A Mission from the International Monetary Fund (IMF), AFRICAC West 2, on the invitation of the Government of Sierra Leone, is engaging staff of the Ministry of Finance, especially those in the Fiscal Risk Management Division on addressing challenges of State-Owned Enterprises (SOEs) operations.
The three-day workshop commenced on Thursday 2nd February 2023 at the Accountant General Department, George Street in Freetown.
In his opening statement, the Principal Deputy Financial Secretary (PDFS) Mathew Dingie stated that the establishment of the Fiscal Management Risk Division in 2018 was a result of the pressure coming into the budget that emanated from the SOEs in terms of pay-out and debt which made some of these SOEs go into liquidation, and the burden falls on the government.
“The formation of the Fiscal Risk division was to scrutinise these entities and pressure them to raise revenue for themselves and by extension the government” he added.
Mr Dingie explained that the government have implemented a lot of reforms over the years to minimize the financial risk of these SOEs, stating that the availability of early and prompt information would enable to ensure that those risks are crystalised and systems put in place to mitigate them.
He officially welcomed the experts who have worked on similar interventions in other African nations and encouraged staff to be open in the technical discussions to be able to solicit solutions and by so doing remedy the challenges.
In her presentation, Catherine Kambai, Senior Economist at the Fiscal Risk Management Division, gave a succinct and summarized explanation of the Fiscal risk division, the major sources of SOEs’ Fiscal Risks, SOEs’ Financial vulnerabilities, contingent liabilities, exogenous shocks and specific fiscal risks.
She noted that there are currently sixteen active SOEs in the Country and that these SOEs represent a large cost to the budget due to increased provision of subsidies to quasi-fiscal operations and ball of some SOEs. She mentioned that SOEs may also undermine economic growth, particularly where they operate in vibrant sectors.
Kubai Khasiani, Regional Advisor Public Financial Management AFRITAC west 2 during the discussion said that he is here to work with staff and develop a framework that can assist in the monitoring of financial risk to be able to use the information to plan.
He re-emphasized that their presence in the country is to be able to work together with the team to develop a contextual model to tackle the outstanding macroeconomic risk, a specific risk with a mitigation strategy.
In her statement, Catherine Effah the resource person and expert from Ghana said she is happy to share her experience with the staff on how they have been able to manage the many challenges of fiscal risk from SOEs in Ghana. She noted that good information data is important to the mitigation of fiscal risk.
Bernard Drum SOE Specialist IMF consultant said he is delighted to share his experience from different countries across the world on solving these problems.
Dzingai Francis Chapfuwa – IMF also share his taught on the importance of getting pre-information from these SOEs, understanding the Metrix and being able to come up with a framework suitable for the Sierra Leone situation.