Guinea and the IMF

Country's Policy Intentions Documents

See also:
Poverty Reduction Strategy Papers (PRSPs)

Enhanced Structural Adjustment Facility
Policy Framework Paper, 1999–2001

Prepared by the Guinean Authorities in Collaboration with the Technical Staffs of the International Monetary Fund and the World Bank
December 8, 1999

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  1. Introduction

  2. Economic Developments Over the Period 1996-98

  3. Macroeconomic Objectives and Policies for 1999-2001
    1. Fiscal Policy
    2. Public Investment Program (PIP)
    3. Monetary Policy and Financial Sector Reform
    4. External Sector Policy
    5. External Debt Management
    6. Financing Requirements

  4. Structural Reforms
    1. Public Enterprise Reforms
    2. Judicial System Reforms
    3. Strengthening Institutional Capacities for Better Service Provision
    4. Territorial Administration and Decentralization

  5. Sectoral Policies
    1. Rural Development
    2. Mining Sector
    3. Energy Sector
    4. Infrastructure Sector
    5. Urban Sector
    6. Water Supply and Sanitation
    7. Environmental Problems
    8. Education Sector
    9. Health, Population, and Social Affairs
    10. Tourism

  6. Statistics--Technical Assistance

Tables 1-3 PDF, 142k (Use the free Adobe Acrobat Reader to view pdf files)

  1. Policy Framework Paper for 1999-2001
  2. Selected Economic and Financial Indicators, 1997=2001
  3. Social Indicators

I.  Introduction

1.  In September 1996, the Guinean authorities, assisted by the IMF and the World Bank, began to reform economic management in order to restore economic and financial equilibrium. These efforts were prompted by the need to revitalize Guinea's economy after several years of upheaval caused by a decline in mining revenue and a concomitant decline in fiscal revenue, as well as poor management of public funds. The challenge was to put in place: (i) an effective government based on the restoration of an ethic of responsive public service; (ii) a rigorous economic policy that ensures lasting social stability; and (iii) a strategy to promote private investment, based on an in-depth review of the role of government and the rehabilitation and creation of appropriate basic infrastructure. The ultimate objective was a sizable reduction in the high level of poverty, which now affects approximately 40 percent of the population. The government introduced significant changes in the management of the economy. Its strategy, governed by the broad strategic guidelines set out in Guinea--Vision 2010, and continued good performance has enabled Guinea to maintain its programs with the IMF and the World Bank.

2.  This policy framework paper (PFP) briefly reviews the results obtained during the period 1996-98 and sets overall national objectives for 1999-2001 aimed at: (i) more rapid growth, with a private sector focus; (ii) improved public services to reduce poverty; and (iii) strengthening institutional and human resource capacity. In addition, it describes the medium-term strategy adopted by the government and presents the macroeconomic and sectoral policies to be implemented over the next three years and reviews Guinea's external financing requirements for that period.


II.  Economic Developments over the Period 1996-98

3.  Between 1996 and 1998, major tax, banking, and structural reforms were instituted. These reforms will continue, as well as reforms in the sectors selected for inclusion in the Medium-Term Expenditure Framework (MTEF) (see below) in the public finances, at the central bank (BCRG), and in favor of decentralization.

4.  The macroeconomic policies and the structural and sectoral reforms implemented by the Guinean government in the past three years helped reduce macroeconomic imbalances and establish a more stable economic and financial environment. Annual growth of real GDP exceeded 4.5 percent between 1996 and 1998 and inflation averaged just over 3 percent with a slight rise in the general price level in 1998. The primary budget surplus rose from 1.3 percent of GDP in 1996 to 2.4 percent in 1998 as a result of tight spending controls. Average investment stayed around 17 percent of GDP but with a marked increase in private sector financing. Net foreign assets of the central bank (BCRG) stood at US$113.6 million at end-1998, compared to US$71.6 million in 1996.


III.  Macroeconomic Objectives and Policies for 1999-2001

5.  The primary objective of the Guinean government for 1999-2001 is to lay the groundwork for sustained economic growth, based on a larger role for the private sector, in order to combat poverty more successfully. To achieve this goal, the government intends to: (i) strive for effective, ethical public management by intensifying the war on corruption; (ii) create the conditions for sustained private sector development; (iii) effectively implement the ongoing legal and regulatory reforms; and (iv) complete the rehabilitation of the banking system and strengthen its role in financial intermediation.

