SL-Fourth Economic Rehabilitation and Recovery Grant

closed

The Fourth Economic Rehabilitation and Recovery Grant (ERRG4) Project will provide quick disbursing support to the Government's 2005 budget in a single tranche. This project (the fourth in a series), is designed to consolidate Sierra Leone's transition from peace-keeping and relief aid, to equitable and sustainable development, in the context of Sierra Leone's Poverty Reduction Strategy. The ERRG4 will provide critical resources to consolidate and deepen the agenda set by the ERRC series, including progress made in governance, decentralization of government, management of public resources, human resource development, and private sector-led economic growth. The grant will contribute to economic recovery and growth, by providing foreign exchange resources for the imports of essential commodities, by providing financial resources to the Government budget, to finance priority public expenditures, and by supporting reforms to attract private investment. In helping to close the financing gap in 2005, it will also contribute to maintaining macroeconomic stability, and low inflation. However risks include delayed or inadequate public services that could exacerbate poverty, and possibly lead to social unrest; the budget is heavily dependent upon external assistance; macroeconomic stability could prove difficult to maintain; and, weak institutional capacity could cause delays in implementing the program; and, conflict in neighboring Cote d'Ivoire may affect trade, or spill over into Sierra Leone, while slow or incomplete disarmament in Liberia could create tensions between Guinea and Sierra Leone, which could spark a new war.