?s Second Poverty Reduction Strategy Paper (PRSP-2) in the context of a multi-donor budget support framework. This single tranche credit is the third in a programmatic series of three Development Policy Operations (DPOs) undertaken by the World Bank and is consistent with the Joint Country Assistance Strategy.2

1.2 At the time the GRGC-3 was negotiated in late 2009, the international financial and economic crisis had already adversely affected Sierra Leone?s economic performance, although the full extent of this was unclear. Government had already responded in 2009 through programs to assist the hardest hit. For 2010, government plans call for an economic stimulus program to be effected through increased public expenditures with a primary focus on infrastructure spending, mainly for roads and a bold new social agenda to improve health outcomes and provide a cushion for the most vulnerable.

1.3 A more complete picture about the effects of the global economic and financial crisis on economic performance in 2008 and 2009 is now available. Reduced export demand and remittances led to a slowdown in domestic growth which in turn has lowered the revenue base. Unexpected spending needs in 2009 resulted in deferred investments and generated costs for the 2010 Budget which appears underfinanced by the equivalent of about 1.2 percent of GDP, or about US$27.5 million. The authorities are therefore seeking additional financing resources to help close the larger than anticipated gap to protect growth and ensure that priority expenditures under the PRSP-2 are maintained.

2. IMPACT OF THE GLOBAL ECONOMIC CRISIS

2.1 Sierra Leone?s economic performance has been adversely affected by the global economic downturn. As in a number of Afiican countries the principal transmission channel has been through the real sector affecting exports, remittances and GDP growth. Lower GDP growth in turn has led to reduced government revenues. Precise measurement and quantification of the direct effects of the global downturn is, however, not clear-cut due in part to the weak

Sierra Leone: Third Governance Reform and Growth Credit, Report no. 51 10-SL, World Bank, 2009. ? Joint Country Assistance Strategy for the Republic of Sierra Leone, IDA, IFC and African Development Bank, Report no. 52297-SL, World Bank, 2010. The strategy was discussed by the World Bank Board on April 6,2010.

1

statistical base and also owing to the fact that government policy was in fact successful in partially mitigating the effects of the downturn on the domestic economy.

2.2 Falling diamond prices in late 2008 saw export earnings from that source plummet. The net result was a 5.2 percent reduction in the U.S. dollar value of overall exports for 2008 (Table 2.1).3 The collapse of diamond prices continued into 2009, with diamond export prices falling at an average rate of 8 percent per month, between January and June, before stabilizing in the second half of the year while the share of diamonds in total exports slipped another 10 percentage points. The deterioration was not confined to diamonds but extended to other important mining exports including bauxite and rutile which in 2009 experienced declines in world prices and export volumes.

Table 2.1: Key Economic Indicators, 2008-12

2008 2009 2010 201 1 2012 Prelim. Projected Projected Projected

Real GDP Growth (%) 5.5 4.0 4.8 5.5 6.0 Consumer Price Inflation (%, e.0.p.) 12.2 10.8 12.5 9.5 8.0 Terms of Trade (YO Change) -2.5 -8.3 5.7 4.3 2.8

Exports of Goods (US$ % chg.) -5.2 3.9 25.9 12.5 11.5 Imports G&NFS (US$ % chg.) 24.8 -2.6 14.7 11.9 10.7 Current Account (YO GDP) -11.7 -8.4 -9.0 -9.0 -9.1

Revenue and Grants (% GDP) 16.0 19.5 19.4 18.8 20.6 - Revenue 11.5 11.7 12.4 12.9 13.7 - Grants 4.5 7.8 7.0 5.9 6.9

Expenditures (YO GDP) 20.7 22.7 23.3 23.6 24.0 - Recurrent 14.8 15.5 15.1 15.1 15.0 - Development and Net Lending 5.9 7.2 8.2 8.5 9.0

Overall Fiscal Balance (YO GDP) -4.7 -3.2 -3.9 -4.7 -3.5

Source: Ministry of Finance and Economic Development, IMF and Bank staff estimates.

2.3 A sharp increase in fuel imports for the emergency power supply project more than offset the steep decline in international oil and rice prices that occurred over the second half of 2008. As a result the U.S. dollar value of imports increased by 24.8 percent in 2008. In the event, growing pressure on the balance of payments led to a 28 percent depreciation of the Leone vis-&vis the U.S. dollar in 2009. In turn, imports dropped in 2009 (by 2.6 percent in U.S. dollar terms), under the influence of lower demand (due notably to the phasing down of the emergency power project and the scaling back of mining production) and worsening relative

The share of diamonds in total exports which had been around 80 percent in the middle of the decade fell to around 46 percent in 2008.

2

prices, exchange rates and terms of trade. Compounded with a slight rebound in exports, the contraction of imports in 2009 entailed a reduction in the current account deficit, from 1 1.7 percent of GDP in 2008 to 8.4 percent in 2009.

2.4 Remittances from abroad which have played a critical safety net role declined significantly in 2009, although the weak data base for these prevents precise estimation of the extent of declines4 A lower bound estimate of the fall in remittances suggests that they declined by at least 10 percent in 2009. The drop in diamond prices also trickled down to adversely affect the incomes of small scale artisanal producers. Taken together the impact on household and personal disposable incomes of falling diamond prices and reduced remittances cannot be overstated.

2.5 Real growth in 2009 was reduced by as much as 1.5 percentage points as a result of lower exports and remittances. GDP growth is estimated to have declined to 4.0 percent in 2009 (that is, approximately 1.5 percent in per capita terms) whereas the expectation and forecast was for an annual increase of 5.5 percent in real terms. Lower export demand and remittances, and deteriorating terms of trade are believed to have played an important role in the deceleration of economic activity in 2008 and 2009. In contrast, GDP growth averaged 7.0 percent per year over the period 2005-07.