6.  With implementation of these interrelated reforms, it will be possible to establish the framework needed to achieve the government's programmed macroeconomic objectives for 1999-2001 which are to: (1) achieve real economic growth at an annual average of 4.7 percent; (2) bring inflation below 4 percent per year; and (3) reduce the external current deficit excluding official transfers to 5.3 percent in 2001 in order to bring official reserves to 3.5 months in 2001. There should be an upturn in investment, reaching 18.8 percent of GDP in 2001, with private investment at 13 percent of GDP. A similar trend should be seen in savings, permitting the financing of higher investment. The domestic saving rate is expected to reach almost 19 percent of GDP in 2001.

A.  Fiscal Policy

7.  The government is expected to account for the increase in domestic saving, thanks to improved collection of budget revenue, which should make it possible to gradually reduce Guinea's dependence on external assistance. Accordingly, the authorities are aiming at achieving a primary surplus of 3 percent by 2001. Given the weakness of government revenue from aluminum and bauxite, where prices continue to be variable, the authorities will step up their efforts to mobilize nonmining revenue, which should rise from 8.1 percent of GDP in 1999 to approximately 9.2 percent in 2001.

8.  The expected improvement in nonmining revenue should come from stronger implementation of the measures already taken, such as the VAT and expansion of the tax base. All VAT exemptions not covered by the law have been eliminated. In the same vein, imports that are tax-exempt under the Vienna Convention are now subject to a quota system and the imports of mining companies not directly linked to their production are subject to the VAT. In addition, the government will continue to step up its efforts to reduce the fraudulent import and distribution of petroleum products. The administrative reorganization process has continued with the creation of a property tax division at the National Directorate of Taxes. This division is responsible for managing the new single real estate property tax for which collection operations began, for the first time, in 1998. The improvement in customs revenue will come from: (1) reform of the customs tariff initiated in January 1998, which should stimulate trade; (2) stepping up of smuggling countermeasures; (3) rigorous enforcement of the program for safeguarding customs revenue; and (4) streamlining of customs exemptions. The increase in nonmining revenue will also come from improvements in the nontax revenue yield, notably user fees charged by the state (from the fisheries sector, in particular) and revenue generated by administrative departments.

9.  Efforts launched in 1998 to improve government expenditure management will be continued. Three additional priority sectors have been identified for 1999 (the justice system, urban development, and social affairs). These are now covered under the Medium-Term Expenditure Framework (MTEF) approach, in addition to rural development, education, health, and highway maintenance. The MTEF process includes the following stages: (a) identifying medium-term strategic sectoral objectives, accompanied by verifiable performance indicators; (b) translating these objectives into priority sectoral action programs incorporating operating and investment expenditure; (c) costing these programs; (d) establishing binding medium-term sectoral "envelopes" for the seven sectors, reflecting established priorities, (e) allocating the annual budget on the basis of priority programs, and (f) measuring the impact of the public service on the population by means of performance indicators.

10.  In order to improve the budget process, the government has embarked upon a package of reforms, including: (a) regularly producing consolidated balance sheets of treasury accounts; (b) auditing previously executed budgets by preparing the final budget accounts at regular intervals; (c) simplifying and strictly complying with budget execution procedures; (d) enhancing coordination among the various government units to ensure the collection and consistency of budget data, including financing; (e) improving transparency and flow of information inside and outside government; (f) reforming the budget nomenclature to ensure a more accurate breakdown of expenditure between the central and decentralized arms of government; (g) ensuring compliance with and enforcement of laws and regulations governing expenditure and accounting procedures; (h) producing monthly investment expenditure statements, including counterpart funds, the foreign exchange budget, and externally financed projects; (i) computerizing the expenditure process, from commitment to settlement, and progressively bringing all ministerial departments on line, thereby facilitating information access; and (j) updating the treasury's chart of accounts and the general accounting regulations. To increase the effectiveness of government expenditure, government procurement regulations and a set of measures to enhance government contracts have been implemented and will be pursued assiduously.

