Statement by IMF Mission to the Republic of GuineaPress Release No. 07/163
July 19, 2007
The following statement was issued on July 18 in Conakry by Mr. Jean Le Dem, the International Monetary Fund's mission chief for the Republic of Guinea:
"An IMF mission visited the Republic of Guinea during July 4-18, 2007 to conduct the regular consultations under the Article IV of the IMF Articles of Agreement, which requires an annual review of the economic policies of all IMF member countries. The mission also initiated discussions with the authorities on a three year program that could be supported by a new Poverty Reduction and Growth Facility (PRGF) arrangement.1 The mission met with Prime Minister Lansana Kouyaté, the Minister of Finance, Economic Affairs and Planning Dr. Ousmane Doré, the Governor of the Central Bank, Mr. Daouda Bangoura, other ministers and senior officials of the government and the central bank, members of the national assembly, and representatives of the business community, civil society and Guinea's development partners.
"Since taking office in early April, the new government has announced far reaching
changes, mostly in the areas of transparency, management of public resources,
and governance. The mission noted that a set of bold measures has already been taken to restore financial control and to stabilize the macroeconomic situation. The authorities have adopted a six month recovery program and a budget law for the remainder of 2007. A new Poverty Reduction Strategy Paper covering 2007-10 that will include a home-grown policy framework to reverse the country's rising poverty trend is also being finalized.
"Policy discussions focused on stabilization policies and structural reforms that can unleash the strong potential of Guinea's economy, including in the mining sector, and reduce poverty. At present, the main challenge is consolidate economic stabilization by continuing fiscal and monetary policies consistent with bringing inflation down to single digits and building a strong external position. Thus, strengthening government revenue collection and expenditure management, improving the central bank's ability to conduct independent monetary policy while promoting efficiency in the foreign exchange market, and implementing measures already adopted in the areas of transparency and governance are critical.
"In the coming months, the authorities and Fund staff expect to finalize discussions on the details of the proposed PRGF arrangement, including in the context of the preparation of the 2008 budget. A PRGF arrangement would facilitate resumption of debt relief for Guinea in the context of the enhanced Initiative for Heavily Indebted Poor Countries (HIPC) and help Guinea qualify for the Multilateral Debt Relief Initiative (MDRI)2."
1 The PRGF is the IMF's concessional facility for low-income countries. PRGF-supported programs are based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners and articulated in the country's Poverty Reduction Strategy Paper. This is intended to ensure that PRGF-supported programs are consistent with a comprehensive framework for macroeconomic, structural and social policies to foster growth and reduce poverty. PRGF loans carry an annual interest rate of 0.5 percent and are repayable over 10 years with a 5½ year grace period on principal payments.
2 The HIPC Initiative is a comprehensive approach to debt reduction for heavily indebted poor countries pursuing IMF- and World Bank-supported adjustment and reform programs. The Multilateral Debt Relief Initiative (MDRI) provides for 100 percent relief on eligible debt from three multilateral institutions to a group of low-income countries.