3. GOVERNMENT’S RESPONSE TO THE GLOBAL ECONOMIC CRISIS

3.1 Government responded to the emerging effects of the global downturn in 2009 through a number of channels designed to provide a cushion against economic hardship. The first of these focused on protecting the poor and vulnerable. To that end, working with development partners, it prepared and implemented a cash-for-work program as well as a food- for-work program. It also decided not to pass through the full effects of the increase in international fuel prices to domestic consumers despite significantly increasing the fuel excise tax in the second half of the year to recoup lower than expected revenues.

3.2 Expenditure in 2009 came under pressure from unanticipated spending needs including additional costs associated with the delayed completion of the Bumbuna hydro-electric power plant (which necessitated continued fuel imports), an unbudgeted deployment of Sierra Leonean forces to the UN mission in D a r k , and additional counterpart funds to key road projects. Recurrent spending was an estimated 15.5 percent of GDP, somewhat over the budget target of 14.8 percent of GDP while development expenditures were 7.2percent of GDP in keeping with the budget target.

3.3 Despite lower economic growth, the revenue performance in 2009 was protected by the sharp increase in import duty collection, due to the currency depreciation. Total estimated revenues at 1 1.7 percent of GDP were slightly higher than in 2008 (1 1.5 percent) but still remained 0.5 percent of GDP lower than the original target. The planned introduction of a Goods and Services Tax (GST) was deferred until 2010, in the face of its likely negative impact on domestic consumption and economic activity in the midst of ongoing economic crisis.

Discussions with the authorities and banks as well as anecdotal evidence all point to a significant decline in remittances in 2009 as a result of the crisis.

3

3.4 The overall fiscal balance was held to -3.2 percent of GDP in 2009 with the help of higher than programmed grants, and some accumulation of arrears. Donor grants increased by 3.2percentage points of GDP in 2009, providing the fiscal space needed to increase both recurrent and development expenditures. In protecting consumers from the effects of rising global oil prices, the Government also accumulated arrears vis-h-vis domestic fuel distributors estimated at 0.4 percent of GDP, which it now intends to clear in 2010.

3.5 The protracted effects of the global crisis and slowdown are constraining the Government’s ability to finance its program supported under the Governance Reform and Growth series. For 2010, the Government decided to undertake stimulus spending in order to restore the growth trajectory to pre-global downturn levels and increase employment. This is to be done by way of accelerated spending, primarily on infrastructure, as reflected in the budgeted increase in development expenditures, from 7.2 percent of GDP in 2009 to 8.2 percent in 2010, 8.5 percent in 201 1 and 9.0 percent in 2012. The macroeconomic framework for 2010-12 acknowledges the lasting impact of the global recession, as evidenced by the conservative GDP growth assumptions retained and the very progressive return to the pre-crisis growth trajectory. It is estimated that Sierra Leone needs sustained annual growth above 6 percent in order to make a significant dent in the incidence of poverty.

3.6 The extent of the global crisis on the poor and vulnerable was also largely unforeseen. For example, with the vast majority of the country’s diamond production in the hands of small-scale artisanal miners, the sharp decline in diamond exports noted above would have had a profound adverse effect on household incomes. Thus amid concerns about the impact of the economic slowdown on household welfare and with Sierra Leone classified by the UN as the world’s least developed country5, the Government also plans to increase social spending in 2010 to protect the poor and vulnerable. Per capita income is lower today than it was in the 1960s and with nearly 70 percent of the population living below the poverty line in 2007, the country is not expected to attain any of the Millennium Development Goals (Annex 3) by 2015. Government announced an initiative in 2009 to provide a package of basic health services to the most vulnerable-pregnant and lactating mothers and children under the age of five years-to be implemented in 2010. Poverty related expenditures are expected to be maintained at about 5 percent of GDP in 2010.

3.7 Government recognizes the complexity of the undertaking and the challenges that it will face, over and above issues of cost, financing and sustainability. These challenges include the ability of the health system to scale up and respond to an expected increase in demand. Issues including adequacy of human resources, physical and institutional infrastructure and availability of pharmaceuticals are all receiving intense attention. The Bank and other development partners have provided technical assistance to help government prepare and plan for this important initiative which it intends to implement commencing in May 20 10.

3.8 Improved revenue performance is planned for 2010 due to greater administrative effort, base broadening, introduction of the GST and a reduction in granting of discretionary exemptions. As a result mainly of revenue reforms, revenues are expected to rise to about 12.4 percent of GDP (Box 3.1). On the expenditure side the wage bill will increase by about 0.4 percent of GDP on account of pay increases for health workers in connection with the

’ Sierra Leone placed at the bottom of the rankings of the U.N. Human Development Index, 2008.

4

new health care initiative. Development expenditures will also go up as planned due to accelerated capital spending on infrastructure, by up to 1 percent of GDP to an estimated 8 percent of GDP. Taken together this will give rise to a deficit equivalent to about 4 percent of GDP in 2010.

Box 3.1: Ongoing Revenue Reforms

Sierra Leone’s revenue effort, at just over 11 percent of GDP, is among the lowest in the world. To improve this, a number of tax policy reforms are underway or planned at the National Revenue Authority (NU) including the introduction of a value-added tax (GST) in early 2010. Off-budget revenues collected by some ministries are to be brought into the consolidated revenue fund. An effort is also being made to make taxation less of a burden to f m s that would otherwise remain outside the formal economy. Other policy reforms include the introduction of self-assessment for some categories of tax payers, the development of a Small Taxpayer Regime, customs law reform, and a study on the reform of tax incentives. MOFED plans to initiate implementation of the Integrated Financial Management Information System revenue module and is considering strengthening its capacity to formulate tax policy.

