Press Release No. 07/227

Press Release: Statement by IMF Mission to the Republic of Guinea

October 12, 2007

The following statement was issued on October 3 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 September 24-October 3, 2007 to continue the discussions initiated in July on a program that could be supported by an arrangement with the Fund. The mission met with President Lansana Conté, Prime Minister Lansana Kouyaté, the Minister of Finance, Economic Affairs and Planning Dr. Ousmane Doré, Minister of Economic and Financial Control and Transparency Mr. Saidou Diallo, Minister of Mines and Geology Mr. Ahmed Kanté, the Governor of the Central Bank, Mr. Daouda Bangoura, and senior officials of the government and the central bank.

"The mission has reached a preliminary understanding "ad referendum" on a three-year program that could be supported by a Poverty Reduction and Growth Facility (PRGF) arrangement. ¹ These understandings are subject to review by Fund management and ultimately to approval by the IMF Executive Board. They are also subject to firming up financing assurances that the authorities expect to obtain from donors in the coming weeks, with a view to presenting a proposal to the IMF's Executive Board before the end of 2007.

"The program is based on the second Poverty Reduction Strategy that the authorities have adopted in August. It envisages a further consolidation of the macroeconomic environment, with inflation declining from 15 % this year to 10 % next year, economic growth reaching 5 percent in 2008, and the gradual strengthening of Guinea's external position. An important increase in investment and social expenditures, including a substantial increase in the education budget are envisaged in 2008.

"The program also includes a strong program of structural reforms focusing on measures to bolster public financial management (including refraining from granting of ad hoc tax and customs exemptions and extra-budgetary spending) and to improve the financial operations of the central bank as well as its accounting systems and internal controls.

The mission would like to thank the authorities for their hospitality and the fruitful discussions."

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.