B.  Public Investment Program (PIP)

11.  In the context of implementing the MTEF, the government will continue its efforts aimed at: (a) selecting projects based on a macroeconomic framework and priority, medium-term objectives and programs, so as to ensure efficient inter- and intrasectoral expenditure allocation; (b) gearing the size of the PIP to the resources available to finance recurrent costs; and (c) rigorous programming and execution of counterpart funds to ensure better project execution. In addition to and in support of the investment expenditure reform program already underway, the Guinean government has taken the following actions: (i) recoding investment expenditure by source and type; (ii) rationalizing the institutional structures involved in investment budget programming and execution; and (iii) strengthening of project appraisal and monitoring capacities.

12.  In implementing the MTEF, the government will make use of the high-intensity labor projects (HILP) technique to keep the cost of infrastructure development at a low level. This will at the same time create employment, increase community participation and alleviate poverty.

C.  Monetary Policy and Financial Sector Reform

13.  The main objective of monetary policy will be to bring inflation below 4 percent. Implementation of this policy will be based on controlling the growth of base money through indirect instruments, particularly by buying and selling securities issued in connection with the conversion of permanent advances of the BCRG to the treasury. Monetary programming for 2000 projects a 9.5 percent expansion of the money stock which is consistent with the growth target for the BCRG's net foreign assets. Given the programmed domestic primary surplus on the budget, this monetary growth will allow for an increase in bank credit to the private sector in the order of 14 percent.

14.  To ensure the financial soundness of Guinea's banking system and boost its competitiveness, the government has undertaken to strengthen banking supervision in light of the Basle Committee core principles. Through the BCRG, it will ensure that banks are strictly supervised and that financial institutions comply with the prudential rules. In addition, the Directorate of General Banking Supervision has been restructured and its staff recruited by competitive selection; a specialized team of inspectors was installed in January 1999. Furthermore, the BCRG decided to toughen the regulations governing lending to affiliates. Similarly, new regulations on the internal audit of credit establishments were implemented during the first quarter of 1999. Finally, the authorization of a new bank and the restructuring of ailing decentralized credit institutions, together with strict supervision by the BCRG, will increase the efficiency of the banking system and allow for diversification of its financial services. Work has begun on an overall restructuring of microfinancing.

D.  External Sector Policy

15.  The BCRG's pursuit of a flexible exchange rate policy, together with strict compliance with the fiscal and monetary objectives of the program, should allow the exchange rate to stabilize at a level conducive to the continued competitiveness of the Guinean economy. It should also allow Guinea to accumulate a comfortable level of foreign exchange reserves, which would give it the means to deal with exogenous shocks. In pursuit of such a policy, the BCRG has encouraged banks to actively seek foreign exchange. This arrangement, together with the admission of exchange bureaus to the interbank foreign exchange market (MID) and the BCRG's organization of foreign exchange auctions, should strengthen competition and facilitate access to foreign exchange.

E.  External Debt Management

16.  Guinea's total public and publicly-guaranteed external debt stock is equivalent to US$3.5 billion, i.e., a net present value of US$2.4 billion. Almost 55 percent of this stock is owed to multilateral organizations on concessional terms. Guinea has bilateral rescheduling arrangements with all the Paris Club members apart from Russia and is actively seeking to enter into arrangements with the remainder of its bilateral creditors on terms at least as advantageous as those granted it by Paris Club members. Guinea has serious, chronic problems with managing its debt, which the authorities are determined to resolve as quickly as possible. With donor assistance, the Debt Directorate of the Ministry of Finance is putting in place a debt management system that will provide up-to-date information on the debt stock, service payments due, and the disbursements expected. In addition, the Debt Directorate will improve its collaboration with the Ministry of Planning which records ongoing debt disbursements, and with the central bank which is responsible for servicing the debt, subject to approval by the Ministry of Finance. In order to avoid the accumulation of arrears, the appropriate departments will carry out a full reconciliation of their statements with those of all Guinea's creditors.

