## EXECUTIVE SUMMARY

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---

### Context and background
- Explosion on December 18, 2023, of a major fuel import and storage facility in Conakry:
  - 25 deaths and 457 injured.
  - Destruction of the entire storage of gasoline (facility covered most of the country’s gasoline supplies and 40 percent of its total petroleum product supplies).
  - Damage to governmental and private buildings and widespread fuel shortages affecting transportation and economic activity.
- Socio-political environment:
  - Socio-political tensions persist following the military coup of September 2021.
  - Transition to civilian rule by January 2025 challenging; completion of the 10-step, 24-month framework largely delayed as of mid-March.
  - ECOWAS eased sanctions at its extraordinary meeting on February 24, 2024.
  - Widespread electricity outages, cost-of-living difficulties, strikes; explosion exacerbated social discontent.

### Fund financial support and request
- Authorities requested emergency assistance under the Exogenous Shocks window of the Rapid Credit Facility (RCF):
  - Requested disbursement: SDR 53.55 million (25 percent of quota or about US$71.5 million).
  - Purpose: address urgent balance-of-payments needs associated with the explosion, including decontamination, assistance to affected households, reconstruction of buildings and infrastructure, and a new fuel depot.
- IMF precedent and recent emergency financing:
  - June 2020: RCF disbursement (50 percent of quota) for COVID-19 response.
  - December 2022: Food Shock Window (FSW) financing (25 percent of quota); funds transferred to World Food Program and other implementing entities during May-June 2023.

### Recent economic developments and fiscal/financial position
- Growth and inflation:
  - Real GDP growth: estimated 4.0 percent in 2022; estimated 5.7 percent in 2023.
  - Mining sector growth: 6.8 percent in 2022; 9.4 percent in 2023.
  - Non-mining sector (agriculture) growth: 4.8 percent in 2023.
  - Average inflation: 10.2 percent in 2022; 7.8 percent in December 2023.
- Monetary policy and credit:
  - BCRG policy rate: lowered to 11 percent from 11.5 percent in September 2023; reserve requirements cut to 13 percent from 15 percent.
  - Private sector credit: 8.9 percent of GDP (lower than 2014-2022 average of 10 percent).
  - MPC on March 15, 2024: kept key rate and reserve requirement ratio unchanged; BCRG signaled readiness to tighten if needed.
- Banking sector soundness and vulnerabilities:
  - Regulatory capital: 15 percent of risk-weighted assets at end-2023 (regulatory threshold 10 percent).
  - Non-performing loans: 8.9 percent of total loans at end-2023 (from 8.8 percent one year earlier; regulatory limit 10 percent).
  - Liquid assets share: 22.3 percent of total assets at end-2023 (from 23.8 percent at end-2022).
  - Government securities held by banks: 28.6 percent of banks’ assets at end-2023 (from 21.6 percent at end-2022); exceptional bonds equivalent to 2.8 percent of GDP issued in September-October 2023.
  - Exposure to oil sector and Letters of Credit to Import (LCIs) linked to lost fuel imports expire end-March 2024; risk of NPLs increasing beyond 10 percent if importers default.
- Fiscal developments:
  - Fiscal deficit (including grants): 0.8 percent of GDP in 2022; 1.6 percent of GDP in 2023.
  - Priority capital projects: 4.5 percent of GDP in 2023 (ramp-up by 1.1 percentage points).
  - Public debt ratio: 40.3 percent of GDP in 2023 (slight increase reflecting rise in domestic debt).
  - Decline in fuel subsidies and systematic lowering of subsidies to Electricité de Guinée (EDG) in the budget by 0.8 percentage points of GDP since 2022.
- External sector:
  - Current account deficit: 8.7 percent of GDP in 2023.
  - Real effective exchange rate estimated overvalued by 17.9 percent in 2023.
  - Foreign reserves: declined from 3.4 months of (prospective) imports in December 2022 to 2.4 months in January 2024; partial rebound included from repatriation enforcement and phase-out of central bank guarantees for oil imports.

### Outlook and risks (post-explosion)
- Short-term (2024) impact:
  - Real GDP growth projected to decelerate from 5.7 percent in 2023 to 4.1 percent in 2024 (1.2 percentage points lower than the pre-explosion projection).
  - Average inflation projected to increase to 11.0 percent in 2024.
  - Overall fiscal deficit (including grants) projected to widen from 1.6 percent of GDP in 2023 to 3.0 percent in 2024 (pre-blast scenario: 2.4 percent of GDP).
  - Urgent financing needs estimated at US$164 million.
  - Current account deficit projected to widen from 8.7 percent of GDP in 2023 to 10.6 percent in 2024.
  - Gross reserves projected to decline to 2.2 months of imports at end-2024.
  - Staff simulation: absent financing from the IMF and others, reserves could fall to about (text truncated in source).
- Medium-term (2025-28) outlook (conditional on contained fallout):
  - Growth projected to rebound and average around 6.7 percent over 2025-28, driven by mining-sector investment and new bauxite and gold mines; Simandou completion is an upside risk.
  - Inflation expected to decline progressively to 9.2 by 2027, due to tighter monetary policy and a stable Guinean franc exchange rate.
  - Current account deficit would narrow to about 8 percent of GDP as exports recover.
- Risk environment:
  - Balance of risks tilted to the downside: global conflicts, commodity price volatility, political instability, extended fuel shortages, and intensified sovereign-bank nexus.
  - Key mitigants: PRE diversification efforts, inclusive political dialogue, and potential upside from Simandou project.

### Policy recommendations and priorities
- Fiscal policy and public finances:
  - Mobilize domestic revenues, especially from the mining sector.
  - Modernize tax administration and strengthen revenue administration (TA, digitalization, VAT stratification).
  - Improve public finance management and investment efficiency (including PIMA and C-PIMA work).
  - Anchor spending on available resources; increase spending on education, health, and social protection.
  - Target social expenditures to address gender gaps, food insecurity, and climate exposure.
- Monetary and financial policies:
  - Strengthen monetary and financial policies to quell inflation pressures while preserving financial stability.
  - Continue monitoring banking sector vulnerabilities (sovereign and oil-sector exposures, LCIs).
  - Avoid central bank financing and limit heavy reliance on commercial bank financing to prevent crowding out.
- Governance and implementation:
  - Continue implementing recommendations from the 2022 Article IV consultation; address safeguards assessment concerns.
  - Ensure transparency and good governance in externally financed programs; publish procurement and beneficial ownership information.
- Structural and inclusion priorities:
  - Address large gender gaps in education and health (PNG III, 2024-29).
  - Target support to households affected by the explosion and populations facing food insecurity.
- Simandou project:
  - Ensure Simandou delivers expected benefits; proper implementation of the revised Simandou convention is critical.
  - Authorities hope Simandou production could start at the end of 2025 in an upside scenario.

### Explosion-related fiscal impact and cost estimates
- Explosion-related total cost (Text Table 1 totals):
  - Total: 1,457.89 billion GNF; 164.05 million USD; 0.645 percent of GDP.
- Selected line items (exact figures as reported):
  - Transfers and subsidies: 482.22 billion GNF; 54.26 million USD; 0.213 percent of GDP.
  - Fuel supply cost: 122.40 billion GNF; 13.77 million USD; 0.054 percent of GDP.
  - Monetary transfers to affected households: 25.15 billion GNF; 2.83 million USD; 0.011 percent of GDP.
  - Temporary shelters: 251.15 billion GNF; 28.26 million USD; 0.111 percent of GDP.
  - Humanitarian assistance: 6.31 billion GNF; 0.69 million USD; 0.027 percent of GDP.
  - Investment (total): 841.75 billion GNF; 94.72 million USD; 0.372 percent of GDP.
  - New fuel storage capacity: 679.07 billion GNF; 76.41 million USD; 0.300 percent of GDP.
  - Building houses in safe areas: 113.63 billion GNF; 12.79 million USD; 0.050 percent of GDP.
  - Net lending (bank line of credit to productive activities): 127.50 billion GNF; 14.35 million USD; 0.056 percent of GDP.

### Fiscal policy stance and revenue outlook
- 2024 fiscal stance:
  - Staff views a fiscal deficit of 3.0 percent of GDP for 2024 as temporary and appropriate, consistent with the ECOWAS rule.
- Tax revenue performance:
  - Tax revenues: 11.9 percent of GDP in 2023.
  - Tax revenues expected: 11.7 percent of GDP in 2024.
  - Estimated tax potential: 18 percent of GDP.
- Projected revenue increase:
  - Ongoing revenue mobilization efforts expected to lead to a gradual increase of government revenue by about 1 percent of GDP over 2024-27.
- Policy cautions:
  - Avoid central bank financing and crowding out private-sector credit via heavy government reliance on commercial bank financing.
  - Debt stance: Guinea remains at moderate risk of debt distress; domestic debt vulnerabilities increased due to substantial T-bond issuance.

