Press Release No. 12/364

Press Release: IMF Executive Board Completes First Review Under the Three-Year Arrangement Under the Extended Credit Facility for Guinea and Approves US$ 28.3 Million Disbursement

September 26, 2012

The Executive Board of the International Monetary Fund (IMF) today completed the first review of Guinea’s economic performance under a program supported by the Extended Credit Facility (ECF). Completion of the review enables the disbursement of an amount equivalent to SDR 18.36 million (about US$28.3 million), bringing total disbursements under the arrangement to SDR 36.72 million (about US$56.6 million). In completing the review, the Executive Board approved the requests for a waiver for nonobservance of the performance criterion on new external arrears and the modification of the performance criteria for end-December 2012

The Executive Board approved a three-year ECF arrangement with an amount equivalent to SDR 128.52 (about US$198.1 million) for Guinea on February 24, 2012 to support the government's economic program (Press Release No. 12/57).

The Executive Board also agreed that Guinea has taken the steps necessary to reach its completion point under the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative. The Executive Board of the World Bank reaching a similar decision on September 25 (Press Release No. 12/363).

Following the Board’s discussion of Guinea, Mr. Naoyuki Shinohara, Deputy Managing Director and Acting Chair, issued the following statement:

“Guinea continues to make good progress in addressing large macroeconomic imbalances. Growth is picking up, inflation is declining, and the exchange rate has stabilized. Key factors have been strong fiscal adjustment and tight monetary policies, while large exceptional mining revenue in 2011 also helped rebuild international reserves. Progress with structural reform has been good.

“The authorities’ macroeconomic policies are appropriately geared toward reducing inflation and maintaining adequate international reserves. The revised budget for 2012 was made necessary by a shortfall in exceptional mining revenue, while fiscal policy in 2013 will remain based on limiting domestic bank financing of the budget. Weekly foreign exchange auctions will continue to play an important role in managing the economy’s liquidity.

“The structural reform agenda focuses on improving the tax system and tax administration, public financial management, and the investment climate, and removing bottlenecks in key sectors such as mining, electricity, and agriculture. Implementation of the new mining code and conduct of the planned review of mining contracts with full transparency are crucial to unlock Guinea’s mineral wealth.

“Guinea has reached the completion point under the enhanced HIPC Initiative. Almost all of Guinea’s creditors have agreed to participate in the Initiative, and Guinea will also receive additional debt relief under the Multilateral Debt Relief Initiative and various bilateral initiatives. The external debt burden will fall significantly, releasing resources for investment and poverty reduction. To safeguard future debt sustainability, the authorities plan to strengthen debt management and pursue prudent debt policies,” Mr. Shinohara added.