IMF Executive Board Completes Second Review Under the Extended Credit Facility for Guinea and Approves US$27.4 Million DisbursementPress Release No. 13/185
May 20, 2013
The Executive Board of the International Monetary Fund (IMF) today completed the second review of Guinea’s economic performance under a program supported by the Extended Credit Facility (ECF). The completion of the review enables the disbursement of an amount equivalent to SDR 18.36 million (about US$27.4 million), bringing total disbursements under the arrangement to SDR 55.08 million (about US$82.1 million). In completing the review, the Board approved the authorities’ request for a waiver for nonobservance of the continuous performance criterion on new nonconcessional external debt.
The Executive Board approved a three-year ECF arrangement with an amount equivalent to SDR 128.52 (then about US$198.1 million) for Guinea on February 24, 2012 to support the government's economic program (Press Release No. 12/57).
Following the Board’s discussion of Guinea, Mr. Naoyuki Shinohara, Deputy Managing Director and Acting Chair, issued the following statement:
“Guinea’s macroeconomic performance under the ECF-supported program has been satisfactory. Growth has been strong, inflation is gradually declining, and international reserves are at a comfortable level. Guinea has also benefitted from a substantial reduction in its external debt stock after reaching the completion point under the Heavily Indebted Poor Countries’ Initiative (HIPC Iniaitiative) in September 2012. Continued strong commitment to program policies and structural reforms will be necessary to consolidate macroeconomic stability, maintain debt sustainability, and foster sustainable and inclusive growth.
“The authorities’ fiscal and monetary policies for 2013 remain appropriately geared toward reducing inflation. Efforts to strengthen revenue collections and rationalize expenditure, together with additional external assistance, facilitated the maintenance of a high level of domestically-financed investment spending in the 2013 budget despite dwindling resources from the 2011 exceptional mining revenue. The government has taken steps to contain subsidies, including in the electricity sector. Going forward, it will be important to introduce a timely automatic adjustment mechanism while providing targeted assistance to the poor. It will also be important to maintain an adequate level of international reserves.
“The December 2012 agreement on increases in civil service wages is within the limits of the 2013 budget but it is important to assess the timing of the implementation of the last round of the increases against trends in inflation. The authorities should work with social partners to develop a medium-term approach to wage increases accompanied by a strengthened civil service reform program.
“Further progress in the implementation structural reforms will be necessary to achieve strong and sustainable growth and reduce poverty. Key reforms should continue to focus on improving the business climate and the electricity sector, as well as governance of the mining sector.
“Guinea’s third Poverty Reduction Strategy Paper for 2013–15 (PRSP-III) lays out a good program for tackling Guinea’s development and macroeconomic challenges, emphasizing the strengthening of state institutions, including justice and security, and improving the business climate. Successful implementation will require prioritization of the many proposed policies and actions and effective monitoring and evaluation of the outcomes of programs,” he said.