The Executive Board of the International Monetary Fund (IMF) today completed the third review of Guinea’s economic performance under the program supported by an Extended Credit Facility arrangement (ECF). The Board’s decision, which was taken without a meeting,1 enables the immediate disbursement of an amount equivalent to SDR 18.36 million (about US$28.2 million), bringing total disbursements under the arrangement to an amount equivalent to SDR 73.4 million (about US$112.8 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).
Guinea‘s economy went through a difficult period in 2013, reflecting the fragile socio-political situation and a sharp slowdown in investment in the mining sector. As a result, growth is estimated to have slowed to 2.5 percent, sharply below the programmed 4.5 percent expansion. Inflation continued to fall, and at end-2013 was 10.5 percent year-on-year. International reserves were maintained at a satisfactory level, and the exchange rate remained broadly stable.
Performance under the ECF-supported program remains satisfactory. Notwithstanding a sizeable shortfall in government revenues and an increase in subsidies to the energy sector, strong adjustment measures have kept the fiscal deficit on track. All performance criteria (PCs) for end-June 2013 and the indicative targets for end-September 2013 were met with significant margins, and those for end-2013 are also expected to be met. However, the structural reform agenda incurred delays, reflecting capacity constraints and the need for additional technical assistance, as well as a weakening of policy coordination and the difficult political and social environment.
Guinea’s macroeconomic prospects for 2014 are positive, provided political stability and an acceleration in the implementation of structural reforms. Real GDP growth could rebound to 4.5 percent, also assuming a gradual acceleration of investment in the mining sector. Inflation is projected to further decline to 8.5 percent, while gross official reserves should remain at around 3 months of imports. Fiscal targets incorporate an increase in public investment, a strong revenue effort, and an increase in external assistance. Structural reforms aim at completing the actions delayed from 2014 and focus on public financial management, civil service reform, the mining sector, the business climate, agriculture, and the electricity sector.
1 The Executive Board takes decisions without a meeting when it is agreed by the Board that a proposal can be considered without convening formal discussions.