### Electricity sector reforms (Box 1)
- Access and performance:
  - National access to electricity: "46 percent"; Rural access: "19 percent"; Urban access: "88 percent."
  - Public administration arrears to EDG (2020 to August 31, 2023): "US$163million."
  - Untargeted electricity subsidies absorbed "more than 61 percent of mining-sector revenues in 2023."
- EDG medium-term recovery plan (prepared in 2020; on hold):
  - Tariff reform target: align tariffs to costs of supply by "2025-26."
  - Tariff cost recovery per World Bank estimate: "only forty percent half of production costs."
  - Share of customers paying flat rate: "85 percent."
  - EDG clients: "398,000 in 2018" and "608,000 in 2022."
  - Loss reduction target: cut losses from non-compliance in half by "2025."
  - Social tariff consumption threshold: "90 kWh."
- Expected benefits:
  - Achieving EDG’s financial sustainability and investment would enhance exploitation of hydro and solar potential, expand domestic access, and support exports to neighboring countries.

### Governance, anti‑corruption, and AML/CFT
- Governance progress:
  - Additional allocations to recruit staff for the Court of Audit.
  - ANLC reported improved CPI score in 2023.
  - Major corruption cases transferred to CRIEF.
  - AGRASC being set up to manage recovered assets.
- Extractive sector transparency:
  - EITI report published in December 2023 (covering up until 2021); authorities implementing EITI recommendations.
  - Destruction of main mining laboratory by explosion hampered quality control of mining exports.
- AML/CFT:
  - CENTIF moved to the central bank and reported improved working conditions.
  - Guinea’s second mutual evaluation by GIABA completed November 2023 identified significant weaknesses; CENTIF preparing follow-up report expected November 2024.
- Authorities’ commitments:
  - Publish expenditure reports and procurement contracts (with beneficial ownership information) and audits; implemented prior actions related to FSW reporting and Covid-19 emergency financing.

### Debt, DSA highlights, and financing
- Public debt and composition:
  - Public debt ratio: 40.3 percent of GDP in 2023.
  - External public debt: 19.7 percent of GDP in 2023.
  - Domestic debt: 20.6 percent of GDP in 2023.
  - Share of external debt in total debt: 48.9 percent at end-2023.
- Contingent liability tailored stress test (combined) aggregate shock to central government debt ratio: 11.2 percent of GDP.
- DSA projections and risks:
  - Real GDP growth: 2024 projection 4.1 percent; medium-term growth supported by mining investment.
  - Overall fiscal deficit (including grants): projected 3.0 percent of GDP in 2024; medium-term target to stabilize around 2½ percent.
  - Guinea assessed at moderate risk of external and overall debt distress.
- External financing mix and assumptions:
  - Projected Total External Financing (USD million): 483.9 (2023), 844.4 (2024), 659.4 (2025), 1,091.1 (2026), 1,345.7 (2027), 788.4 (2028).
  - Average grant element of new external borrowing expected to average 27.6 percent over 2024-28.
- Fund exposure:
  - Fund exposure to Guinea would increase to 158 percent of quota or 1.7 percent of GDP (Table 7).
  - Guinea’s future debt service to the Fund expected to reach 0.7 percent of exports and 3.4 percent of gross international reserves in 2028.

### Annex I — Potential economic impact of the fuel depot explosion (highlights)
- Event and immediate response:
  - Official death toll: 25; Injured: 457 (as of February 12, 2024); Affected households: 2,141.
  - Immediate actions: temporary unloading terminal, trucking from Sierra Leone, partial fixing of pipeline to second storage facility.
- Fuel supply shock assumptions (2024):
  - Average shortage of oil products: 8.1 percent in 2024 versus baseline.
  - Gasoline: imported quantities decline on average by 12.2 percent in 2024; baseline demand 11,156 b/d; imports provisional terminal 8,851 b/d; trucks from Sierra Leone 939 b/d; shortage 12.2 percent.
  - Other oil products: baseline demand 18,198 b/d; imports 17,179 b/d; shortage 5.6 percent.
  - Total oil products: baseline demand 29,354 b/d; imports 26,969 b/d; shortage 8.1 percent.
- Macro impacts (projected deviations):
  - Real GDP growth: 1.2 percentage points lower in 2024.
  - Real mining GDP growth: slows to 7.6 percent in 2024 (2.2 percentage points lower than without the incident).
  - Non-mining GDP growth: decelerates to 3.1 percent in 2024 (0.9 percentage points lower).
  - Transportation sector: 1.9 percent contraction in 2024.
  - Fuel import expenses: 11 percent higher than without the incident.
  - Imports of intermediate and capital goods: 3 percent higher (post-explosion reconstruction).
  - Exports: 2 percent lower than pre-explosion baseline (mainly lower gold exports).
  - Gross international reserves could fall to 2.0 months of imports by end-2024 without financial support.
  - Average inflation expected at 11.0 percent in 2024 (3.1 percentage points higher than baseline).
- Policy implications:
  - Prevent shortages, accidents, and health hazards from provisional unloading and trucking.
  - Accelerate reconstruction and timely completion of new oil storage and import terminal (completion assumed end-2026).
  - Coordinate financial support with partners to prevent reserve depletion and mitigate fiscal pressures.

### Food Shock Window (FSW) implementation and targeting (selected findings)
- FSW-supported actions:
  - Corn imports: 10,000 tonnes sold affordably to poultry operators.
  - Seed provision: 2,500 tonnes rice seeds and 1,300 tonnes corn seeds distributed via seed banks in 35 centers.
  - Nutritional inputs: in-kind distribution benefiting a total of 60,000 people.
  - Indigent fund: about 1,901 healthcare vouchers (848 fully covered).
  - Tractors and machinery: purchase of 32 tractors led to a 35-percent increase in fleet available to farmers; 30 additional harvesters financed.
  - Rice mill: Sinko rice mill operationalized with capacity of 100 tonnes per day.
  - WFP resilience program: strengthened capacity of 10,000 people.
  - Pilot Tongil rice across 109 villages over 300 hectares.
- Reporting and transparency:
  - WFP complied with annual reporting; FODA, FDSI, and ANIES published monthly reports and procurement documents.
  - Beneficial ownership and procurement information published as committed.
  - Court of Account audit of FSW implementation launched; initial findings planned.
- Lessons:
  - Targeted programs can alleviate food insecurity and should be financed by budgetary resources.
  - Need structures to scale up quickly during emergencies.

### Data, capacity development, and statistical issues
- Data provision broadly adequate for surveillance, but gaps persist.
- Priority improvements:
  - Finalize transition to GFSM 2014; implement national CPI from 2022; rebase national accounts to SNA2008.
  - Strengthen debt and external sector data; build macroframework capacity.
- e‑GDDS reports published monthly though dissemination not timely.
- Authorities working with STA on SDDS roadmap.

### Mission, consultations, and editorial note
- IMF mission in Conakry: January 31–February 13, 2024; Team headed by Ms. P. Garcia Martinez.
- Meetings included Prime Minister Bernard Goumou; Ministers Moussa Cissé, Lanciné Condé, Rose Pola Pricemou, Aicha Nanette Conté; Central Bank Governor Karamo Kaba; private sector, civil society, and development partners.
- Document dated April 24, 2024.

*International Monetary Fund. EXECUTIVE SUMMARY (Guinea), April 24, 2024.*

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Context and background
- On December 18, 2023, the explosion of a major fuel import and storage facility in the center of the capital caused:
  - 25 deaths and 457 injured.
  - Destruction of the entire storage of gasoline (the facility covered most of the country’s gasoline supplies and 40 percent of its total petroleum product supplies).
  - Damage to governmental and private buildings and widespread fuel shortages affecting transportation and economic activity.
- The crisis is projected to cause a general increase in prices and negatively affect non-mining economic activity and the external position (Annex I).
- Socio-political context:
  - Socio-political tensions persist following the military coup of September 2021.
  - The transition to civilian rule by January 2025 remains challenging given delays in the 10-step, 24-month framework agreed between the military junta and ECOWAS; completion of the 10 steps was largely delayed as of mid-March.
  - ECOWAS eased sanctions at its extraordinary meeting on February 24, 2024, which could renew dialogue on the transition timeline.
  - Widespread electricity outages, cost-of-living difficulties, and the hardship caused by the explosion exacerbated social discontent and led to strikes.

