The Executive Board of the International Monetary Fund (IMF) today completed the fourth review of Guinea’s economic performance under the program supported by an Extended Credit Facility arrangement (ECF). The Board’s decision enables the immediate disbursement of an amount equivalent to SDR 18.36 million (about US$28.1 million), bringing total disbursements under the arrangement to SDR 91.8 million (about US$140.6 million).
The Executive Board approved the three-year ECF arrangement for Guinea on February 24, 2012, for an amount equivalent to SDR 128.52 million (120 percent of the country’s quota in the IMF, see Press Release No. 12/57).
At the conclusion of the Executive Board’s discussion of Guinea, Mr. Naoyuki Shinohara, Chair and Deputy Managing Director issued the following statement:
“Guinea’s economy was affected by a number of adverse shocks in 2013—including the suspension of investment in some large mining projects and election-related political unrest. However, with strong adjustment policies, the 2013 fiscal deficit was contained, despite a sharp revenue shortfall, which supported a further decline in inflation, a stable exchange rate, and a satisfactory level of international reserves. The onset of the Ebola epidemic in early 2014 constitutes an additional near-term challenge.
“Growth was also held back by slow progress with structural reforms, including in the electricity and mining sectors. Structural reform remains a priority and the authorities have taken steps to improve the coordination and monitoring of the reform agenda. However, political stability in the run-up to the 2015 presidential elections will also be important.
“The authorities’ revised budgetary projections for 2014 remain in line with available financing and maintain macroeconomic stability. The revised projections address a revenue shortfall, while safeguarding critical social and public investment spending. The authorities also intend to continue the comprehensive reform of public financial management. In this context, the finalization of the new procurement framework is a positive step, particularly given rising public investment. Other important measures include strengthening tax administration and improving expenditure and commitment management, to avoid a recurrence of arrears.
“The Central Bank’s gradual relaxation of monetary policy is appropriate, given developments in inflation and international reserves. The intended development of an interbank market will allow the introduction of indirect policy instruments to help deepen the money market and promote monetary policy flexibility.
“The authorities continue to strengthen debt management in order to preserve debt sustainability. To this end, it will be important to give priority to grants and concessional resources. Usage of the new exceptional mining revenue for medium-term investment spending under the Special Investment Fund will help ensure that such resources are used effectively and sustainably.
“The pace of other growth-enhancing structural reforms should be accelerated. In this regard, Guinea’s attainment of EITI compliant status is commendable. However, prompt completion of the implementing regulations of the 2011 mining code and review of mining contracts will help reduce investor uncertainty. Rapid progress is also needed with other measures designed to enhance the business climate, including key legislative reforms concerning electricity, public-private partnerships, and the judicial system.”