IMF Staff Completes a Virtual Fifth and Sixth Extended Credit Reviews Mission with Guinea

October 28, 2020

End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.
  • IMF staff and the Guinean authorities reached a staff-level agreement on the combined fifth and sixth reviews of the program of economic policies and reforms supported by a three-year Extended Credit Facility (ECF) arrangement.
  • The ECF arrangement aims at fostering high and broad-based inclusive growth and reducing poverty while preserving macroeconomic stability. Growth in 2020 exceeds projections, with the mining sector showing strong resilience, while non-mining growth continues to be seriously impaired by the Covid-19 pandemic.
  • As the economy reopens, measures including mobilizing additional tax revenues will be key to creating fiscal space for scaling up public investment.

Washington, DC: A staff team from the International Monetary Fund, led by Clara Mira, conducted a virtual mission during September 23 - October 23, 2020 with the Guinean authorities on the combined fifth and sixth reviews of Guinea’s economic and financial program supported by a three-year Extended Credit Facility (ECF) arrangement. Subject to IMF management approval, consideration by the IMF’s Executive Board is expected to take place in December 2020.

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

“The Guinean authorities and IMF staff have reached a staff-level agreement on the fifth and sixth reviews 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 inclusive growth and reducing poverty while preserving macroeconomic stability. Performance under the ECF-supported program against end-December 2019 targets was satisfactory, while some end-June 2020 targets were missed, reflecting the impact of the pandemic and the ensuing necessary policy response. The authorities are taking corrective actions to address the underlying issues. Most program-supported reforms are being implemented.

“The economy expanded by close to 6 percent in 2019 and is showing unexpected resilience in 2020 supported by buoyant mining activity. As a result, overall growth is expected to exceed 5 percent this year, although non-mining sectors have been severely impacted by the pandemic. Headline inflation is expected to return to single digits by the end of the year, having exceeded 10 percent earlier due to Covid-related increases in food and transportation prices. As a result of Covid-19 Response Plan spending, the basic fiscal balance showed a deficit of 1.1 percent of GDP by end-August. Gross international reserves have been maintained at 3.8 months of import coverage.

“The authorities’ Response Plan supported by development partners, including the June 2020 IMF Rapid Credit Facility disbursement, has helped to mitigate the impact of the pandemic. As Covid-19 restrictions recede and the economy gradually reopens, mobilizing additional tax revenues—especially in the mining sector—and progressively reducing untargeted electricity subsidies are critical to creating fiscal space for scaling up growth-supporting public investment in the medium term. Social safety nets should be further enhanced during and after the pandemic to reduce poverty and protect the most vulnerable. Debt sustainability will need to be preserved by maintaining a prudent borrowing strategy.

“Continuing to build external buffers and greater exchange rate flexibility will boost Guinea’s shock absorption capacity. To this end, competition in the foreign exchange market is being reinforced and a rule-based intervention strategy for the central bank has been finalized.

“Restoring limits on the central bank’s lending to the government will help to restrain monetary growth. Maintaining a prudent monetary policy will be central to containing inflation and active liquidity management operations will help meet monetary policy targets.

“Advancing reforms to improve governance and the business climate will support private sector development and inclusive, broad-based growth. Measures to continue strengthening public financial and investment management, strengthen the anti-corruption framework and the AML/CFT regime are being implemented, including through the planned publication of the asset declaration form.”

The IMF team thanks the authorities for the productive discussions.

 

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