Administrative changes at NRA include the creation of a Large Taxpayer Unit in 2008, the introduction of taxpayer identification numbers in 2009, customs administration, improving taxpayer education and outreach, and building tax administration capacity in general. These efforts are being supported by a number of development partners including the Commonwealth Secretariat, the United Kingdom’s Department for International Development (Dff D), Investment Climate Advisory Services, and the World Bank.

3.9 Accordingly, the 2010 budget submitted to Parliament in late November 2009 foresees a deficit of approximately 3.9 percent of GDP. The 2010 budget is, however, under- financed by the equivalent of about 1.2 percent of GDP, about US$27.5 million, given the incomplete available information at the time of budget preparation around mid-2009. As noted, the gap has emerged mainly due to (a) the effect of lower than anticipated growth in the revenue base in 2009 resulting from the economic slowdown, which will carry over to 2010; (b) higher spending needs in 2010 arising from the need to pay for the implicit subsidy on fuel in 2009; and (c) weaknesses in budget planning and preparation which resulted in incomplete expenditure identification and inability to secure adequate donor financing ex ante.

4. BANK RESPONSE AND STRATEGY

4.1 The proposed supplemental financing responds to Government’s need for additional resources to close the financing gap in 2010, to protect growth and maintain priority expenditures under the PRSP-2. Prior to these developments the World Bank had programmed a total of US$12 million in regular IDA resources for 2010. This included US$7 million in budget support resources and US$5 million for a youth employment project. Given the unfolding situation with respect to the economic slowdown experienced by Sierra Leone as a result of the global downturn, the Bank has decided to utilize resources from the IDA pilot Crisis Response Window (CRW) to provide additional budget support through this proposed supplement to the GRGC-3 in the amount of US$7 million and to scale-up the youth employment project to US$20million. Thus a total of US$14million is planned in budget support for 2010, and US$20 million in projects.

4.2 Other development partners have also come forward and committed to provide additional financing over and above what they had originally programmed for Sierra

5

Leone in 2010, in order to help close the remaining financing gap and fully finance the budget. Principal among them are the European Commission (EC) which has indicated that it will provide a second round of resources from its Vulnerability-FLEX facility and the U.K.’s DffD which has also agreed to provide additional resources. Together with the proposed Supplemental Financing from the IDA pilot CRW, this should be adequate to close the additional financing gap estimated for 2010 (Table 4.1).

Table 4.1: Additional Financing Gap, 2O1Ob (US$ million)

Financing; Gap European Commission U.K. Department for International Development IDA pilot CRW Supplemental Financing

27.5 13.0 7.5 7.0

/a Amounts are tentative. Source: Bank staff estimates

5. THE REFORM PROGRAM: AN UPDATE

5.1 The GRGC-3 is the third in a programmatic series of three DPOs that was fully disbursed in December 2009 following the completion of all prior actions. The program document for the GRGC-3 includes envisaged policy measures for bringing forward a new series of DPOs to the Board of Executive Directors planned for 2010, in addition to the normal requirement for maintenance of an appropriate macroeconomic framework and continued improvement in strengthening fiduciary arrangements. A summary of recent progress is provided below.

5.2 A number of policy areas that could form the basis of the next budget support operation planned for 2010, were discussed with the Government. Government continues to make good overall progress in implementing its development program including undertaking to implement future reforms in several areas. These include establishment of a legislative framework for public debt management that will provide the basis for a comprehensive and modern approach to debt management. In a bid to rationalize and strengthen public investment management it has decided to strengthen the legal and institutional framework governing public investment. In order to improve the environment for private investment the Government is also committed to establishing a regulatory framework for the formation of public-private partnerships. Efforts to improve public procurement include expanding its coverage in public entities and other measures to strengthen and formalize procurement capacity. To curtail the proliferation of discretionary tax exemptions and increase the transparency and accountability of exemption decisions, it is preparing a legislative framework to guide such decisions. To kick-off medium term reforms in the power sector it has made a decision to transition to an efficiency-adjusted cost-based tariff formula for the provision of electric power. Finally, to underscore its commitment to transparency it has prepared for enactment a Freedom of Information Act.

5.3 Macroeconomic framework: the Fifth Review of the IMF Extended Credit Facility (ECF) was successfully concluded in December 2009. Program performance in the first half of 2009 was assessed as satisfactory. All end-June quantitative performance criteria were met, as

6

were all end-June structural benchmarks, although one with a delay. One of the two structural benchmarks for September 2009 was met, while the other was missed because of delays in revising the underlying legislation. Discussions under the sixth and final review of the ECF and on a three-year successor program were recently concluded ad referendum with the IMF.

5.4 Fiduciary arrangements: The fiduciary arrangements outlined in the GRGC-3 will apply. The Government continues to deepen its ongoing program of public financial management reforms at both central and local levels, with support from the new Integrated Public Financial Management Reform Program formally launched in February 20 10.

6. RATIONALE FOR PROPOSED SUPPLEMENTAL FINANCING

6.1 Unanticipated financing need. The request for supplemental financing is consistent with OP 8.60. The protracted nature and impact of the global economic crisis has created an unanticipated financing gap which could jeopardize the GRGC-3 and the Government’s broader reform program. The planned stimulus spending will have a substantial effect on the budget. Compounding these effects revenue performance has been lower than anticipated also due to the effects of the global recession. The on-going international economic downturn represents an exceptional external shock beyond the control of the authorities, threatening original program objectives for 2010 absent a government response. The IMF and World Bank have evaluated the program proposed by the authorities and consider it adequate.