### Fund financial support and request
- Authorities requested emergency assistance under the Exogenous Shocks window of the Rapid Credit Facility (RCF):
  - Requested disbursement: SDR 53.55 million (25 percent of quota or about US$71.5 million).
  - Purpose: address urgent balance-of-payments (BOP) needs associated with the explosion, including decontamination of the site, assistance to affected households, reconstruction of buildings and infrastructure, and a new fuel depot.
- IMF precedent and recent emergency financing:
  - June 2020: RCF disbursement (50 percent of quota) for COVID-19 response.
  - December 2022: Food Shock Window (FSW) financing (25 percent of quota) to address global food crisis; funds transferred to World Food Program and other implementing entities during May-June 2023, rollout ongoing (Annex III).

### Recent economic developments and fiscal/financial position
- Growth and inflation:
  - Real GDP growth: estimated 4.0 percent in 2022; estimated 5.7 percent in 2023.
  - Mining sector growth: 6.8 percent in 2022; 9.4 percent in 2023.
  - Non-mining sector (agriculture) growth: 4.8 percent in 2023.
  - Average inflation: 10.2 percent in 2022; 7.8 percent in December 2023.
- Monetary policy and credit:
  - BCRG lowered interest rate to 11 percent from 11.5 percent in September 2023; reserve requirements cut to 13 percent from 15 percent.
  - Private sector credit at just 8.9 percent of GDP (lower than 2014-2022 average of 10 percent).
  - MPC on March 15, 2024, kept key rate and reserve requirement ratio unchanged; BCRG signaled readiness to tighten if needed.
- Banking sector soundness and vulnerabilities:
  - Regulatory capital: 15 percent of risk-weighted assets at end-2023 (regulatory threshold 10 percent).
  - Non-performing loans: 8.9 percent of total loans at end-2023 (from 8.8 percent one year earlier; regulatory limit 10 percent).
  - Liquid assets share: 22.3 percent of total assets at end-2023 (from 23.8 percent at end-2022).
  - Government securities held by banks: 28.6 percent of banks’ assets at end-2023 (from 21.6 percent at end-2022), reflecting exceptional bonds equivalent to 2.8 percent of GDP issued in September-October 2023.
  - Banking system exposure to oil sector and the stock of Letters of Credit to Import (LCIs) linked to the fuel imports lost in the explosion expire at end-March 2024; risk of NPLs increasing beyond 10 percent if importers default.
- Fiscal developments:
  - Fiscal deficit (including grants): 0.8 percent of GDP in 2022; 1.6 percent of GDP in 2023.
  - Increase in priority capital projects to 4.5 percent of GDP in 2023 (ramp-up by 1.1 percentage points).
  - Public debt ratio: 40.3 percent of GDP in 2023 (slight increase reflecting rise in domestic debt).
  - Decline in fuel subsidies and systematic lowering of subsidies to Electricité de Guinée (EDG) in the budget by 0.8 percentage points of GDP since 2022.
- External sector:
  - Current account deficit: 8.7 percent of GDP in 2023.
  - Real effective exchange rate estimated overvalued by 17.9 percent in 2023.
  - Foreign reserves: declined from 3.4 months of (prospective) imports in December 2022 to 2.4 months in January 2024; partial rebound already included from repatriation requirement enforcement and a phase-out of central bank guarantees for oil imports.

### Outlook and risks (post-explosion)
- Short-term (2024) impact of the explosion:
  - Real GDP growth projected to decelerate from 5.7 percent in 2023 to 4.1 percent in 2024 (1.2 percentage points lower than the pre-explosion projection).
  - Average inflation projected to increase to 11.0 percent in 2024.
  - Overall fiscal deficit (including grants) projected to widen from 1.6 percent of GDP in 2023 to 3.0 percent in 2024 (pre-blast scenario: 2.4 percent of GDP).
  - Urgent financing needs estimated at US$164 million.
  - Current account deficit projected to widen from 8.7 percent of GDP in 2023 to 10.6 percent in 2024.
  - Gross reserves projected to decline to 2.2 months of imports at end-2024.
  - Staff simulation: absent financing from the IMF and others, reserves could fall to about (text truncated in source).
- Medium-term (2025-28) outlook (conditional on contained fallout from oil supply shock):
  - Growth projected to rebound and average around 6.7 percent over 2025-28, driven by mining-sector investment and new bauxite and gold mines; completion of Simandou iron ore project is an upside risk.
  - Inflation expected to decline progressively to 9.2 by 2027, mainly due to tighter monetary policy and a stable Guinean franc exchange rate against the US dollar (explained by repatriation measures and FX market rules).
  - Current account deficit would narrow to about 8 percent of GDP as exports recover.

### Policy recommendations and priorities
- Fiscal policy and public finances:
  - Beef up fiscal space for priority spending and ensure fiscal sustainability.
  - Mobilize domestic revenues, especially from the mining sector.
  - Modernize tax administration.
  - Improve public finance management and investment efficiency (including PIMA and C-PIMA work).
  - Anchor spending on available resources and increase spending on education, health, and social protection to boost productivity, diversify the economy, and reduce poverty.
  - Critical social expenditures should target large gender gaps, elevated food insecurity, and mitigation of exposure to climate change.
- Monetary and financial policies:
  - Strengthen monetary and financial policies to quell inflation pressures while preserving financial stability.
  - Continue monitoring banking sector vulnerabilities (sovereign and oil-sector exposures, LCIs).
- Governance and implementation:
  - Continue implementing key recommendations from the 2022 Article IV consultation; gaps remain (including slow progress on safeguards assessment concerns).
  - Ensure transparency and good governance in implementation of externally financed programs (MOUs with FSW implementing agencies introduced such measures).
- Social and inclusion priorities:
  - Address long-standing and unusually large gender gaps in education and health (Annex II).
  - Target support to households affected by the explosion and populations facing food insecurity.

### Mission and consultations
- IMF mission dates and composition:
  - IMF team held discussions with Guinea’s authorities during January 31–February 13, 2024, in Conakry.
  - Team head: Ms. P. Garcia Martinez; team included Messrs. J. Ntamatungiro, M. Otero Nule, Y. Zhao, J. Guihy, M. Stuermer, N. Noumon, and Mss. J. Ren and F. Diallo.
  - Meetings included Prime Minister Bernard Goumou, Minister of Economy and Finance Moussa Cissé, Minister of Budget Lanciné Condé, Minister of Planning Rose Pola Pricemou, Minister of Women’s Promotion Aicha Nanette Conté, Central Bank Governor Karamo Kaba, other senior officials, and representatives from the private sector, civil society, and development partners.
  - Mr. M. Mlachila participated in the last days of the mission; Mr. F. Sylla and Ms. R. Bah joined some meetings.
- Dates and editorial note:
  - Document dated April 24, 2024.

_International Monetary Fund. EXECUTIVE SUMMARY (Guinea), April 24, 2024._

### 2.0  months of imports by the end of 2024.

### 2.0  months of imports by the end of 2024.

### Economic impact and scenario projections
- Baseline (authorities): fuel shortages contained to 15 percent for gasoline and 5.6 percent for all other petroleum goods in 2024; Real GDP growth would slow to 4.2 percent in 2024.
- Downside (authorities): gasoline shortages of 25 percent in 2024; Real GDP growth would slow to 3.6 percent in 2024.
- Staff projection: baseline close to the authorities’ baseline; gross reserves would gradually recover to 3.0 months of imports (from 2.0 months of imports by the end of 2024).
- Current account: deficit would widen amid higher import costs of petroleum products and the construction of a new deposit.

