Sierra Leone First Macro Stability and Resilience DPO with a Catastrophe Deferred Drawdown Option

Sierra Leone is susceptible to economic and climate shocks, which, along with structural bottlenecks, have undermined macroeconomic stability and the ability to sustain growth. The development policy financing (DPF) operation with a Catastrophe Deferred Drawdown Option (Cat DDO) is the first in a programmatic series of three to help restore macro-fiscal stability and strengthen economic resilience. The financing is an International Development Association (IDA) grant of US60 million dollars equivalent with a Cat DDO of US20 million dollars equivalent, of which US5 million dollars is from the Crisis Response Window (CRW). The program development objective is to (i) improve fiscal management, (ii) enable conditions for inclusive growth, and (iii) build climate and disaster resilience. Reforms under the first pillar aim to increase revenue collection, strengthen public financial management (PFM), and improve accountability and transparency in public procurement. Reform under the second pillar aims to improve the energy sector's operational efficiency, enhance access to finance, and foster gender equality in employment and economic opportunities. Reforms under the third pillar aim to strengthen the country’s ability to respond to climate shocks and natural disasters. The operation is closely aligned with the Government’s Medium-term National Development Plan (MTNDP 2024-2030) priorities. The government’s commitment to reforms is further reflected in the Letter of Development Policy (annex 4). This DPF builds on the strong foundation established by the previous Inclusive and Sustainable Growth DPF series and earlier operations, and is complementary to the support from other development partners.