6.2 The program remains broadly on track and government commitment is firm. Implementation of the program supported under GRGC-3 has proceeded as anticipated and remains on track with government implementing agreed structural reforms. As noted above it has also maintained an adequate macroeconomic framework throughout and is making efforts to improve fiduciary arrangements. Government commitment is measured by the successful completion of two preceding annual development policy operations and three prior to that. To date, government remains in compliance with all the covenants embedded in the Legal Agreement for the financing of the GRGC-3.6

6.3 The Borrower is unable to obtain sufficient funds from other lenders on reasonable terms and in a reasonable time. The Government is actively seeking additional financing to cover the financing gap and as noted above, has received some commitments with regard to additional financing with discussions still ongoing with respect to others. The Supplemental Financing is therefore a critical element to close the fiscal gap due to lower budget revenues than originally programmed and the need for stimulus spending. Accessing non-concessional external financing is not a viable option as it would be inconsistent with the recommendations of the most recent debt sustainability analysis as well as the program agreed with the IMF.

6.4 The time available is too short to process a freestanding Bank operation. The time required for preparation of a freestanding Bank operation would be so lengthy as to severely disrupt government plans for its 2010 stimulus program. Thus Bank assistance needs to be rapid to be timely, given the long lead times required for successful implementation of infrastructure

Financing Agreement for Credit Number 4661-SL, December 3,2009, between the Republic of Sierra Leone and the Association.

7

and public works. Thus, expedited IDA pilot CRW procedures are proposed to respond quickly to the urgent needs of the country generated by the on-going economic downturn.

7. IMPLEMENTATION ARRANGEMENTS

A. BENEFITS

7.1 The proposed supplemental financing will assist the authorities in pursuing the objectives for 2010 as set out in the GRGC-3 operation, focusing on the consolidation of recent improvements in economic management that could otherwise be reversed and to reduce macroeconomic risks, and the improvement of the quality of public sector administration and institutions where policies and outcomes are lagging relative to other countries.

7.2 The proposed supplement will also help close the financing gap in 2010, which resulted from the need to maintain expenditure levels consistent with government’s planned stimulus package and its poverty reduction objectives despite the impact of the international economic slowdown.

B. TERMS OF THE SUPPLEMENTAL FINANCING

7.3 The borrower is the Republic of Sierra Leone and this Supplemental Financing is a single-tranche credit for US$7 million equivalent that would be made available upon credit effectiveness, so long as the borrower continues to make satisfactory progress with respect to implementing its program supported under the original GRGC-3 DPO and continues to maintain a satisfactory macroeconomic policy framework. No other conditions, except for the standard requirement for a legal opinion will apply to this Supplemental Financing. The closing date for the Supplemental Financing is June 30,201 1. The proposed supplemental financing continues to support the full program of actions set out in the program document for GRGC-3.

C. FIDUCIARY ASPECTS

7.4 The fiduciary arrangements outlined in the GRGC-3 DPO, which rely on government systems and institutions, will continue to apply for this supplemental financing in light of both a specific review of fiduciary arrangements undertaken for the GRGC-3 and various improvements in the fiduciary environment noted below.

7.5 The Government has made consistent progress in strengthening its public financial management framework and systems. It implemented recommendations of the 2002 Country Financial Accountability Assessment supported by IDA through the Institutional Reform and Capacity Building Project and technical assistance provided by the African Development Bank, DfID and the EC. This resulted in: establishment of the legal and regulatory framework for budgeting, accountability, and procurement; implementation of a financial management information system; clearance of the backlog of annual financial statements; and establishment of basic budgeting, procurement, and accounting procedures in local councils.

7.6 Subsequently the Public Expenditure and Financial Accountability assessment conducted in early 2007 found Sierra Leone’s performance to be similar to the average for other countries in the region. Since then, the timeliness of financial statements and audit reports has improved

8

further, although major weaknesses remain with respect to budget management and transparency. To build on the progress to date and to tackle these challenges, the Government has prepared a comprehensive program of public financial management reforms which is being implemented through the Integrated Public Financial Management Reform Project. Financial support to the tune of US$20.9 million is being provided for this effort through a pooled financing arrangement which brings together IDA, DffD and the EC. The Government aims to sustainably improve the credibility, control, and transparency of fiscal and budget management.

7.7 In terms of the foreign exchange environment, the IMF conducted a safeguards assessment of the Bank of Sierra Leone in 2002 and 2006. The latter showed significant progress in implementing recommendations of the 2002 assessment and a follow-up report in 2009 indicates continued progress including, adoption of International Financial Reporting Standards, strengthening of internal audit and increased capitalization of the bank.

D. FUNDS FLOW AND AUDITING REQUIREMENTS FOR THE SUPPLEMENTAL FINANCING

7.8 The proposed operation will follow IDA’S disbursement procedures for DPOs. Once the operation becomes effective, and at the request of the Borrower, the proceeds will be deposited by IDA into a deposit account in US. dollars at the Bank of Sierra Leone which forms part of the country’s foreign exchange reserves. After disbursement of the loan, the Government will ensure that the equivalent Leone amount of this loan is promptly accounted for (in Leones) in the Borrower’s budget system in the Consolidated Revenue Fund, and so be available to finance budget expenditures. Within 30 days of receipt the Borrower will provide written confirmation to IDA of the disbursement of the loan and that the amount has been converted to local currency and an equivalent amount has been credited to an account of the Government available to finance budgeted expenditures, providing supporting details of the accounting.

7.9 Disbursement would not be linked to specific purchases. The proceeds of the operation would not be used to finance expenditures excluded under the Agreement. If, after being deposited in a government account, the proceeds of the operation are used for ineligible purposes as defined in the Financing Agreement, IDA will require the Borrower to either: (a) apply the corresponding amount to eligible purposes; or (b) refund the amount directly to IDA. No designated account is required for this operation.