F.  Financing Requirements

17.  Program projections for the period 1999-2001 are based on a notional average annual growth of 4.7 percent for imports and 7.9 percent for exports, which should lead to a reduction in the balance of payments current account deficit from 6.0 percent of GDP in 1998 to 5.3 percent in 2001. Following a fall in international reserves in 1999 and a reaccumulation in 2000, the annual financing requirement (before any debt relief arrangement not yet concluded) increases from US$328.3 million (9.0 percent of GDP) in 1999 to US$375.4 million (10.6 percent of GDP) in 2000 and declines to US$342.9 million (9.2 percent of GDP) in 2001. Excluding project and nonexceptional aid, as well as the debt relief not yet finalized, overall financing requirements are estimated at US$175.7 million, approximately, for the period 1999-2001, 115.5 million of which have already been identified (US$33 million for the IMF, US$45 million for IDA, US$19.3 million for the European Union, US$13 million from the African Development Bank, US$5.2 million for bilateral donors and lenders). This should result in a residual financing requirement of US$54.4 million for 2001, which could be covered by the multilateral and bilateral donors and lenders and by supplementary debt relief to be granted by the Paris Club. In addition, Guinea will seek debt relief from Russia and its non-Paris Club creditors on comparable terms. The preliminary HIPC Initiative document will present a debt sustainability analysis for Guinea. In addition, it does not intend to contract or guarantee any new external loans on nonconcessional terms.


IV.  Structural Reforms

A.  Public Enterprise Reforms

18.  The government will adopt a privatization program, reflecting its determination to divest public enterprises. Over the next three years, the government will prepare and implement a comprehensive framework of public enterprise reforms which include the following major objectives: (a) improving the business and regulatory environment necessary to encourage private sector participation in revitalizing the economy and, more particularly, in the provision of basic infrastructure such as roads; (b) strengthening the efficiency, financial situation, and competitiveness of the parastatal sector; and (c) reducing government budgetary costs. Through these reforms, the government will aim at sending a clear signal to the private sector, nationals and foreigners alike, of the new role of the state. For public utilities, the government will shortly finalize the concession arrangements for electricity and an improved management contract for the water sector. Concomitantly, efforts will be made to focus policy reform on efficiency and on expanding access to the population through an improved regulatory framework and more competitive market structures. In mining, the government policy will focus on three aspects: (i) privatization of state-owned companies; (ii) for companies remaining under state (partial) ownership, the exclusive reliance on private sector management; and (iii) the liquidation or privatization of support services in that sector. Outside these so-called strategic sectors, the government will adopt a comprehensive sector-wide strategy involving full or partial privatization of some 40 commercial enterprises and the liquidations of about 12 enterprises deemed non viable. Where only partial divestiture is achieved, the government will be reduced to a minority shareholder without veto power. In addition, the government will strengthen the legal and institutional framework for privatization and utility sector reform involving: (i) the review of the legal framework for privatization, including privatization law and regulations, bankruptcy laws and procedures, and legislation governing public enterprise employee status; (ii) the creation of a privatization unit, with appropriate mandate, authority, and resources; (iii) transfer of public enterprise oversight responsibility to the privatization unit; (iv) the review of selected utility and transport sector legislation and regulatory instruments; and (v) measures designed to alleviate the social impact of privatization, such as retrenchment plans and a communication strategy. Guinea will take steps to join the privatization network which aims at providing international investors with comprehensive information on its privatization program. The government will also update the cross-debts situation between the state and public enterprises with the view to eliminate them.

19.  An audit of the debts and claims of the public enterprises was carried out and will be followed by a settlement plan by offsetting cross debts and clearing remaining amounts. Also, the government has inventoried and reduced tax exemptions and direct and indirect subsidies to public enterprises.

B.  Judicial System Reforms

20.  The government is determined to implement a well-designed program of legal and judicial reforms to facilitate the establishment of an environment favorable to private and public investment. In order to guarantee the rights of plaintiffs and improve investment security, it approved a law in 1997 providing for the creation of special lower and appellate courts to handle economic disputes. It is expected that these courts will sit in plenary session with all three magistrates present. In addition, the work of training magistrates in business law is in progress. Recruitment of an expert in economic disputes to strengthen the follow-up and study of economic cases is underway. An arbitration court is in place. A draft law on restructuring the arbitration procedure is under discussion in the National Assembly; the relationship between the criminal investigation office and the public prosecutor's office has been clarified and the presence of attorneys during examinations of their clients by the criminal investigation office is now permitted. The government has decided to increase budget allocations to the sector, to enable it to carry out its mission more effectively.

C.  Strengthening Institutional Capacities for Better Service Provision

21.  Government policy in this area consists of strengthening the capacity and transparency of economic management to ensure more efficient use of resources for better provision of services to users. Therefore the following measures, which are under way, will be pursued: (a) update of civil service personnel management regulations; (b) continuation of efforts to consolidate civil service records, including strengthening the capacity of the administrative management department; (c) control of new recruitment in the civil service; (d) increased resource allocation to the priority sectors; (e) improved communication between service providers and recipients; and (f) introduction of performance-based incentive systems. In support of this program to strengthen institutional capacities, the government will aim at revitalizing, by means of performance indicators, its system for controlling and evaluating the quality of services provided and the level of user satisfaction in relation to the results achieved.

