Press Release No. 18/497

IMF Executive Board Completes Second Review of the Extended Credit Facility with Guinea

December 21, 2018

On December 21, 2018, the Executive Board of the International Monetary Fund (IMF) completed the second review of Guinea’s economic performance under the Extended Credit Facility (ECF) [1] arrangement. Completion of this review enables the immediate disbursement of SDR 17.213 million (about US$23.9 million), bringing total disbursements under the arrangement to SDR 51.636 million (about US$71.6 million). The Board also approved the authorities’ request for modification and a waiver of non-observance of a performance criterion.

Guinea’s three-year ECF arrangement was approved by the Executive Board of the IMF on December 11, 2017 (see Press Release No. 17/484) for SDR 120.488 million (about US$167.2 million at the time of the arrangement’s approval, or 56.25 percent of Guinea’s quota). The ECF arrangement aims at strengthening resilience, scaling-up public investment in infrastructure while preserving stability, strengthening social safety nets, and promoting private sector development.

Following the Executive Board’s discussion on Guinea, Mr. Tao Zhang, Acting Chair and Deputy Managing Director, issued the following statement:

“Guinea is implementing a program of macroeconomic policies and reforms to achieve high and broad-based growth and reduce poverty while preserving macroeconomic stability. Performance under the ECF-supported program against end-June targets was satisfactory and program-supported reforms advanced well. In view of revenue shortfalls, the authorities have undertaken additional measures to achieve the end-2018 fiscal target. The strong growth momentum continues, and the medium-term outlook is favorable.

“Achieving a basic fiscal surplus will support preserving macroeconomic stability. Mobilizing additional tax revenues will allow scaling-up growth-supporting infrastructure investment. The authorities also aim to reduce untargeted electricity subsidies and have an automatic adjustment mechanism for petroleum prices. Attention to the social impact of these planned reforms will be important, including by strengthening social safety nets.

“Prudent debt management will be crucial to maintaining debt sustainability. Limiting non-concessional borrowing and enhancing public finance and investment management will help preserve debt sustainability and support efficiency and transparency.

“A more active strategy to accumulate reserves will help build external buffers and strengthen Guinea’s resilience to shocks. Increasing competition in the foreign exchange market and moving to a rule-based intervention strategy will also support greater exchange rate flexibility.

“Monetary policy will remain prudent to preserve moderate inflation. The authorities will continue to limit government budgetary borrowing from the central bank and move toward a more active liquidity management. Strengthening banking supervision and the regulatory framework will support financial sector stability.

“The authorities are committed to advancing growth-supporting structural reforms. Strengthening the anti-corruption framework and the business climate will enhance governance and support private sector development.”

[1] The ECF is a lending arrangement that provides sustained program engagement over the medium to long term in case of protracted balance of payments problems.