E. POVERTY AND SOCIAL IMPACT

7.10 The proposed Supplemental Financing to the GRGC-3 is expected to have a significant and positive impact on poverty reduction, primarily because it will contribute to closing the financing gap that has emerged for 2010. In addition recent policy initiatives by the Government such as the health care initiative for pregnant and lactating mothers and children under the age of 5 years will also have a significant and positive impact on the poor and on vulnerable groups. As outlined above, the policies supported under the operation aim at protecting pro-poor growth and poverty reduction objectives. To the extent that the Government’s 2010 program has the expected impact of stimulating growth, creating additional employment opportunities, and extending the reach of critical health services, it would protect the objectives of the PRSP-2 and have a positive impact on the poor and on vulnerable groups.

9

F. ENVIRONMENTAL ASPECTS

7.1 1 The policies and actions supported by the GRGC-3 and this proposed supplemental financing are not likely to have any significant effect on the environment, natural resources and forests. The policies and actions supported under the GRGC-3 and the supplemental financing address primarily institutional reforms, none of which entails any environmental effect. Government’s 201 0 budget does, however, include investments in basic infrastructure and agriculture that may have some environmental effects. Most of these additional investments, should they materialize, would be financed by development partners, each with their own environmental requirements.

G. RISKS AND RISK MITIGATION

7.12 A number of risks could jeopardize the expected outcomes and benefits of this operation, principally: (i) exogenous shocks; (ii) financing risk; (iii) fiduciary risk. Measures to mitigate these risks in the event they materialize are being taken as outlined further below.

7.13 Risks from exogenous shocks remain significant. These include an extended global recession, another rapid rise in international commodity prices for food or fuel, or new and unavoidable expenditure obligations such as might result from a natural disaster.’ A further deterioration in the terms of trade that such events might trigger could depress growth, reduce remittances from abroad and place government’s ambitious plans for a stimulus to the economic recovery at risk. The risks created by such shocks to macroeconomic stability and PRSP-2 implementation are mitigated by the Government’s established track record of maintaining a satisfactory macroeconomic framework, a successful agreement with the IMF, and a continuous dialogue with the IMF, the World Bank and the multi-donor budget support development partners on macroeconomic policies and the reform program. In addition, the Bank will continue to monitor the impact of the global recession and assess the need for further support, such as the planned expansion of the cash for work program.

7.14 Financing Risk could derail the reform program, supported by this operation. The most pressing risk comes fiom the failure to secure timely and adequate financing for the 2010 budget. Although this now appears to be in place, including through this proposed supplemental financing, there is a possibility of delay. Should that occur, the Government would face a dilemma: whether to maintain its program through increased resort to domestic borrowing and the attendant risks to macroeconomic stability that would entail; or to undertake substantial reductions in key expenditure programs including PRS implementation, and the lower GDP growth that would be likely. This risk is mitigated by the Government’s track record of satisfactory macroeconomic performance and the ongoing intensive dialogue with development partners within the harmonized multi donor budget support group.

7.15 Fiduciary Risk due to weak institutional capacity and governance. Weak institutional capacity or corruption could hamper the implementation of the reforms supported by the proposed operation and the broader Poverty Reduction Strategy. Additionally, inadequate

’ Sierra Leone has faced natural disasters of various kinds, mainly in the form of recurrent floods (2009,2007,2005) drought or landslides. The country is thus considered to be at relatively high mortality risk from multiple hazards with 13 percent of its area at risk and more than 35 percent of the population at risk.

10

training in procurement procedures could slow the effective broadening of procurement reform, and weaknesses in accounting skills especially at the sub-national level are also issues of concern. These risks are mitigated by the choice and design of the supported measures which are calibrated to existing capacity, the provision of extensive technical assistance and capacity building through ongoing or planned projects (including support from the Institutional Reform and Capacity Building Project for training in procurement and accounting skills), the Integrated Public Financial Management Reform Project and the growing involvement of civil society in oversight activities. As noted above, IDA and other development partners remain committed to build capacity and strengthen the fiduciary environment.

11

Annex 1: Fund Relations Note Sierra Leone-Assessment Letter for the World Bank

May 7,2010

Sierra Leone’s program, supported by the Fund under the Extended Credit Facility (ECF), is broadly on track. All but one of the quantitative performance criteria for December 2009 were met. Although economic activity in 2009 was negatively impacted by the global economic downturn, there are positive signs of a moderate pick-up in exports and growth. Discussions on the final review of the program and a successor three-year ECF-supported program were concluded ad referendum during the Spring Meetings.

Recent economic developments and short-term outlook

1. Economic activity in 2009 was adversely affected by falling global demand and a drop- off in foreign remittances. In spite of a pickup in exports of diamonds and agricultural products in the second half of 2009, real GDP growth eased to 4 percent in 2009, down from 5.5 percent in 2008. Growth is expected to rise to 4.8 percent in 2010, aided by global economic recovery, investment in basic infrastructure, initiatives to improve the business climate, and increasing agricultural productivity. Inflationary pressures subsided somewhat during 2009 as prices of imports decreased, reducing annual inflation from 12.2 percent in 2008 to 10.8 percent in 2009. However, 12-month inflation jumped to about 17 percent in February, reflecting the initial impact of implementing a new VAT (called GST in Sierra Leone) and higher domestic fuel prices. Monetary policy aims to bring inflation down to 12.5 percent in December 2010, while accommodating administered price adjustments and supply shocks.

2. Under the ECF-supported program, all except one quantitative performance criteria for end-December 2009 were met, but the performance on structural benchmarks was mixed for the second half of 2009. While three benchmarks, including the key one on introduction of the Goods and Services Tax (GST), were met (one with delay), two benchmarks on tax administration, and one benchmark on strengthening banking supervision were not met.