### Explosion-related fiscal impact and cost estimates
- Fiscal balance: overall fiscal deficit widening from 1.6 percent of GDP in 2023 to 3.0 percent of GDP in 2024, against 2.4 percent of GDP in the pre-blast scenario.
- Financing of 2024 deficit: expected to be financed mainly by external loans and issuance of Treasury securities; identified financing leaves a financing gap of US$164 million in 2024.
- Emergency support expected: IMF emergency financial support (RCF) in the amount of $71.5 million, and assistance from other development partners (WB, IsDB, AfDB).
- Explosion-related cost (Text Table 1 totals):
  - Total: 1,457.89 billion GNF; 164.05 million USD; 0.645 percent of GDP.
- Selected explosion-related cost line items (exact figures as reported):
  - Transfers and subsidies: 482.22 billion GNF; 54.26 million USD; 0.213 percent of GDP.
  - Fuel supply cost: 122.40 billion GNF; 13.77 million USD; 0.054 percent of GDP.
  - Monetary transfers to affected households: 25.15 billion GNF; 2.83 million USD; 0.011 percent of GDP.
  - Temporary shelters: 251.15 billion GNF; 28.26 million USD; 0.111 percent of GDP.
  - Humanitarian assistance: 6.31 billion GNF; 0.69 million USD; 0.027 percent of GDP.
  - Investment (total): 841.75 billion GNF; 94.72 million USD; 0.372 percent of GDP.
  - New fuel storage capacity: 679.07 billion GNF; 76.41 million USD; 0.300 percent of GDP.
  - Building houses in safe areas: 113.63 billion GNF; 12.79 million USD; 0.050 percent of GDP.
  - Net lending (bank line of credit to productive activities): 127.50 billion GNF; 14.35 million USD; 0.056 percent of GDP.
  - Other listed items and their exact values are included in the total 1,457.89 billion GNF / 164.05 million USD / 0.645 percent of GDP.

### Fiscal policy stance and revenue outlook
- 2024 fiscal stance: staff views the fiscal deficit of 3.0 percent of GDP for 2024 as temporary and appropriate, consistent with the ECOWAS rule.
- Tax revenue performance:
  - Tax revenues amounted to 11.9 percent of GDP in 2023.
  - Tax revenues expected to be 11.7 percent of GDP in 2024.
  - Estimated tax potential: 18 percent of GDP.
- Projected revenue increase: ongoing revenue mobilization efforts expected to lead to a gradual increase of government revenue by about 1 percent of GDP over 2024-27.
- Financing risks to avoid: staff emphasizes avoiding central bank financing and crowding out private-sector credit via heavy government reliance on commercial bank financing.
- Debt risk: Guinea remains at moderate risk of debt distress; domestic debt vulnerabilities have increased due to substantial T-bond issuance to finance high public investment spending.

### Policy recommendations and medium-term priorities
- Near-term fiscal priorities:
  - Mobilize domestic revenues, especially from the mining sector.
  - Anchor spending on available resources and strengthen cash management.
  - Limit central bank financing and crowding out of private credit.
- Medium-term fiscal anchor:
  - Return to a fiscal deficit of 2.5 percent of GDP throughout 2026-27.
  - Adopt a comprehensive fiscal policy reform strategy and consider an MTFF for resource-rich countries.
- Revenue mobilization measures:
  - Boost mining revenues by addressing transfer mispricing and tax exemptions (estimated annual revenue loss of 2 percent of GDP).
  - Enforce the July 2022 reference price decree and implement obligation to declare sale prices (included in 2024 budget law).
  - Strengthen tax auditing capacities and carry out tax audits of mining companies (with external assistance).
- Strengthening revenue administration and VAT performance:
  - Modernization of tax and customs departments with Fund TA.
  - Implement new Tax code and reforms to personal income tax (taxed at source separately).
  - VAT improvements via stratification of taxpayers (LTO/MTO), expansion of regional tax centers, digitalization (TIN, e-declaration, e-payment), and USSD tax payment due to around 40 percent internet accessibility.
- Public financial management and arrears:
  - Independent audit of 2014-20 arrears validated obligations of GNF 2,075 billion (1.1 percent of GDP) with a clearance plan adopted in September 2023.
  - Improve budget execution, align spending plans with available resources, and limit emergency spending to avoid new arrears.
- Subsidy and social protection reforms:
  - 2024 budget includes reduction of electricity subsidies by some 0.6 percent of GDP.
  - Strengthen social protection and unify social registries (ANIES and PDSI); consolidate the Registre Social Unifié (RSU) to better target interventions accompanying subsidy removals.
- Public investment management:
  - Prioritize investment in infrastructure and human capital, incorporate gender and climate perspectives.
  - Apply good public investment management principles; draft legal framework for investment management expected to be adopted by decree before the 2024 spring meetings.
  - Improve execution rate of the investment budget (70 percent in 2023) via designation of project coordinators for foreign-financed investments.
- Governance and institutional reforms:
  - Strengthen governance and transparency, fight corruption, and improve the AML/CFT regime.
  - Consider special institutions such as natural resource funds to stabilize mining revenues and save for future generations.
- Social and gender priorities:
  - Increase social and growth-enhancing expenditures to improve performance on SDGs (health, education, electricity, transport).
  - Implement policies under the third National Gender Policy (PNG III, 2024-29) to reduce gender disparities and boost growth potential.
- Simandou project:
  - Ensure the Simandou project delivers expected benefits; proper implementation of the revised Simandou convention is critical.
  - Authorities hope Simandou production could start at the end of 2025 in an upside scenario.

### Risks and contingency considerations
- Balance of risks tilted to the downside:
  - Global risks: conflicts escalation, commodity price volatility, weaker world growth affecting inflation, mining-sector export earnings, and oil imports.
  - Domestic risks: unstable fuel supplies, worsening political situation, social instability, greater government resort to bank credit and central bank financing causing inflation, crowding out private credit, fueling poverty, endangering banking sector stability.
- Mitigants and policy levers:
  - Efforts to enhance diversification under the Interim Reference Program (PRI) and Economic Recovery Plan (PRE).
  - Promote inclusive political dialogue.
  - On the upside: Simandou project could accelerate with production starting at the end of 2025 in an optimistic scenario.

*Source: IMF staff report excerpt for Guinea (content unit). *

### Box 1. Key Reforms in the Electricity Sector Under the Medium-Term Plan

### Box 1. Key Reforms in the Electricity Sector Under the Medium-Term Plan

### Context and main challenges
- Guinea has the highest potential for hydropower in West Africa but low and uneven access to electricity: "46 percent" national access; "19 percent in rural areas and 88 percent in urban areas."
- Electricité de Guinée (EDG) was established in 2001 under technical supervision of the Ministry of Energy and financial supervision of the Ministry of Economy and Finance (MEF). EDG’s poor performance and governance have been targeted for reform across multiple IMF and World Bank programs.
- COVID-19 impacts and a suspension of planned tariff increases worsened EDG’s situation. Public administration arrears to EDG totalled "US$163million" for the period 2020 to August 31, 2023. The December 2023 explosion further exacerbated EDG’s financial difficulties.
- EDG constitutes a drain on the budget, with untargeted electricity subsidies absorbing "more than 61 percent of mining-sector revenues in 2023."

### EDG medium-term recovery plan (prepared in 2020; on hold)
- Objective: strengthen EDG’s financial sustainability to (i) exploit renewable energy potential and expand provision of electricity domestically and to neighboring countries, (ii) free up resources for priority spending, and (iii) ensure better targeting of electricity subsidies.
- Key reform measures included:

  - Tariff reform
    - Plan projected tariff increases to align tariffs to costs of supply by "2025-26."
    - Design features: (i) higher increases for households than commercial customers; (ii) a more progressive pricing system based on consumption levels.
    - The last tariff increase was in "September 2021."
    - The World Bank estimates that total tariffs cover "only forty percent half of production costs," with particularly low tariffs for households and subsidies benefiting wealthier households.
    - About "85 percent of customers pay a flat rate," rather than a rate reflecting actual consumption.
    - EDG clients increased from "398,000 in 2018 to 608,000 in 2022."
    - The plan includes a social tariff linked to level of consumption until a threshold of "90 kWh," above which the normal tariff applies.
    - Footnote: A World Bank mission to finalize discussion on a potential DPO will visit Guinee during "March 25-29, 2024." The DPO is expected to include EDG’s reforms.
    - Footnote: The World Bank has separate programs to reinforce social safety nets which are not explicitly linked to the energy sector recommendations.

  - Clearance of arrears
    - Government to pay its arrears to EDG, which in turn clears its arrears to suppliers.

  - Reduced technical and non-technical losses
    - Targeted reduction by cutting losses from non-compliance in half by "2025."
    - Current collection rates remain low: "50 percent for the public sector; 64 percent for the private sector."

  - Improved collection rates and metering
    - Measures: installation of pre-paid and standard meters; enhancement of EDG’s management and operational capacity.
    - Implementation challenges: important delays in meter installation, high fraud, and pervasive illicit power connections.

  - Greater transparency and procurement
    - Procurement should be transparent and competitive to minimize costs.
    - Improved financial reporting with EDG financial statements produced and audited in line with best practices.
    - Existing power purchase agreements (PPAs): one IPP using thermal sources and two hydro IPPs (SOGES and SOGEKA operating Souapiti and Kaléta). Contracts are not competitive; Souapiti’s operation created obligations due to a "take or pay" clause requiring purchase of agreed output even if not distributed.

