Second Deputy Bank Governor is important for improving Central Bank’s efficiency – IMF

Parliament has approved Sheikh Alhaji Yayah Sesay as the Second Deputy Bank Governor under the new Bank of Sierra Leone (BSL) Act on June 25th 2020. Section 12 of the BSL Act 2000 was amended by including an office for a Second Deputy Bank Governor. According to the new Act this newly approved officer of the bank will be responsible for financial stability. The First Deputy Governor is charged with responsibility of monetary stability.

According to the International Monetary Fund (IMF) Country Report No. 20/196 which detailed the country’s Request for Disbursement under the Rapid Credit Facility, the appointment and subsequent approval of the Second Deputy Governor by the President, is important for improving the efficiency of the internal organization of the central bank. The IMF will continue its efforts to help enhance BSL governance to buttress financial sector oversight. All of this comes in with the new BSL Act, the Banking Act, and Borrowers and Lenders Act, which came into effect in mid-2019, aimed at bolstering central bank’s independence and accountability, and strengthen financial stability.

They went further to note that the BSL is finalizing the terms of reference for its Financial Policy Committee, which will implement updated prudential guidelines and appropriate macroprudential policy measures and provide an important first step for interagency coordination. In addition a Financial Sector Stability Review is underway to help the BSL identify priority areas for financial reform and develop a roadmap to be supported by a comprehensive capacity development program.

On the country’s accountability and transparency for an effective COVID-response, the authorities have committed to the IMF for effective governance and accountability in their COVID-19 response, consistent with the emphasis on improving governance in their National Development Plan (NDP). The Anti-Corruption Commission (ACC) has launched a COVID-19 response task force on transparency to watch over the use of funds during this crisis. The Audit Service Sierra Leone (ASSL) however issued a public notice in March reiterating the main legal procedures in the use of public funds and its role in safeguarding the integrity of public finances in Sierra Leone.

The IMF staff wrote that the authorities have also begun to put in place measures to manage and monitor COVID-related spending, supported by IMF technical assistance (TA). The Government has set up the COVID-19 Fund (CF), an extra budgetary account at the BSL, to pool funds with a counterpart account at a commercial bank to execute the emergency spending. “This represents an improvement over the multitude of makeshift funds and agencies during the Ebola response. The authorities plan for regular reporting and the ex post audit by the ASSL of COVID-related interventions in line with their Public Financial Management Act (2016), and to publish online the names and beneficial owners of companies winning large COVID-19-related contracts.”

IMF TA is underway to ensure good practices, particularly on the management and oversight of the CF, the process for approving emergency spending, and increased use of electronic transactions. Timely disbursement of resources to ASSL and empowering ASSL to audit all resources spent will be important.

By Zainab Iyamide Joaque