Discussion of a successor Fund-supported program

3. Staff reached agreement ad referendum with the Sierra Leonean authorities on policies that could be supported by a successor three-year ECF arrangement. The key challenges facing the country continue to be the creation of fiscal space to finance investment in basic infrastructure and implementation of structural reforms to promote higher sustainable private sector-led economic growth. The authorities intend to create fiscal space under the new ECF- supported program by broadening tax bases, containing nonpriority spending, raising public sector efficiency, especially on project selection and implementation, and seeking concessional financing from donors.

12

Fiscal policy

4. Fiscal policy performance during 2009 was broadly satisfactory. Higher budget grants and domestic revenue collections, combined with some expenditure restraint, reduced the overall deficit to 3.2 percent of GDP in 2009 fiom 4.8 percent in 2008 (and 4.4 percent in the program). The domestic revenue target was met by a solid margin as import duties rose significantly.

5 . Fiscal space is to be created for accelerated capital and social spending by broadening tax bases, containing nonpriority spending, and raising public sector efficiency. In 20 10, domestic revenue performance is expected to improve due to revenue gains fiom the introduction of GST, improvement in tax administration, and reduction in discretionary tax exemptions. While nonwage current expenditures are expected to decline because of the ending of the emergency power project, capital expenditures are planned to increase by about 1 percentage point of GDP in 2010. The wage bill is set to increase by 0.4 percent of GDP as a result of significant salary increases to health care workers, one component of the recently launched free health care initiative. Implementation of a multi-year pay reform, addressing compensation for all public servants, is to begin this year. This reform is expected to be budget neutral in 2010. The overall fiscal deficit is projected at about 4 percent in 2010 while domestic financing is targeted to remain below 2 percent of GDP.

Monetary policy

6. Monetary policy was expansionary toward the end of 2009, accommodating higher budgetary outlays ahead of a delayed inflow of external budget support, combined with difficulties in rolling over treasury bills. Reserve money grew by about 20 percent in the fourth quarter, compared with 1 percent in the first three quarters of 2009. However, monetary policy has been tightened in the first quarter of 2010 and this policy is expected to be maintained to contain inflationary pressures during the rest of the year.

7. The BSL will enhance the conduct of its monetary policy by establishing a benchmark interest rate. The independence of the BSL is to be strengthened, as will the BSL’s capacity to conduct effective bank supervision. Access to credit will be enhanced by strengthening credit information through establishing a credit reference bureau.

8. Although the pace of credit growth to the private sector remained high in 2009, the quality of the bank’s loan portfolio improved, as reflected in a decline in the ratio of nonperforming loans (NPLs) to gross loans fiom 17.9 percent at end-2008 to 10.6 percent at end- 2009.

Exchange rate

9. After a long period of stability, the leone depreciated against the U.S. dollar by about 25 percent in 2009, partly reflecting weak export proceeds and remittances. However, the leone has remained stable since end-2009. In 2010, the BSL will sell foreign exchange through regular

13

foreign exchange auctions to mop up the domestic liquidity created by foreign financed budget spending. Foreign exchange reserves are projected to be maintained at a comfortable level of about 5.5 months of import cover.

Structural issues

10. The structural reform program for 2010 and the medium term will complement the macroeconomic policies that focus on creating more fiscal space for capital and social spending. Efforts will focus on improving tax administration, strengthening public financial management (notably in the planning, evaluating, and monitoring of capital projects), and deepening the financial sector to promote private saving and investments. The government is also committed to establishing a transparent and automatic pricing framework for petroleum products to reflect full pass-through of international market prices to the domestic market.

Relations with the IMF

11. tentatively scheduled for June 20 10.

A Board meeting for the final review of the current program and the ECF request is

14

Annex 2: Sierra Leone at a Glance 2/25/0

Key Dovolopment Indlcators

(2008)

population, mid-year (millions) Surface area (thousand sq. km) Population growth (%) Urban population (%of total population)

GNI (Atlas method, US$ billions) GNIpercapita(At1as method, US$) GNIpercapite(PPP, international 8 )

GDP groMh(%) GDP per capita groMh (%)

(moat recent eatlmate, 2003-2008)

Povertyheadcount ratio at $125aday(PPP,%) Povertyheadcount ratio at $Z.OOaday(PPP,%) Life epectancyat birth (years) Infant mortaiity(per 1000 live births) Child malnutrition (%of children under 5)

Adult Ilteracy, male (%of ages 15 and older) Adult literacy,female (%of ages 15 and older) Gross primaryenrollment, male (%of age group) Gross primaryenrollment,female (%of age group)

Access to an improvedwatersource(%of population) Access to improved sanitation facilities (%of population)

Sierra Leo ne

5.6 72 2.6 38

16 320 750

5.5 2.9

53 76 48 155 26

50 27 155 0 9

53 n

Sub- Saharan

Africa

818 24,242

2.5 36

885 1082 1991

5.0 2.5

51 73 52 89 27

71 54 0 3 93

56 31

LO w income

973 8 . 3 0

2.1 29

5 0 524

1407

6.4 4.2

59 78 26

72 55

0 2 95

87 38

&e dletrlbutlon, 2008 I Mae Fmsle

I 75-78 1

I 10 5 0 5 10

W C d ol tdsl pqxrlauul

Under4 mortalltyrate (per 1,000) rn 300

200

100

0

Net Aid F l o w

(US$ rnillio ns) Net ODA and official aid Top3donors (in2007):

United Kingdom European Commission Netherlands

Aid(%of GNI) Aid percapita(US$)

Long-Term Economic Trends

Consumer prices (annual %change) GDP implicit deflator (annual %change)

Exchange rate (annual average, local per US$) Terms of trade index(2000 = 00)

Population, mid-year (millions) GDP (US$ millions)

Agriculture Industry

Services

Household final consumption evenditure General gov't final consumption evenditure Gross capital formation

