Press Release No. 19/384

IMF Reaches Staff Level Agreement on the Fourth Review of the ECF Arrangement with Guinea

October 23, 2019

• IMF staff and the Guinean authorities have reached a staff-level agreement on the fourth review of the program of economic policies and reforms supported by a three-year Extended Credit Facility arrangement.
• Mobilizing additional tax revenues and gradually reducing electricity subsidies is key to create fiscal space for scaling-up growth-supporting public investment.
• Stepping-up public spending in social safety nets is pivotal to reduce poverty, protect the most vulnerable and foster inclusion.

Following discussions between the Guinean authorities and IMF staff in Conakry during October 1-12, 2019 and the 2019 Annual Meetings in Washington, a staff-level agreement was reached on the fourth review of the program of economic policies and reforms supported by a three-year Extended Credit Facility (ECF) arrangement. Subject to IMF management approval, consideration by the IMF’s Executive Board is expected in December 2019.

At the conclusion of the discussions, Ms. Albertin, IMF mission chief for Guinea, made the following statement:

“The Guinean authorities and IMF staff have reached a staff-level agreement on the fourth review of the program of economic policies and reforms supported by a three-year ECF arrangement. The ECF arrangement aims at fostering high and broad-based growth and reduce poverty while preserving macroeconomic stability. Performance under the ECF-supported program against end-June 2019 targets was satisfactory and program-supported reforms are advancing.

“Real growth was at 6 percent in 2018 and strong economic performance is expected to continue in 2019, supported by buoyant mining activity. Headline inflation slowed to 9.4 percent in August 2019. The basic fiscal balance recorded a surplus of 1.2 percent of GDP at the end-June. Gross international reserves strengthened to 3.7 months of import coverage.

“Mobilizing additional tax revenues and gradually reducing electricity subsidies is pivotal to create fiscal space for scaling-up growth-supporting public investment. In parallel, strengthening public investment management will ensure investment returns are captured and foster efficiency and transparency. Stepping-up public spending in social safety nets is pivotal to reduce poverty, protect the most vulnerable and foster inclusion. A prudent borrowing strategy will preserve debt sustainability.

“Further building external buffers will strengthen Guinea’s resilience against shocks. Moving towards greater exchange rate flexibility will support reserve accumulation. To this end, competition in the foreign exchange market was strengthened and a rule-based intervention strategy for the central bank is being finalized.

“Maintaining a prudent monetary policy will be important to moderate inflation. Continuing to limit the central bank’s lending to the government will be key to contain inflationary pressures. A more active liquidity management will help achieve monetary objectives.

“Advancing reforms to improve governance and the business climate is key to support the private sector development and broad-based growth. Continuing to strengthen the anti-corruption framework and the AML/CFT regime is important.”