### Expected benefits of reforms and investment
- Achieving EDG’s financial sustainability, together with sustained investment in transmission and distribution, would:
  - Enhance exploitation of Guinea’s hydro and solar energy potential.
  - Make Guinea a fully green energy country exporting electricity to neighboring countries.
  - Improve energy access, supporting strong economic growth, diversification, and sustainable development.

### Key statistics and indicators (as presented)
- National access to electricity: "46 percent."
- Rural access: "19 percent."
- Urban access: "88 percent."
- Public administration arrears to EDG (2020 to August 31, 2023): "US$163million."
- Untargeted electricity subsidies absorption of mining-sector revenues in 2023: "more than 61 percent."
- Tariff cost recovery per World Bank estimate: "only forty percent half of production costs."
- Share of customers paying flat rate: "85 percent."
- EDG clients: "398,000 in 2018" and "608,000 in 2022."
- Tariff alignment target: by "2025-26."
- Loss reduction target: cut losses from non-compliance in half by "2025."
- Social tariff consumption threshold: "90 kWh."
- World Bank DPO mission dates: "March 25-29, 2024."

*Source: Box 1. Key Reforms in the Electricity Sector Under the Medium-Term Plan (from the provided IMF content).*

### 36.      The authorities are committed to strengthening governance and combatting

### 36.      The authorities are committed to strengthening governance and combatting corruption

### Governance and anti‑corruption: progress and remaining challenges
- Additional budgetary allocations in the revised Budget Law will allow the Court of Audit to recruit staff to address personnel shortages.
- The National anti‑corruption agency (ANLC) reported that Guinea improved its score on the 2023 Corruption Perceptions Index (CPI) of Transparency International through increased sensibilization and thanks to repression, prevention, and detection efforts.
- Major corruption cases are transferred to the financial and economic criminal court, the “Cour de Répression des Infractions Économiques et Financières” (CRIEF), which prosecutes embezzlement, corruption, and other financial crimes.
- To effectively combat corruption, the autonomy and independence of anti‑corruption institutions need to be strengthened.
- The Ministry of Justice is setting up a public institution (AGRASC) charged with recovering and managing assets recovered from the misappropriation of public resources.

### Extractive sector transparency, courts, and asset declaration regime
- EITI published its most recent report for Guinea (covering up until 2021) in December 2023.
- Authorities are implementing EITI recommendations, namely improving financial transparency of SOEs and strengthening the beneficial ownership framework.
- Guinea’s progress will be evaluated in the upcoming validation process starting in April 2024.
- The four commercial courts appear to be efficiently delivering judgments to the satisfaction of the business community, although the limited number of specialized judges continues to be a major constraint.
- An institution charged with judicial aid to indigent people is expected to start soon and is described as a major innovation by international standards.
- The 2021 coup suspended the constitution, creating a legal vacuum for the asset declaration regime; the transitional parliament reported progress in drafting a new constitution, which should provide a legal basis for resuming asset declarations by key officials and for the resumption of IMF‑supported reform efforts on the asset declaration regime.

### AML/CFT regime: assessments and capacity constraints
- The financial intelligence unit (CENTIF) indicated improved working conditions following its move to the central bank.
- Guinea’s second mutual evaluation by GIABA was completed in November 2023; the evaluation identified significant weaknesses with the effectiveness of implementation, requiring stepped‑up actions by authorities.
- Progress was noted in areas where the Fund provided TA, including development of a risk‑based supervisory framework.
- The banking supervision department of BCRG is monitoring AML/CFT measures in banking and insurance institutions, although resource constraints hinder implementation and development of risk‑based supervision.
- CENTIF is preparing a follow‑up report on Guinea’s technical compliance with the FATF Recommendations expected to be submitted to GIABA in November 2024.

### Authorities’ views
- Improving transparency and governance is a key priority according to the authorities.
- They attribute encouraging results in reducing misappropriations to political will and coordinated work among institutions fighting corruption and money laundering, with a multi‑institutional workshop occurring during the mission.
- Efforts were emphasized to strengthen monitoring of mining export prices through the 2022 reference price decree and of export quantities via a quarterly bulletin on mining production and exports.
- Controlling the quality of mining exports has been hampered by the destruction of the main mining laboratory by the fuel explosion.

### IMF assistance modalities and financing needs
- The authorities requested emergency assistance under the Exogenous Shocks window of the RCF with an access of 25 percent of quota (SDR 53.55 million) to address urgent balance‑of‑payments needs associated with the explosion.
- The current account deficit in 2024 is expected to widen significantly (by 1.7 percent of GDP relative to the pre‑explosion case), leading to a financing gap of US$164 million (Text Table 1) to prevent a large decline of reserve coverage in end‑2024 (projected to be 2.2 months of imports if the financing gap is filled) (Table 6).
- If urgent needs are not addressed, severe economic disruption would ensue, with further depletion of foreign reserves and adverse effects on non‑mining exports, electricity production, and food distribution in 2024 and beyond; post‑explosion construction would further drain foreign reserves.
- The RCF addresses urgent liquidity needs, but authorities should consider a UCT‑quality program to address longstanding challenges and enhance policy credibility; the authorities expressed interest in an ECF‑supported program request.
- Disbursement under the RCF would be used as budget support and included in the revised 2024 budget law as emergency spending to catalyze funding from other sources.
- The BCRG and the Ministry for Finance will establish a framework agreement on responsibilities for servicing financial obligations to the IMF.
- The authorities committed to safeguards for Fund resources, including publication of expenditure reports and procurement contracts (with beneficial ownership information) and an audit by the Court of Audit; they have implemented three prior actions by publishing reports on use of FSW resources and related procurement contracts and by sharing a provisional Court of Audit report on Covid‑19 emergency financing implementation (pending publication by end‑June 2024).

### External financing and catalytic role of Fund support
- The authorities are working with development partners to mobilize additional financing: the World Bank is preparing a DPO ($100 million) and possible top‑up emergency financing; AfDB and IsDB are considering emergency assistance from previously allocated project resources; the private sector is expected to participate in constructing a new fuel storage facility through a PPP.
- Fund exposure to Guinea would increase to 158 percent of quota or 1.7 percent of GDP (Table 7).
- Guinea’s future debt service to the Fund is expected to reach 0.7 percent of exports and 3.4 percent of gross international reserves in 2028, both lower than peak levels at the time of Guinea’s FSW request.
- Guinea’s debt is assessed to be sustainable and at moderate risk of external and overall debt distress, despite recent increases in domestic debt vulnerabilities.

### Data, capacity development, and statistical issues
- Data provision is broadly adequate for surveillance, although significant gaps persist due to capacity constraints.
- Priority statistical improvements include: finalizing the transition to GFSM 2014; implementing the national CPI introduced in 2022; finalizing the rebasing of national accounts data and moving to SNA2008; strengthening debt and external sector data; and building macroframework capacity.
- Guinea’s e‑GDDS reports are published monthly, though dissemination is not timely.
- Authorities are working with STA on a roadmap to subscribing to the SDDS.

### Staff appraisal: macroeconomic effects, fiscal stance, and policy recommendations
- The Guinean economy was hit by a domestic shock (fuel facility explosion) that endangered growth and created urgent financing needs amid political uncertainty.
- Growth averaged 5.1 percent of GDP during 2019‑23 despite global shocks.
- The explosion led to fuel shortages and urgent financing needs for assistance to households, cleaning, and reconstruction; fuel shortages have largely been contained but supply remains unstable and supply costs have increased.
- Growth is expected to be sustained by a resilient mining sector but will decelerate in 2024 by about one percentage point with respect to the pre‑explosion forecast.
- Socio‑political tensions persist following the September 2021 military coup, with uncertainties on the timeline to transition to civilian rule.

Fiscal and debt policy recommendations
- Fiscal policy in 2024 is expected to be relaxed temporarily due to the explosion, with the fiscal deficit expected to widen to 3 percent of GDP, partly reflecting the government response.
- Fiscal priority should be mobilizing domestic revenues, especially from the mining sector.
- Strengthening cash management is critical to limit spending to available resources and avoid central bank financing, banks’ exposure to the government, crowding out of bank credit to the private sector, and accumulation of payment arrears.
- Over the medium term, the fiscal deficit should be brought down in 2025 and returned to the fiscal anchor at 2.5 percent of GDP throughout 2026‑27.
- Priorities include modernizing tax and customs departments, enforcing the reference price decree, ensuring mining companies respect agreements, implementing the new decree on the legal framework for investment projects, introducing program budgeting, and exploring a framework for managing mining resources (including setting up a stabilization fund).
- Authorities are encouraged to pursue prudent external borrowing policies, maximize concessional financing, avoid repeated domestic arrears, and improve debt management with Fund TA.