Eqorts of goods and services Imports of goods and services Gross savings

Manufacturing

1880

91

5 8 4

8.5 26

20.0 5 .0

10

3.3 1 0 1

33.0 219 5.3

45.0

90.7 8.4 8.2

22.9 38.2 0.5

1880 2000 -

2008 '

59 181

4 68

1 3

0.2 29.3 15 43

8 14

i n 0 -0.9 70.6 6.1

1514 2,092.1 0 2 DO

4.1 4.2 850 636 (%oFGDP) 46.9 56.4 8.2 28.4 4.6 3.5

33.9 0.3

83.5 00.0 7.6 14.3 0.0 8.9

22.4 18.1 23.6 39.3 2.6 -9.0

535

88 72 47

32.9 99

4.7 112

2,982.3 0 0

5.6 1954

50.2 23.5 3.7 26.3

85.8 12.5 14.7

8.3 29.4

8.3

Growth of GDP and GDP per caplta (46) I

05 95 I --C GOP - GOP par capita

1980-SO 1890-2000 2000-08 (average annualgmuth 9Q

2.2 0.3 3.4 0.5 -5.0 0 .3

3.1 -0.0 17 -4.5

6.7 4 .9 -2.9

-2.7 -4.3 4.7 w.4 -11 -5.6

-16 4 2 -5.1 -0.2

Note Figures initalics areforyears otherthanthosespeclfied 2006dataarepreliminary a Aid dataarefor2007

Development Economics, Development Data Group (DECDG)

indicates datearenot available

15

Sierra Leone

, USBmillions

Balance o f Payments and Trade

(US$ millio ns) Total merchandise exports (fob) Total merchandise imports (cif) Net trade in goods and services

Current account balance as a %of GDP

Wrkers' remittances and compensation of employees (receipts)

Reserves, including goid

Cent ra l Government Finance

(%of GDP) Current revenue (including grants)

Current expenditure

Overall SurplUS/defiCit

Highest marginal taxrate (%)

Tax revenue

Individual Corporate

External Debt and Resource Flows

(US$ millions) Total debt outstanding and disbursed Total debt service Debtrelief (HIPC,MDRI)

Total debt (%of GDP) Total debt service (%of exports)

Foreign direct investment (net inflows) Portfolio equity(net inflows)

2000

75 161

-a5

-D1 -15.9

7

50

19.4 D.8

22.7

-9.3

1,190 47

857

187.1 382

39 0

2008

314 381 -255

-209 -D.7

150

M2

42.9 14.7 20.7

-4.7

389 6

352

19 .Q H

-3 0

Composition oftotal oxtwnal debt, 2008

Pr i va te Sec to r Deve lopmont 2000 2008

Time required to start a business (days) - l7 Cost to start a business (%of GNI percapita) - 145.8 Time required to registerproperty(days) - 86

Ranked as a major constraint to business 2000 2008 (%of managers surveyed who agreed)

n.a. n.a.

Stock market capitalization (%of GDP) Bank capital to asset ratio (%) 8.5 l7.7

Governance Indicators, 2000 and 2008

V o i c e d aawntatility

Poiitid stability

Regulatay quality

Ruled law

Cmtrd d cwruptim

0 25 50 75 100

02008 Cmntry'a perantile rank (0100) 02000 higher values implybdtermthg

Source: K a ~ t m i n n X n a y M a 8 I ~ P i . World Bank

Techno logy and Infrastructure 2000 2008

Paved roads (%of total) Fixed line and mobile phone

High technologyexports subscribers (per DO people)

(%of manufactured exports)

Environment

Agricultural land (%of land area) Forest area (%of land area) Nationally protected areas (%of land area)

Freshwater resources per capita (cu. meters) Freshwater withdrawal (billion cubic meters)

C02 emissions per capita (mt)

GDP perunit of energyuse (2005 P P P $ per kg of oil equivalent)

7.9

1

311

38 40 39.8 38.5

.. 4.1

35,240 29,518 0.4

0 . 0 0.18

Energy use per capita (kg of oil equivalent) !

(US% mil/io ns)

IB RD Total debt outstanding and dlsbursed Disbursements Principal repayments Interest payments

I 0 0 0 0 0 0 0 0

IDA Total debt outstanding and disbursed 354 D8 Disbursements 70 26 Total debt service 4 1 ,

IFC (fiscalpar) Total disbursed and outstanding portfolio 2 1

of which IFC o w account 2 1

8

Disbursementsfor IFC own account 0 o j Portfolio sales, prepayments and

repaymentsfor IFC own account 1 0

M IGA Gross exposure - 5 New guarantees 0 5

16

Annex 3: Millennium Development Goals Sierra Leone

with selected targets to achieve between 1990 and 2015 (estimateclosest to date shown, Y- ?years)

Goal 1: halve the rat rs for axtreme povrrty and malnutrltion 1990 1996 2000 2008 Poverty headcount ratio at $125 a day (P P PI % o f population) 53 4 Povertyheadcount ratio at national poverlyline(%of population) 82 6 70 2 Shareof incomeorconsumption to the poorest qunitile (%) 11 6 1 Prevalenceof malnutntion (%of children underb) 24 7 26 3

62 8

Goal 2: ensure that chlldren are able to completa primary schooling P rimary scho o I enro Ilm ent (net, %) Primarycompletion rate (%of relevant age group) 61 Secondaryschool enrollment (gross, %) B 26 32

43

Youth literacyrate (%of people ages 15-24) a i

Goal 3: ollmlnate gondrr disparity In education and empower women Ratio of girls to boys in primaryand secondatyeducation (%) 67 71 66 ,

Proportion of seats held bywomen in national parliament (%) 6 9 0 Womenemployed in thenonagriculturalsector(%of nonagriculturalemployment) 23 ,