22.  During the same period, the government is committed to fighting corruption. Accordingly, the following measures will be taken: (a) prepare a strategy for combating corruption and (b) put in place a plan of action to intensify the war on corruption.

D.  Territorial Administration and Decentralization

23.  In addition to the consolidation of an economic environment favoring high, sustainable growth, the government's development strategy hinges on the objective of establishing a development administration serving the population. Accordingly, the government has set up decentralized administrative structures and units that are closer to the people, with a view to: (i) abandoning a non-participation management style, resulting from the previous highly centralized political and administrative system; and (ii) promoting community development for greater participation by the people in the development process. This decentralization process, which began under the second republic in 1985, has led to the creation of 303 rural development communities (CRDs) and 38 urban communes (including five for the city of Conakry), 270 districts, and 1,700 neighborhoods.

24.  Despite these achievements, there are still several constraints that have limited the impact of earlier efforts. The government recently made initial steps, in the context of the Program of Support to Village Communities, to make changes in the institutional framework, with a view to refocusing the development process on people by: (i) improving the regulatory and institutional framework of decentralization; (ii) strengthening the capacity of grassroots organizations to design and implement development programs; and (iii) making operational consultative personnel available. At the same time, efforts are under way to review options likely to promote budgetary decentralization and to strengthen the management and coordinating capacity of staff of the prefectures.


V.  Sectoral Policies

A.  Rural Development

25.  To alleviate poverty, which is an essentially rural phenomenon in Guinea, the government, in its Basic Rural Development Policy Letter, challenged itself to achieve ambitious goals for improved living standards for rural populations based on direct, active participation or through decentralized community and private institutions. Reforms will focus primarily on the agriculture, fisheries and livestock sectors which are the principal sources of jobs and income in the rural environment.

26.  The key strategic areas for development of Guinea's agriculture, as described in the new policy are (a) development of rural infrastructure, in particular, unpaved roads, village water projects, and hydro-agricultural improvements; (b) promotion of broader-based participation in basic rural organizations and their increased ownership of development initiatives; (c) improved efficiency of agricultural services; (d) modernized farming, notably through use of improved seeds, fertilizers, and products for enhancing plant health; (e) improvement of the lawmaking framework, particularly with regard to land use; (f) promotion of small and medium-sized agricultural enterprises, particularly by instituting a rational and workable system for rural credit and microfinancing; and (g) protection of the environment and promotion of rational and sustainable management of natural resources. In order to carry out the aforementioned strategies, the government has redefined key functions in the Ministry of Agriculture, Water, and Forests (MAEF) and work is in progress to achieve to match requirements and personnel better; in 1999, MAEF personnel will be redeployed.

27.  In the fisheries sector, the overall objective is to maximize the economic and social benefits to the country from rational use of its fisheries resources. The specific goals are to achieve food security by increasing fish consumption, and to increase export trade in fisheries products. The strategy is based on four general principles, as follows: (a) the rational management of fisheries by focusing on research and the system for monitoring, follow-up, and surveillance of fishing; (b) the increase in fish products on the domestic market and for export through the development of continental, maritime, and river fishing, and fish farming; (c) total sectoral liberalization by government divestiture of productive activities, the development of a domestic packaging and marketing capability, and (d) institutional support in managing the sector.

B.  Mining Sector

28.  The government has instituted an ambitious reform program, with two principle objectives. First, regarding the institutional, legal, and regulatory environment, a new mining policy has been created and a new mining code promulgated. This more liberal code is aimed at restoring competitiveness to the mining sector tax system, which provides stable incentives through the duration of the assigned mining rights. Second, regarding the encouragement of private investment, the government, assisted by donors and lenders, has initiated the "Program for the Promotion of Investment in the Mining Sector" which should make it possible to (i) complete the geological map of Guinea on a scale of 1:200,000; (ii) build a reliable databank on the sector; (iii) harmonize all legislation governing the sector; (iv) strengthen the institutional framework; (v) restructure mining enterprises; and (vi) provide management training.