Social, gender, and structural recommendations
- Redirecting more resources to infrastructure, human capital, and social protection would strengthen growth and reduce poverty.
- The third National Gender Policy (PNG III, 2024‑29) should prioritize preventing early girl school dropouts and empowering women.
- Strengthening the social protection system, building on FSW progress in upgrading the transfer framework, will facilitate targeted interventions to mitigate impacts of the fuel facility explosion and accompany removal of untargeted fuel and electricity subsidies.

Monetary, financial sector, and governance recommendations
- The BCRG should remain vigilant to control inflation in the context of increased inflation expectations related to the explosion; it foresees a gradual reconstitution of reserves requirements and signaled readiness to adjust the policy interest rate as needed.
- Progress is needed on issues raised in the 2023 safeguards assessment of the BCRG.
- Authorities are encouraged to strengthen governance and transparency by providing adequate staffing to the Court of Audit (within the revised 2024 budget law) and implementing EITI recommendations.
- Regarding AML/CFT, authorities should improve effectiveness in line with GIABA recommendations, finalize and implement the risk‑based supervisory framework, address deficiencies in technical compliance, submit the second follow‑up report to GIABA as planned, and finalize the framework for risk‑based supervision.
- Minimizing tax exemptions in future mining conventions, based on the Simandou convention, will help boost investor confidence.

Simandou and climate resilience
- Proper management of the Simandou project and efforts to adapt and mitigate climate change would substantially increase Guinea’s potential.
- The Simandou project is expected to increase employment and economic activity; spending additional tax revenues on education and infrastructure could boost productivity and diversify the economy.
- Early investment in resilience infrastructure would help adapt to climate change; sustainable expansion of the renewable energy sector would help mitigate emissions.
- Authorities should ensure the commercial viability of the Souapiti hydropower dam and the sustainable expansion of Guinea’s renewable energy.

Staff support for RCF request
- Staff supports the authorities’ request for the RCF with access of 25 percent of quota (SDR 53.55 million) and use of its resources for emergency spending to mitigate impacts of the fuel explosion, including higher fuel import costs, repair of damaged buildings, assistance and relocation of impacted households, and reconstruction of a new fuel storage facility that meets high security standards.
- A medium‑term Fund arrangement could help address structural challenges and play a stronger catalytic role; staff welcomes the authorities’ intention to request a UCT arrangement in the near term.

*Source: IMF staff report excerpt.*

### 54.      Staff recommends that the next Article IV consultation with Guinea be held on the

### Staff recommends that the next Article IV consultation with Guinea be held on the standard 12-month cycle.

### Petroleum product prices, subsidies, and energy sector
- Gasoline prices converged to the official price of 12,000 GNF/Liter in 2023.
- Fuel subsidy dynamics:
  - Fuel subsidies (foregone revenues) declined from a peak in 2022.
  - Subsidies to the electricity sector (EDG) absorbed around 60 percent of mining revenue in 2023.
- Revenue measures noted include increasing revenue from different taxes, including the special tax on petroleum products (TSPP).

### Fiscal revenues, expenditures, and public finances
- Total government revenues are low compared to regional and global peers (figures shown in comparative charts).
- Table 3b (percent of GDP) highlights:
  - Total revenue and grants: 14.7 percent (2024 Act.) and projected 14.0 percent (2028).
  - Revenue: 14.0 percent (2024 Act.) and projected 13.9 percent (2028).
  - Tax revenue: 12.9 percent (2024 Act.) and projected 12.1 percent (2028).
  - Non-mining revenue: 10.9 percent (2024 Act.) and projected 9.5 percent (2028).
  - Capital expenditure: 3.7 percent (2024 Act.) rising to projected 6.3 percent (2028).
  - Basic fiscal balance: 0.6 percent (2024 Act.) and projected 0.3 percent (2028).
  - Overall balance including grants: -0.3 percent (2024 Act.) deteriorating to -2.4 percent (2028).
- Table 3a (GNF billions) shows:
  - Total revenue and grants: 18,166 (2024 Act.) to projected 55,314 (2028).
  - Total expenditure and net lending: 18,498 (2024 Act.) to projected 64,724 (2028).
  - Wages and salaries: 4,430 (2024 Act.) to projected 15,433 (2028).
  - Interest on debt: 577 (2024 Act.) to projected 3,653 (2028).
  - Domestically financed capital expenditure: 2,766 (2024 Act.) to projected 15,851 (2028).
  - External financing (net): 2,148 (2024 Act.) to projected 5,192 (2028).

### Real sector developments and outlook
- GDP growth and components (Table 1, annual percent change):
  - GDP at constant prices: 5.6 (2019 Act.), 4.7 (2020 Act.), 5.6 (2021 Act.), 4.0 (2022 Act.), 5.7 (2023 Prel.), projected 4.1 (2024), 5.6 (2025), 5.8 (2026), 5.6 (2027), 5.6 (2028).
  - Mining sector: 3.5 (2019), 27.5 (2020), 2.9 (2021), 6.8 (2022), 9.4 (2023 Prel.), projected 7.6 (2024), 10.7 (2025), 11.7 (2026), 10.7 (2027), 10.6 (2028).
  - Non-mining: 6.0 (2019), 0.2 (2020), 6.3 (2021), 3.3 (2022), 4.8 (2023 Prel.), projected 3.1 (2024), 4.2 (2025), 4.0 (2026), 4.0 (2027), 4.0 (2028).
- Selected indicators (charts): passenger arrivals recovered in 2022 to pre-pandemic levels; some non-mining indicators showed fragility in early 2022.
- Mining production and mining sector growth may slow in 2024 as gold output growth weakens amid fuel shortages.

### Fiscal balances, financing, and public debt
- Overall and basic fiscal balances are projected to deteriorate in 2023 (charts and tables).
  - Overall balance (percent of GDP): -3.5 to 1.5 ranges shown in figure; Table 3b indicates overall balance including grants: -0.3 (2024) and projected -2.4 (2028).
- Financing and borrowing:
  - Net government borrowing (excl. recapitalization) charts show increased issuance of T bonds to commercial banks in 2023.
  - Table 1 projections for Public and Publicly Guaranteed Debt: projected decline in debt ratios over projection period (charted).
- Debt metrics (Table 1, memorandum):
  - External public debt, incl. IMF: 20.0 (2019 Act.), 28.1 (2020 Act.), 22.6 (2021 Act.), 21.4 (2022 Act.), 19.7 (2023 Prel.), projected 21.2 (2024) ... projected 23.9 (2028).
  - Total public debt, incl. IMF: 38.2 (2019 Act.), 47.4 (2020 Act.), 42.4 (2021 Act.), 40.1 (2022 Act.), 40.3 (2023 Prel.), projected 39.3 (2024) ... projected 37.5 (2028).

### Inflation, monetary developments, and banking sector dynamics
- Inflation:
  - Average CPI inflation: 9.5 (2019 Act.), 10.6 (2020 Act.), 12.6 (2021 Act.), 10.5 (2022 Act.), 7.8 (2023 Prel.); projected 11.0 (2024) and subsequent years in Table 1.
  - Inflation has declined significantly in 2023 in part owing to lower food price pressures (chart).
- Monetary aggregates and credit:
  - Reserve money and broad money trends shown; reserve money growth and broad money (M2) moderated as government relied less on BCRG advances.
  - Commercial bank lending shares: bank financing to government increased significantly while growth of bank credit to private sector decelerated (chart).
- Financial soundness indicators (Table 5, end-of-period snapshots through Q4 2023):
  - Regulatory capital to risk-weighted assets: 15.4 (2019), 14.0 (2020), 218.47 (?) [value formatting in source], 14.4 (2022), quarterly values Q1–Q4 2023: 16.98, 16.90, 16.14, 15.31.
  - Nonperforming loans to total gross loans: 9.90 (2019), 9.38 (2020), 9.21 (2021), 8.77 (2022), Q4 2023 = 8.95.
  - Return on assets and equity, interest margin, and liquidity ratios are reported through Q4 2023 in Table 5.