Goal 4: reduce under-6 mortallty by two-thlrds Under-5 mortalityrate (per 1000) Infant mortaiityrate (per 1000 live births) Measles im m unizat ion (pro portion of one-year o Ids immunized, %)

Goal 6: reduce maternal mortality by threr-fourths Maternalmorlalityratio (modeledestimate,per 00,000 live births) Births attended byskiiled healthstaff (%of total) Contraceplive prevalence (%of women ages 15-49)

290 283 274 262 6 9 6 6 61 6 5

37 67

e a t o f HIV/AIDS and Prevalence o f HIV (%of population ages 15-49) Incidence of tuberculosis (per 00,000 people) Tuberculosis cases detected under DOTS (%)

0 2 207

2, no 42 43 i 4 5 '

Goal 7: halve the proportion of people without suatalnable accesa to b a s k noedr Access to an lmprovedwater source(%of population) Access to improved sanitation facilities (%of population) Forest area(%oftotallandarea) Nationally protected areas (%of total land area) C02 emissions (metric tons per capita) GDP perunit of energyuse(c0nstant 2005PPP $ perkgof oilequivalent)

42.5

0.1

Goal 8: develop a global partnership for developmont Telephone mainlines (per 00 people) Mobile phone subscribers (per 00 people) Internet users (per 00 people) Personal computers (per 0 0 people)

Education Indicators ( W )

::I ~. . ~. . ~. , 0

2000 2002 2004 2006 2008

-C Primary net enmiiment ratio ( I

-0- Ratio olglds to boys ~n pnmary 8 secondary education

olds)

1990 1995 2000 2007

OSiem Leone OSubSahamn Amca

10 12 279 377 29 33

57 57 a P

412 39 8

0.1 0.1

17 574 37 '

53 I n i

4 1 ' 38 5

0 2

0 3 0 4 0 4 0 0 0 0 0 3 8 1 0 0 0 0 0 1 0 3

1

I : I C 1 Indicator8 (per I00 people)

I ' 2000 2002 2004 2008

.Fixed t moMle SUbBcnbFm

.int.m.t "men

MAP SECTION

Bintimani(1948 m)

Gor

iH

i l ls

Loma

Mts

.

SherbroIsland

Wara

WaraMts.

KAMBIAB O M B A L I

K O I N A D U G U

T O N K O L I L I

K O N O

KAILAHUNK E N E M AB O

P U J E H U N

B O N T H E

M O YA M B A

P O R T L O K O

WESTERNAREA F.R.

Gre

atSc

arcie

s

Little

Scar

cies

Mongo

Bagbe

Seli

Pam

pana

Rokel

Jong

Sewa

Kittam

Sherbro Moa

LakeMape

LakeMabesi Mano

Pendembu

Lunsar

Mano

Rotifunk

SongoYonibana

Masiaka

Waterloo

Sembehun

Kamakwie

Fadugu

BumbunaAlikalia

Kayima

Gandorhun Koindu

Buedu

Kurubonla

Kamaron

Tefeya

Yengema

Panguma

Lago

Pendembu

Daru

Njaiama-Sewafe

Joru

Zimmi

Fairo

Potoru

Kribundu

SumbuyaMatru

Blama

Momaligi

Bendugu

Falaba

Binkolo

Yana

Gbinti

Batkanu

Pepel Masingbi

Matotoka

Yele

Mongeri

Dambara

Mange

MadinaJunction

Makeni

Bo

Kenema

Kambia

Port Loko

Moyamba

Bonthe

Pujehun

Kailahun

Sefadu

Magburaka

Kabala

L IBERIA

KAMBIAB O M B A L I

K O I N A D U G U

T O N K O L I L I

K O N O

KAILAHUNK E N E M AB O

P U J E H U N

B O N T H E

M O YA M B A

P O R T L O K O

WESTERNAREA F.R.

Pendembu

Lunsar

Mano

Rotifunk

Songo

Shenge

Yonibana

Masiaka

Waterloo

Sembehun

Kamakwie

Fadugu

BumbunaAlikalia

Kayima

Gandorhun Koindu

Buedu

Kurubonla

Kamaron

Tefeya

Yengema

Panguma

Lago

Pendembu

Daru

Njaiama-Sewafe

Joru

Zimmi

Fairo

Potoru

Kribundu

SumbuyaMatru

Blama

Momaligi

Sulima

Bendugu

Falaba

Binkolo

Yana

Gbinti

Batkanu

Pepel Masingbi

Matotoka

Yele

Mongeri

Dambara

Mange

Lungi

MadinaJunction

Makeni

Bo

Kenema

Kambia

Port Loko

Moyamba

Bonthe

Pujehun

Kailahun

Sefadu

Magburaka

Kabala

FREETOWN

LIBERIA

G U I N E A

G U I N E AGre

atSc

arcie

s

Little

Scar

cies

Mongo

Bagbe

Seli

Pam

pana

Rokel

Jong

Sewa

Kittam

Sherbro Moa

Moa

LakeMape

LakeMabesi

YawriBay

ManoATLANTIC OCEAN

To Forecariah

To Kindia

To Ouré-Kaba

To Faranah

To Kolahun

To Monrovia

Gor

iH

i l ls

Loma

Mts

.

SherbroIsland

TurtleIslands

BananaIslands

Wara

WaraMts.

Bintimani(1948 m)

13°W 12°W 11°W

12°W 11°W

7°N

8°N

9°N

10°N

8°N

9°N

10°N

SIERRALEONE

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.

0 20 40

0 20 40 50 Miles

60 Kilometers

IBRD 33478

NOVEMBER 2004

S IERRA LEONESELECTED CITIES AND TOWNS

DISTRICT CAPITALS

NATIONAL CAPITAL

RIVERS

MAIN ROADS

RAILROADS

DISTRICT BOUNDARIES

INTERNATIONAL BOUNDARIES