29.  The government has decided to divest itself of its mining companies and thus reduce its role as owner and operator in the sector, while strengthening its role as regulator and intermediary. The government has already reduced its shareholding in the AREDOR company to 15 percent. Through privatization it is intending also to reduce its shareholding in the aluminum company, FRIGUIA, to a minority without veto power. Should the privatization operation not succeed because of the absence of a credible buyer, the government will resort to a private concession. The government will continue its restructuring of the bauxite company, SBK, and is committed to reducing its share of the company's capital to a minority. The government will continue its efforts in connection with reducing operating costs and strengthening the management of another bauxite company, CBG, and will design a strategy for encouraging new private investment in the bauxite and aluminum sectors in the Boké region which may include a share in the CBG. Finally, the government will undertake measures to reduce its shareholding in the other mining companies, notably MIFERGUI, SMN, and SBDT. The government will make every effort to conclude, successfully, a study on the role of the National Agency for the Development of Mining Infrastructures (ANAIM).

30.  Two important projects to begin exploration for iron ore in the southeast of Guinea (the Nimba and Simandou projects) have reached an advanced stage of discussions between the government and the consortium Euronimba and the Rio Tinto group, respectively. Yet, realization of these projects depends on the development of relevant infrastructure, in particular a port, to facilitate production transportation. The government reached a consensus with private investors to enhance aluminum production through development of an integrated aluminum foundry at Konkouré. This project comprises an aluminum plant with capacity on the order of 250,000 tons/year, financed exclusively by private investors, and a hydroelectric complex with the capacity to produce 3,496 GWH/year, 10 percent of which will be absorbed by the factory itself.

C.  Energy Sector

31.  While technical conditions in the electric power sector have improved with the sharp increase in electric power supply and enhanced efficiency of the distribution network, the sector's financial situation continues to be unfavorable, necessitating the rapid implementation of institutional reform and related financial restructuring. The government has decided to shift from the current arrangement to a long-term concession.

32.  With this in mind, the government has set up an Interministerial Committee to be supported by a Financial and Technical Council and a Legal Council to carry out the process of installing the new concessionnaire in late 1999 on the basis of an open bidding procedure. The government has already decided to divest itself of ENELGUI at the end of the transition period, which is due to expire upon the installation of the new concessionnaire, and to set up a regulatory body to ensure that the powers of the government, as the public authority, are preserved in the new institutional arrangement. At the same time as the government, it will create the conditions for increased participation by private operators and investors in the sector. New legislation and regulations will be promulgated to encourage the private sector to become a stakeholder in electric power production for the Conakry region and the major urban centers; this involves, in particular, the issuing regulations to implement the BOT law for the electric power sector. Meanwhile, for 1999, the government plans to implement a program to supply power to towns in the interior, covering about 10 regional centers. As regards rural electrification, the government, with World Bank support, has set up a village electrification pilot program, scheduled to be launched in 1999 by one of the six targeted villages.

D.  Infrastructure Sector

33.  The new road infrastructure policy is essentially focused on ensuring sustained road maintenance and the increasing involvement of users in road financing and management. The general objectives are: (i) to open up the interior of Guinea; (ii) to establish connections between the principal areas of production and consumption; and (iii) to maintain relations with neighboring countries within the framework of subregional economic integration. The main strategies adopted to achieve these objectives are: (a) improving knowledge of the sector; (b) adapting the road infrastructure to the environment through terminals and the implementation of appropriate road transport regulations; (c) ensuring that financing for road maintenance is sustained and secure; (d) strengthening and redeploying national capacity so as to decentralize road management resources, functions, and skills and introduce a coherent human resources development system; (e) drawing up a national road policy; and (f) creating a road fund based on new ideas.

34.  The government will create a new, so-called second generation Road Maintenance Fund, aimed at achieving stable, regular financing of road maintenance works by associating road users with the management of this fund, which will be based on the following principles: (i) the fund will be legally and financially independent of the administration; and (ii) the fund will have its own resources, collected from road users based on a chargeback system. These resources are expected to grow gradually to facilitate the coverage of all maintenance needs.

