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Sierra Leone News: Forensic audit for foreign exchange transactions

An international audit firm will be appointed to conduct a forensic audit of foreign exchange transactions between the Bank of Sierra Leone (BSL) and Ministries, Departments and Agencies (MDAs) that took place between July 2015 to June 2018. “We have found out that the transactions have not been transparent and several cases of fraudulent transactions have been reported,” said Minister of Finance, Jacob Jusu Saffa. As a result an earlier audit was undertaken by KPMG Sierra Leone on these transactions. According to the Minister, the Safeguards Assessment carried out by the International Monetary Fund (IMF) also expressed similar concerns, so in an effort to safeguard the foreign exchange reserves of the country, an audit will be conducted. BSL is the public institution tasked with ensuring the soundness of the banking system, and safeguarding the country’s foreign exchange reserves. “In this context, the transparency in its operations, accountability of its activities and the general governance of the Bank are critical in ensuring its integrity and public trust,” said Minister Saffa. The government will continue to strengthen the BSL’s governance practices. On its Monetary and Exchange Rate Policies, the Bank will focus on price stability and will also implement monetary policies with the goal of reducing inflation to single digit in the medium-term. The BSL will continue to primarily use its monetary policy rate to signal the monetary policy stance and to enhance the effectiveness of monetary policy, they will seek to further develop and deepen the interbank market to enable market participants to effectively respond to monetary policy signals. There will be an improvement with monetary policy communication to key stakeholders and the public at large. Furthermore, the Bank will focus on the development of appropriate monetary instruments and tools to make liquidity management more effective. Minister Saffa said that the exchange rate will continue to be market determined to allow the economy to adjust to external shocks and maintain export competitiveness and that the BSL’s interventions in the foreign exchange market will be limited to smoothening excessive volatility in the exchange rate. Several enforcement measures have been designed by the BSL in collaboration with the Ministry of Finance in a bid to develop a strategy for building foreign exchange reserves in 2019. Government will require all exporters including large mining companies, licensed diamond and cash crop exporters to repatriate their export proceeds through the banking system and sell at least 15% of their export proceeds to the BSL. A review with the gold exporters’ agreements will require them to sell 5-10% of their export value to BSL at the prevailing official exchange rate and Government will minimise contractual payments in foreign currency thereby contributing to conserving foreign exchange and help to build up the foreign reserves. Furthermore, Government will explore the possibility of converting the tax incentives given to investors in the mining and other sectors into equity, which can help build the external reserves of the country, as is the case in other jurisdictions in the sub region. Government will also ensure that all project loans and grants are disbursed through the Central Bank, given that repayment of these loans is done using the Central Bank’s foreign reserves. This will help the building up of foreign reserves to meet such loan repayment obligations. And finally, all disbursements to NGOs will be through the local banking system and off-shore foreign exchange transactions by NGOs will be prohibited.


By Zainab Iyamide Joaque

Thursday November 8, 2018.

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