Schedule, The Public Financial Management Act, 2016

TRANSFORMATIONAL DEVELOPMENT STABILIZATION FUND AND INTERGENERATIONAL SAVINGS FUND Interpretation. 1. In this schedule – “Bank” means the Bank of Sierra Leone; “Funds” include the Transformational Development Stabilization Fund and the Intergenerational Savings Objectives. 2. (1) The objective of the Transformational Development Stabilization Fund is to insulate expenditures for transformational development projects under the State budget from large fluctuations in extractive industries revenues. (2) The objective of the Intergenerational Savings Fund is to provide a heritage for future generations from savings and investment income derived from extractive industries revenues. Responsibilities of Minister. 3. For the purpose of the investment and management of the Funds, the Minister shall – (a) determine the Investment Policies of the Funds in consultation with the Bank and, if established, the Investment Advisory Committee; (b) oversee implementation of the investment policies and compliance with this Act and regulations made thereunder by the Bank; (c) review the investment, management, and performance of the Funds through an annual report of the Funds submitted under paragraph (1) of subsection 15 and other reports and information submitted under paragraph 16; (d) submit to Parliament and publish the annual report of the Funds together with his opinion; and (e) appoint the Investment Advisory Committee, if so required under paragraph (1) of section 20. Responsibilities of Bank. 4. (1) For the purpose of the investment and management of the Funds, the Bank shall – (a) manage and invest the Funds in accordance with the investment policies and this Act and regulations made thereunder; (b) advise the Minister on determining the investment policies; (c) appoint, oversee, and evaluate external investment managers and custodians for the Funds in accordance with the investment policies; Interpretation. Objectives. of Minister. of Bank. No. 13 Public Financial Management Act 2016 No. 13 Public Financial Management Act 2016104 105 (d) approve detailed policies necessary for the investment and management of the Funds, including, without limitation, policies on risk management, compliance, internal controls and audits, and accountabilities in accordance with the investment policies; (e) maintain records and accounts of the Funds; (f) prepare and submit to the Minister an annual report of the Funds and such other reports and information required under paragraph 16; and (g) perform any other functions assigned to the Bank by an agreement with the Minister mentioned in paragraph 17. (2) When managing and investing the Funds, the Bank shall not be subject to any instruction or direction of any person, except for the investment policies. Investment of Funds. 5. (1) The Funds shall be invested in a diversified manner – (a) with a view to maximizing risk-adjusted financial returns; (b) in a manner consistent with the portfolio management by a prudent institutional investor; and (c) without undue risk to the Funds as a whole. (2) The Funds may not hold, directly or indirectly, more than three percent of the voting rights in a single company or entity. (3) When a contravention of subparagraph (1) arises, the Bank shall take all reasonable steps to remedy the contravention as soon as possible. (4) The Bank may use leverage and derivatives for investment and management of the Funds in accordance with the investment policies. (5) The Funds may not borrow except to the extent permitted under subparagraph (1). (6) The Funds may not make advances or loans or provide any other form of credits to any budgetary agency, any other entity included in the general government, any public enterprise, or any legal and natural person domiciling in Sierra Leone. (7) The Funds may not be used as collateral for any borrowing of the State or any other person domiciling in Sierra Leone, except as collateral in connection with leverage used for investment of the Funds. Investment and policies. 6. (1) The Minister shall determine, review at least annually, revise as he deems appropriate, the investment policies which shall be consistent with any provision of this Act. (2) The investment policies mentioned in subparagraph (1) shall specify – (a) the balance between risk and return in the overall investment portfolio of the Funds; Investment of Funds. Investment and policies. No. 13 Public Financial Management Act 2016 No. 13 Public Financial Management Act 2016106 107 (b) the classes of investment assets in which the Funds are to be invested and the selection criteria for investment assets within those classes; (c) the determination of benchmarks or standards against which the performance of the Funds will be assessed; (d) the constraints on investment of the Funds; (e) the policies for the appointment, oversight, and evaluation of the external investment managers and custodians; (f) the policies for the use of derivatives and leverage; (g) the policies for risk management; (h) the policies for internal controls and audits; (i) any other matters as may be deemed necessary by the Minister. (3) The investment policies may not require directly or indirectly the Bank to invest the Funds in a particular asset or derivative. (4) The investment policies shall be published by the Minister in the website of the Ministry. (5) Before the Minister determines or revises the investment policies under subsection (1), he shall consult with the Bank and, if established, the Investment Advisory Committee. (6) The Bank may, on its initiative, provide the Minister with recommendations on revision of the investment policies at any time. External investment managers and Custodians. 7. (1) The Bank may appoint, on such terms and conditions as the Bank determines, one or more persons as external investment managers who undertake the investment of any part of the Funds, in accordance with the investment policies. (2) In determining the terms and conditions under subparagraph (1), the Bank shall ensure that the external investment manager – (a) undertakes the investment of the Funds in accordance with the investment policies, any other relevant policies of the Bank, this Act, and regulations made thereunder; and (b) reports to the Bank on the state of the investment of the Funds which the external investment manager undertakes at such time and in such manner as the Bank determines. (3) The Bank may appoint, on such terms and conditions as the Bank determines, one or more persons as custodians of the Funds who hold all or part of assets of the Funds for the State, whether on trust or by contract, in accordance with the investment policies. (4) In determining the terms and conditions under subsection (3), the Bank shall ensure that the custodian – (a) holds any assets of the Funds for which they have been appointed in accordance with the investment policies, any other relevant policies of the Bank, this Act, and regulations made thereunder; and (b) provides the Bank with information about any assets of the Funds for which they have been appointed at such time and in such manner as the Bank determines. External investment managers and custodians. No. 13 Public Financial Management Act 2016 No. 13 Public Financial Management Act 2016108 109 Accounting, reporting, and auditing. 