### External sector and balance of payments
- Current account and reserves:
  - The current account widened significantly in 2022 while reserves rose; reserves declined in 2023 amid central bank guarantees for oil imports (charts).
  - Table 2 (US$ millions): Current account including official transfers: -2,085 (2019 Act.), -2,276 (2020 Act.), -403 (2021 Act.), -1,687 (2022 Act.), -1,993 (2023 Prel.), projected -2,709 (2024), -2,722 (2025), -2,517 (2026), -2,425 (2027), -2,757 (2028).
  - Gross available reserves (US$ millions): 1,245 (2019), 1,365 (2020), 1,774 (2021), 2,238 (2022), 1,973 (2023 Prel.), projected 1,893 (2024) ... projected 2,507 (2028).
  - Gross available reserves (months of imports): 2.1 (2019), 2.5 (2020), 2.8 (2021), 3.4 (2022), 2.5 (2023 Prel.), projected 2.2 (2024) ... projected 2.3 (2028).
- Exchange rate and foreign exchange market:
  - Real effective exchange rate (REER) appreciation trend continued in 2023 (chart, 2010=100 index).
  - GNF remained appreciated relative to early 2020 while other currencies exhibited more depreciation pressure (nominal exchange rate charts).
  - BCRG was a net buyer of foreign exchange in the auction market in 2023 (chart).
- External financing requirements and sources (Table 6):
  - FY2024 total requirement (current account deficit): 12,709.5 (US$ millions), 10.6 percent of GDP.
  - Total sources FY2024: 2,545.4 (US$ millions), 10.0 percent of GDP.
  - Financing gap and additional financing sources are detailed with pre-blast and relative-to-pre-blast comparisons (Table 6 values preserved as presented).

### IMF exposure, capacity to repay, and program-related indicators
- Table 7 (SDR millions, as of March 14, 2024) summarizes Fund obligations and capacity indicators:
  - Credit outstanding (existing credit): 303.09 (2022 Actual), 322.30 (2023 Actual), 284.73 (2024 Projection), and multi-year projections through 2033.
  - Percent of quota and percent of GDP and percent of gross foreign available reserves for IMF obligations are provided for 2022–2033 in Table 7.
  - Total payments to the IMF (annual) and ratios to exports and reserves are reported in Table 7.

*Sources: Guinean authorities; IMF staff calculations and projections; charts and tables from the IMF staff report.*

### Annex I. Potential Economic Impact of the Fuel Depot Explosion

### Annex I. Potential Economic Impact of the Fuel Depot Explosion

### Event summary and immediate response
- Explosion at Guinea’s main fuel terminal on December 18, 2023, in central Conakry.
- Human and household impact:
  - Official death toll: 25 deaths.
  - Injured: 457 (as of February 12, 2024).
  - Affected households: 2,141.
- Damage radius: destruction in a radius of about a mile in the government and business district.
- Immediate authorities’ actions that eased shortages:
  - Fast construction of a temporary unloading terminal.
  - Organization of trucking from Sierra Leone.
  - Partial fixing of the pipeline connecting tankers to a second storage facility for diesel and fuel oil.
- Operational and safety caveats:
  - Temporary measures impose additional costs due to trucking and “floating storage”.
  - If unloading in provisional facilities is not managed efficiently and safely, there could be new shortages, accidents, and health hazards.

### Assumptions on fuel supply shocks and logistics in 2024–2026
- Staff projections assume an average 8.1 percent shortage of oil products in 2024 compared to a baseline demand that grows in line with the economy.
- Key assumptions:
  - Imported quantities of gasoline and consumption decline on average by 12.2 percent in 2024 relative to baseline.
  - Imported quantities of diesel and other oil products decrease on average by 5.6 percent in 2024 relative to baseline.
  - Most oil supplies in 2024 shipped by tankers using the temporary terminal and the partially fixed pipeline.
  - Assumed that 10 percent of gasoline supplies need to be trucked from Sierra Leone (in line with SONAP).
  - Construction of the temporary unloading terminal costs about US$1.2 million.
  - Additional costs:
    - Trucking gasoline from Sierra Leone: about US$16 per barrel.
    - Renting a tanker as floating storage: about US$4.5 per barrel on average.
  - 2025 assumptions:
    - Fuel shortages ease as trucking markets adjust; oil consumption and oil imports return to a baseline that grows in line with the economy.
    - Temporary terminal allows effective gasoline imports of about 9,200 barrels per day by tankers; 22 percent of gasoline imports are trucked in 2025 (share increases in following years).
    - Diesel and other products are fully shipped by tankers.
  - Construction of the new oil storage and import terminal completed at the end of 2026.
- Note: Numbers exclude the import terminal in Kankan, which is used by the bauxite mining industry.

### Estimated fuel supply shortages in 2024 (Text Table 1)
- Gasoline:
  - Baseline demand (barrels per day): 11,156
  - Imports: provisory terminal (b/d): 8,851
  - Imports: trucks from Sierra Leone (b/d): 939
  - Shortage (%): 12.2
- Other oil products:
  - Baseline demand (b/d): 18,198
  - Imports: old terminal (b/d): 17,179
  - Shortage (%): 5.6
- Total oil products:
  - Baseline demand (b/d): 29,354
  - Imports (b/d): 26,969
  - Shortage (%): 8.1
- Notes from the table:
  - Gasoline baseline demand assumes 4.1 percent growth.
  - Imports through the provisory terminal assume 4.5 days per week of unloading due to slow unloading and congestion as only one tanker can land.
  - Assumed that 10 percent of gasoline supplies are trucked on average.

### Macroeconomic impacts (projected deviations from baseline without the incident)
- Output and growth:
  - Real GDP growth: 1.2 percentage points lower in 2024.
  - Real mining GDP growth: slows to 7.6 percent in 2024, 2.2 percentage points lower than without the incident (fuel shortages in the gold mining sector).
  - Non-mining GDP growth: decelerates to 3.1 percentage in 2024, 0.9 percentage points lower than baseline.
  - Transportation sector: 1.9 percent contraction in 2024.
  - No indirect and second-round effects are modeled.
- External sector and trade:
  - Current account deficit: deteriorates to 10.6 percent of GDP in 2024, 1.7 percentage points higher than without the incident.
  - Fuel import expenses: 11 percent higher than without the incident (higher effective gasoline import costs due to trucking and floating storage more than offset lower fuel import quantities).
  - Imports of intermediate and capital goods (partly due to post-explosion reconstruction): 3 percent higher.
  - Exports: 2 percent lower than in the pre-explosion baseline, mainly due to lower gold exports.
- Reserves and fiscal position:
  - Gross international reserves could fall to 2.0 months of imports by end-2024 without financial support by the IMF and others (0.4 percentage points lower than in a baseline without the incident).
  - Fiscal deficit: worsens from 2.4 (pre-blast scenario) to 3.0 percent in 2024, due to higher expenditures and lower non-mining revenue.
- Prices and inflation:
  - Average inflation expected to be 11.0 percent in 2024, 3.1 percentage points higher than in the baseline without the incident.
- Persistence and spillovers:
  - Economic effects spill into 2026 because the cost of importing gasoline will remain higher.

### Policy implications and recommended actions
- Authorities should undertake additional actions to prevent shortages, accidents, and health hazards related to provisional unloading and trucking operations.
- Continue and accelerate reconstruction and the timely completion of the new oil storage and import terminal (completion assumed end-2026).
- Monitor and manage the safety and efficiency of temporary unloading operations to avoid new shortages and accidents.
- Consider financial support and coordination with partners (IMF and others) to prevent reserve depletion and to mitigate fiscal pressures.

*International Monetary Fund — Annex I. Potential Economic Impact of the Fuel Depot Explosion*

### 5.      The implementation of the FSW by public entities has also helped reduce food

### 5.      The implementation of the FSW by public entities has also helped reduce food 

### Food-security implementation and targeting
- Qualitative assessment: implementation of the various FSW-financed programs is likely to have helped mitigate food insecurity.
- Corn imports: FODA financed corn imports of 10,000 tonnes that were sold at an affordable price to operators in the poultry sector, mitigating the strong impact of the surge in corn prices.
- Seed provision: The Agricultural Fund acquired 2,500 tonnes of rice seeds and 1,300 tonnes of corn seeds made available to farmers through seed banks in 35 major agricultural centers across Guinea.
- Nutritional inputs: In-kind distribution of specialized nutritional inputs via health structures is ongoing to ensure treatment and prevention of moderate to acute malnutrition in children aged 6-59 months, benefiting a total of 60,000 people.
- Indigent fund: The indigent fund has provided about 1,901 healthcare vouchers—to finance medical and pharmaceutical invoices—in the 8 administrative regions (of which 848 people were fully covered).