E.  Urban Sector

35.  Rapid population growth in the towns has led to a large, continuous flow of migrants from rural areas. These poor new city dwellers settle in locations where rents are lowest--and therefore in the least developed areas to which access is the most difficult. Access to urban services and employment opportunities is therefore limited for the poorest segments of the population. Given the scarcity and instability of municipal funds, particularly in the case of Conakry, the costs of all these services cannot be adequately financed. Towns in the interior also have to deal with similar situations of urban spread and a lack of infrastructure and public utilities, using far fewer resources than those set aside for Conakry.

36.  This has thus led to further measures in the following strategic areas: (i) environmental health, through the strengthening of garbage collection and disposal arrangements and sustained financing of these activities by beneficiaries and the government; (ii) accessibility of poor areas, through the rehabilitation or opening of roads serving those areas, and the development of primary roads serving the poor suburbs; (iii) improvement in the quality of service provided by the highway maintenance network, through the introduction of regular programming and budgeting of routine and periodic maintenance, with a view to increasing the capacity of the secondary network and easing the burden on the primary network; and (iv) increasing the volume of resources available to the government and its capacity to manage financial services, factors which will help sustain the service provision in question.

37.  The supportive measures to be introduced for the implementation of this strategy necessitate, in particular, a deepening of decentralization, calling on the private sector more frequently to provide convenience public services, and simplifying public procurement procedures. The introduction of procedures and programs suited to the capacity of various small and medium-sized enterprises creates an incentive for participation by the national private sector and reduces the costs of supplies and projects. Efforts will also be made to: (a) introduce the real property values as capital in the process of national economic development; (b) guarantee property owners the free and peaceful enjoyment of their property; (c) provide political support to the Interministerial Committee responsible for monitoring implementation of the law governing land use; and (d) increase the number of real property conservation offices.

F.  Water Supply and Sanitation

38.  The government's objectives in this area are: (a) to alleviate the effects of poverty and improve public health while providing greater access to drinking water and to inexpensive sanitation services; (b) to encourage private sector participation, with a view to ensuring the viability of the system (a private company, SEEG, currently operates all the drinking water supply facilities in Guinea's urban centers, and the decision has been made to entrust it with the management of Conakry's wastewater); and (c) to develop the sector's planning capacity. To achieve these objectives, the government will implement the water supply and sanitation strategy, in collaboration with NGOs, the private sector, and local governments, through demand-based pilot programs aimed at maximizing the impact and use of the existing drinking water supply and sanitation facilities in rural areas. The basic principles underlying this strategy will be as follows: (a) decentralization and participation of beneficiaries in the decision making process in all phases of preparation of the rural water supply and sanitation project; (b) financial contribution from local communities to the initial investment and their participation in kind during the works; and (c) making local governments accountable for operations and maintenance. The third water project financed by the World Bank will make strong performance by the sector possible, through a new contract for the management of water facilities in urban areas for the next 20 years, with the private partner, SEEG.

G.  Environmental Problems

39.  Guinea's development cannot be sustained unless the major environmental problems facing the country are solved. Some of these problems, such as the poor urban sanitation caused by inadequate garbage collection services and the lack of sewerage treatment, the absence of drinking water in towns and in rural areas, and air pollution essentially resulting from mining activities, are undermining the health of the populous. The degradation of natural resources as a consequence of soil erosion, deforestation, and the decline of fishing resources threaten production levels, particularly in agriculture, and as a result, hamper medium- and long-term economic growth. Operations are under way to improve the urban environment and to supply towns and villages with drinking water. The government will adopt new legislation and regulations, specifically in the area of environmental evaluation, and will oversee their implementation. The decision has also been made to promote the sound management of timber resources by local communities and to encourage the use of nonpolluting substitute fuels in urban areas. The authorities will create, within the National Environmental Directorate, an operational unit responsible for monitoring implementation of the National Environmental Action Plan. This unit will be responsible for establishing the strategic framework and indicators in the priority areas defined by the plan and for constantly monitoring these indicators, so that it can make suggestions at any time to the planners on necessary changes or measures.

H.  Education Sector

40.  The government will continue to accelerate the development of the education sector. In particular, it will take the following measures: (a) reordering of resource allocation in favor of primary education, with a view to increasing the gross primary school enrollment rate to 60 percent in 2000, while seeking to achieve universal primary education within the framework of a 10-year plan; and (b) improving the quality of education through a series of innovative measures in schools, including increasing the supply of school books; faster and ongoing recruitment and training of teachers, most of whom will be under contract; measures relating to student health and nutrition; and an assessment of what students have learned. At the same time, efforts will be made to decentralize the management of the sector's resources to regional inspectors.