8. (1) The Bank shall prepare the annual financial statements of the Funds in accordance with such internationally accepted accounting standards as specified by the Accountant-General. (2) Within three months after the end of a financial year, the Bank shall submit to the Auditor General for his audit the annual financial statements of the Funds. (3) The Auditor-General or his appointed auditor shall be the auditor of the Funds. (4) Within six months after the end of a financial year, the Bank shall submit to the Minister an annual report of the Funds which includes – (a) the audited financial statements of the Funds for the financial year; (b) the audit reports on the financial statements of the Funds for the financial year; (c) an explanation of the performance of the Funds for the financial year; (d) the investment policies; (e) an explanation of how the investment policies were complied with during the financial year; (f) a list of external investment managers used by the Bank in respect of the investment and management of the Funds; and (g) any other matters as may be deemed appropriate by the Bank. (5) On submission under paragraph (1), the Minister shall lay the annual report of the Funds before Parliament for their information and publish it in the website of the Ministry. (6) The Minister may require the Bank to provide him with any report and information on such matters, at such time, and in such form as determined by the Minister, in respect of the investment and management of the Funds. (7) The Minister may make regulations to prescribe – (a) any reports and information to be regularly submitted by the Bank to the Minister in respect of the performance, investment, and management of the Funds; and (b) whether reports and information mentioned in paragraph (a) are to be published by the Minister. Agreement, compensation, and liabilities. 9. (1) Without prejudice to this Act, the Minister shall enter into an agreement with the Bank to prescribe details relating to the responsibilities of the Minister and Bank, records and accounts to be maintained by the Bank, bank accounts of the Funds, compensation for operational expenses of the Bank, and any other matters in respect of the investment and management of the Funds by the Bank. (2) Notwithstanding subsection (2) of section 80 and subsection (2) of section 82of this Act, operational expenses incurred by the Bank for the investment and management of the Funds shall be charged to the respective Funds. (3) The scope and amount of, and the manner of payment for, operational expenses to be charged to the Funds under subsection (2) shall be prescribed by an agreement between the Minister and Bank under subsection (1). (4) The Bank shall not be liable for any loss incurred in connection with the investment and management of the Funds, unless such loss results from gross negligence or willful misconduct in the performance of the responsibilities by the Bank. Investment Advisory Committee. 10. (1) As soon as practicable after the Intergenerational Savings Fund first receives transfer from the Transformational Development Stabilization Fund under subsection (1) of section 80 of this Act, the Minister shall appoint an Investment Advisory Committee which is responsible to advise the Minister on – Accounting, reporting, and auditing. Agreement, compensation, and liabilities. Investment Advisory Committee. No. 13 Public Financial Management Act 2016 No. 13 Public Financial Management Act 2016110 (a) determination and revision of the investment policies; (b) the performance of the Funds, including the performance of external investment managers appointed by the Bank; and (c) any other matters as may be requested by the Minister in respect of the investment and management of the Funds. (2) The members of the Investment Advisory Committee shall have substantial experience and expertise and professional credibility in the field of management of financial investments. (3) The expenses for the Investment Advisory Committee shall be met from the State budget. (4) Without prejudice to this Schedule, the Minister may make regulations to prescribe the composition, appointment, remuneration, procedures, and any other matters in respect of the Investment Advisory Committee. Made this 12th day of July, 2016. PRINTED AND PUBLISHED BY THE GOVERNMENT PRINTING DEPARTMENT, SIERRA LEONE. GAZETTE NO. 34 OF 21ST JULY, 2016. Passed in Parliament this 31st day of May, in the year of our Lord two thousand and sixteen. IBRAHIM S. SESAY, Clerk of Parliament. THIS PRINTED IMPRESSION has been carefully compared by me with the Bill which has passed Parliament and found by me to be a true and correct printed copy of the said Bill. IBRAHIM S. SESAY, Clerk of Parliament. External investment managers and Custodians. 7. (1) The Bank may appoint, on such terms and conditions as the Bank determines, one or more persons as external investment managers who undertake the investment of any part of the Funds, in accordance with the investment policies. (2) In determining the terms and conditions under subparagraph (1), the Bank shall ensure that the external investment manager – (a) undertakes the investment of the Funds in accordance with the investment policies, any other relevant policies of the Bank, this Act, and regulations made thereunder; and (b) reports to the Bank on the state of the investment of the Funds which the external investment manager undertakes at such time and in such manner as the Bank determines. (3) The Bank may appoint, on such terms and conditions as the Bank determines, one or more persons as custodians of the Funds who hold all or part of assets of the Funds for the State, whether on trust or by contract, in accordance with the investment policies. (4) In determining the terms and conditions under subsection (3), the Bank shall ensure that the custodian – (a) holds any assets of the Funds for which they have been appointed in accordance with the investment policies, any other relevant policies of the Bank, this Act, and regulations made thereunder; and (b) provides the Bank with information about any assets of the Funds for which they have been appointed at such time and in such manner as the Bank determines. External investment managers and custodians.