An IMF mission led by Abdoul Aziz Wane visited Conakry during April 23-May 8, 2015, to conduct discussions on the sixth review of the authorities program supported by an arrangement under the Extended Credit Facility (ECF) [i], which was approved by the IMF Executive Board on February 24, 2012 for SDR 128.52 million. The mission met with finance minister Mohamed Diaré, central bank governor Lounceny Nabé, planning minister Sékou Traoré, deputy budget minister Ansoumane Condé, and other senior government officials, as well as the banking association. The discussions focused on recent economic developments, growth prospects, and policy implementation, as well as policies and structural reforms for 2015.
At the conclusion of the mission Mr. Wane issued the following statement:
“The Guinean authorities and IMF staff have made significant progress toward understandings on a set of policies that, subject to approval by IMF management and the Executive Board, could be supported by the seventh disbursement under the ECF arrangement of SDR 18.36 million (about US$26 million). The Executive Board meeting is expected to be held in late June 2015.
“In 2014, Guinea was hit by an outbreak of Ebola which claimed numerous lives and inflicted a heavy social and economic toll. As a result, economic growth slowed to 1.1 percent, despite agricultural production growing strongly. Macroeconomic stability was maintained thanks to sound policies helped by stepped up international support to fight the Ebola outbreak. Inflation declined to 8.5 percent in March 2015 and the Central Bank’s international reserves remained at safe levels. The Guinean franc depreciated slightly against the US dollar, but strengthened against the euro. All the performance criteria and indicative targets for end-2014 under the ECF arrangement were met. However several indicative for end-March 2015 were missed, reflecting increased pressure on the budget.
“The authorities continued to implement their structural reform agenda, but difficulties in securing technical assistance have slowed the pace of reforms. They remain committed to the ECF-supported reform agenda aimed at strengthening public financial management, improving the business environment, bolstering the productivity of the public sector, strengthening the electricity sector, and finalizing the transformation of the mining sector’s institutional and legal environment. The mission welcomed the adoption of the draft law on public enterprises that will help control budgetary risks.
“This year will be another difficult one for the Guinean economy, reflecting the Ebola outbreak which is still not fully under control, sharply lower commodity prices, and the political uncertainty ahead of the presidential elections. We expect growth to be nil on average in 2015. Little, if any, output expansion seems likely this year.
“The authorities aim to maintain inflation below 10 percent and reserves at around 3 months of imports. They also intend to maintain an ambitious public investment program to support growth and improve living conditions. However, the recent increase in public sector wages and the significant reduction in pump prices will complicate the achievement of these objectives. The mission encourages the authorities to implement the automatic fuel pricing mechanism and revenue-enhancing measures to contain the fiscal deficit as well as enhance the transparency of the public investment program. The IMF team signaled the importance of additional financial assistance from the international community to support the authorities’ adjustment efforts and essential priority expenditure.
“The IMF team thanks the authorities for their hospitality and for the constructive discussions. The mission would like to express its sympathy for the heavy toll in human life of the Ebola virus; the recent decline in new cases gives hope that the outbreak will be eradicated soon.”
i The ECF is the IMF’s main tool for medium-term financial support to low-income countries. Financing under the ECF currently carries a zero percent interest rate, with a grace period of 5½ years, and a maturity of 10 years.
Source: International Monetary Fund (IMF)