41.  Policy in regard to developing technical education and vocational training will be formulated with a view to adapting curriculum content to labor market needs. Three main development thrusts have been defined for developing Guinea's human resources and promoting genuine economic growth: (a) the training of qualified workers and employees so as to prepare more practitioners with a mastery of vocational skills, starting from the end of the primary education cycle; (b) the training of high-level technicians in advanced technologies; and (c) apprenticeships, in-service training, and refresher courses for workers, including those in the informal sector.

42.  Other measures planned in this subsector are: (a) an expansion of the system's flexibility to meet training needs as they arise; (b) the creation of a monitoring unit to track the employment situation and graduates of training institutions; (c) the strengthening of the information and communications system; (d) development and strengthening of the capacity to manage and to promote applied research to improve the response to economic needs; (e) promotion and development of private education and creation of distance learning; (f) incentives for the promotion and development of national expertise; and (g) initiation of cost-recovery measures related to training and to controlling the granting of public funds. Meanwhile, an effort is being made to integrate ongoing subsectoral policies for the three ministerial departments concerned with education into an overall sectoral policy. This would require the departments responsible for the sector to establish new work procedures that use a systemic approach to planning and managing actions. Such an approach would be managed by a newly created strategic and coordinating office for education policy.

I.  Health, Population, and Social Affairs

43.  To meet the major challenges facing this sector, the government will take the following measures: (a) increase the resources allocated by the state to health, in particular to nonwage operating expenditure; (b) expand official participation in the financing of primary health care, with a view to safeguarding the operations of health institutions and the durability of investments in this area; (c) continue budget decentralization, develop human resources, and continue to reassign personnel so as to improve resource management; (d) improve the quality of primary health care and continue to decentralize services, with a view to ensuring that people have access to such care; (e) identify new sources of funding for the sector, such as methods of small-scale prepayment (mutual associations of villagers); (f) ensure complementarity between the public and private sectors, as well as intersectoral collaboration; (g) develop and computerize the health information system, with a view to improving planning and management; and (h) improve provision and distribution of essential generic drugs, as well as the management of Guinea's central pharmacy.

44.  The government has formulated a national population policy with the aim of controlling the high population growth rate. This policy places emphasis on the need to expand family planning services and integrate them into the primary healthcare system.

45.  In social affairs, there are plans to implement a policy aimed at expanding social coverage and improving the conditions and infrastructure needed for providing assistance to the handicapped, drug addicts, and senior citizens. This implementation requires the introduction of a coherent system involving the effective participation of all development partners, with the following components: (a) the formulation and implementation of a national program of community-based readjustment; (b) support for the promotion and protection of the handicapped, drug addicts, AIDS victims and their families, and the prison population; (c) introduction of a qualitative and quantitative database on social action through surveys; and (d) establishment of an information, education, and communications strategy in the area of social development and protection.

46.  To enhance the status of women, the government will implement policies which aim at gender equality. Economic empowerment of women will be promoted; training to set up and run businesses will be provided and access to credit will be strengthened. In addition, institutional enforcement of employment will be promoted, in line with the Gender and Development Program.

47.  In order to enhance the status of children, in particular those in precarious living situations, children's rights and development will be given high priority. Specialized institutions for children with problems will be established; the United Nations Convention regarding children's rights will be followed; and vocational training and hiring opportunities will be strengthened.

J.  Tourism

48.  The government of Guinea has adopted a tourism policy and a code of artisans, with the aim that the development of this sector will help reduce poverty. The strategy aims at creating jobs and creating incentives for foreign private investment, while encouraging the development of diverse and competitive artisanal products.


VI.  Statistics--Technical Assistance

49.  For the next three years, Guinea needs additional technical assistance to improve its statistical system, the current weaknesses are an obstacle to macroeconomic management. In the area of statistics, efforts must be made to correct methodological weaknesses in the preparation of the national accounts and the consumer price index. Similarly, efforts must be maintained to improve the quality of government finance, balance of payments, and external debt statistics, as well as to restructure the trade monitoring system. In the area of economic planning, human and financial resources are required, especially for strengthening the National Planning Directorate. Upgrading in these areas will consist of: (a) improving projection tools; (b) perfecting data collection; and (c) building analytical capacity through the recruitment of macroeconomics and statistics experts.

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