### Agricultural productivity, assets, and resilience
- Fertilizer costs: FSW financing helped keep farmers’ fertilizer costs down.
- Tractors and machinery:
  - Purchase of 32 tractors with FSW resources led to a 35-percent increase in the fleet tractors available to farmers through agricultural service centers (CPA).
  - The FSW financed 30 additional harvesters to help reduce post-harvest losses of rice and corn.
  - The increased use of tractors and harvesters was optimized through GPS tracking systems for real-time monitoring and effective use.
- Rice processing: FSW funds were used to operationalize the Sinko rice mill with a capacity of 100 tonnes per day (includes purchase of spare parts and provision of working capital).
- WFP resilience program: Through its resilience program, the WFP strengthened the ability of 10,000 people to better face future crises by increasing agricultural productivity, generating income, and improving governance of the agricultural sector.
- Pilot crop program: Vulnerable populations were empowered through pilots on the farming of the Tongil rice from Korea—which can be harvested every 3 months (instead of six months for the local rice)—across 109 villages over 300 hectares.
- Note on financing design: A significant portion of FSW funds was allocated in the form of repayable loans (e.g., seeds banks, financing) to promote lasting resilience of populations to price shocks.

### Reporting, governance, audits, and transparency
- Reporting compliance:
  - The WFP complied with its annual reporting requirements in its 2023 report.
  - FODA issued periodic reports and has since published monthly reports on its website since February 2024, along with procurement documents and awarded contracts.
  - FDSI and ANIES published monthly reports and awarded contracts on their websites by end-March (year implied by context).
- Beneficial ownership and procurement transparency:
  - As of April 17th, FODA, ANIES, and FDSI finalized information on beneficial ownership and published it (along with related procurement information and all awarded contracts to date) on their respective websites and the Ministry of Budget’s website, as committed in the letter of intent (LOI) of the RCF request.
- Audits:
  - The Court of Account launched the audit process of FSW implementation by public entities for the budgetary period 2023. Consultations and initial findings were tentatively planned for March 2023 and May 2024, respectively.
  - Implementation reports suggest good transparency and reporting practices pending findings of audits already launched; the WFP will follow its own internal review and audit processes.
- Implementation timing and coordination:
  - The actual implementation of FSW programs could have started faster, given the emergency rationale of the RCF/FSW.
  - There has been limited coordination including on the targeting of program beneficiaries across implementing entities.
  - The implementation showcased programs Guinea could adopt as part of a national strategy: national school feeding programs, revolving funds, and programs to empower local populations.
- Key lessons:
  - Targeted programs can make a big difference in alleviating food insecurity and should continue to be financed by budgetary resources.
  - Guinea should have structures in place to scale up programs quickly during emergencies.

### Excerpts of commitments and implementation status (selected findings)
- Reporting commitments: WFP complied with annual reporting; public agencies required to report monthly have started to provide monthly reports after initially issuing periodic reports.
- Publication and procurement: All procurement processes and contracts related to FSW expenditures for fiscal year 2023, with information on beneficial owners of winning companies, were published on the websites of the Ministry of Budget and implementing entities.
- Treasury Single Account (TSA): An MoU between the MoF and the BCRG implemented the opening of a “Food Shock Fund” account within the TSA defining accounting rules and procedures and control measures.
- Timeliness issues:
  - Monthly, quarterly, and annual comprehensive budget execution reports were partly implemented so far due to delays in program start and lack of inter-agency coordination.
  - Disbursements to implementing entities were delayed due to administrative procedures and the time needed to prepare MoU, identify programs, and brief implementing entities.
  - A full audit by the Court of Account at the end of fiscal year 2023 was implemented partly due to delays in transferring funds to implementing entities; the Court of Account initiated the audit of FSW implementation in fiscal year 2023 in March 2024.

*Source: IMF staff report excerpt on Guinea (FSW implementation, reporting, governance, and related findings).*

### 4.      Background. Guinea’s currency appreciated strongly in 2022. The BCRG’s a de-jure exchange

### 4–D. Selected Background, Assessments, and Policy Issues

### Exchange rate and real effective exchange rate (REER)
- The BCRG’s de-jure exchange rate arrangement is a managed floating regime; since September 2022 the exchange rate is stabilized within a 2 percent band against the US-Dollar.
- In 2022, the real effective exchange rate was on average 25.9 percent above 2021 levels.
- Assessment:
  - The real exchange rate is substantially overvalued.
  - Based on the EBA-lite current account model, the overvaluation is 17.9 percent.
  - It amounts to 50.6 percent above its model-implied norm when applying the EBA-lite REER model.
  - Possible drivers of the 2022 appreciation: increase in foreign direct investment (FDI), pricing in of further FDI, and the Central Bank of the Republic of Guinea (BCRG)’s gold operations (exports of artisanal gold that BCRG re-imports after processing as monetary gold).
  - Risk: the real exchange rate strength could lead to a loss of external competitiveness.
- Model divergence note:
  - The EBA-lite REER model tends to be less accurate than the current account-based model.
  - The divergence could reflect Guinea’s reliance on commodity exports combined with a low share of consumption good imports, reducing the elasticity of the current account to REER changes.

### Capital and financial accounts: flows and assessment
- Background and outlook:
  - FDI and project loans are expected to increase in the coming years due to rebuilding of fuel infrastructure and large investments in mining, electricity, and transportation, notably bauxite mining.
  - FDI inflows normalized from peaks in 2017–2020 (Souapiti hydroelectric dam period).
  - An upside risk to FDI is the Simandou iron ore project and its potential economic spillovers.
  - Strong outflows linked to mining companies may continue to moderate the strength of the financial account.
- Assessment:
  - Roll-over and liquidity risks seem low given that capital inflows have taken the form of relatively stable FDI and project loans.
  - The overall balance of payments was in surplus in 2022 but moved to a deficit in 2023.
  - Increases in reliance on non-concessional or less concessional borrowing could lead to higher debt service payments and the emergence of roll-over risks.

### FX intervention and reserves levels
- Recent developments:
  - The stock of international reserves grew in 2022 but deteriorated substantially in 2023; the BCRG was mostly a net buyer since 2021.
  - Government sales of licenses for telecommunication and mining boosted reserves in the first half of 2022, with reserves peaking at 3.4 months of next year’s expected imports in December 2022.
  - Net outflows since then led reserves to decline to a trough of 2.1 months of expected imports as of November 2023.
  - Key driver of decline: BCRG guaranteed operations by the national petroleum company Société Nationale des Pétroles (SONAP) to import fuels during a period of elevated international oil prices.
  - Reserves uptick: 2.4 months of expected imports as of the end of January 2024; one driver was phasing out BCRG guarantees for oil imports and effective implementation of regulation requiring repatriation of parts of mining revenues.
- Outlook and risks:
  - In the outlook, reserves are estimated to increase slightly to 2.6 months of expected imports in 2027 amid exports rising slightly faster than imports.
  - However, reserves are subject to downside risks: fallout from the explosion of the fuel storage and import facility, volatility in repatriation inflows, and potential re-use of BCRG guarantees for fuel imports if international oil prices rise.
  - Even assuming financial support from the IMF and others, reserves are projected to decline to 2.2 years of imports at the end of 2024.
- Assessment and recommendation:
  - Guinea’s reserves have generally been broadly adequate for precautionary purposes but have become a matter of concern recently.
  - Staff recommends minimum reserves of 3.3 months of imports for African countries as a benchmark.
  - The latest available data point suggests 2.4 months of imports in January 2024 with downside risks.
  - Staff recommends rebuilding the reserves in the short run.

### Financial sector and sovereign-bank nexus
- Bank exposure to government securities rose to up to 28 percent of total assets in October 2023, from 21.6 percent one year earlier.
- Risk: an intensified sovereign-bank nexus could cause a large loss in banks’ balance sheets if the government’s balance sheet weakens, triggering a “doom loop”.
- Policy recommendation: keep monetary financing under its limits and step-up government securities market development.

### Risk Assessment Matrix (RAM) — selected risks, likelihoods, impacts, and policy responses
- Conjunctural/global risks:
  - Intensification of regional conflicts: Likelihood High; Expected impact Medium. Policy responses: intensify structural reforms, create fiscal space to scale up priority spending.
  - Commodity price volatility: Likelihood High; Expected impact High. Policy responses: allow exchange rate to buffer external price shocks; condition sale of reserves to rule-based FX intervention policy.
  - Abrupt global slowdown (including China property sector risk): Likelihood Medium; Expected impact High. Policy response: intensify structural reforms to support diversification.
- Structural risks:
  - Extreme climate events: Likelihood Medium; Expected impact Medium. Policy responses: build resilience for adaptation in agriculture and rural livelihoods; implement 2023 C-PIMA recommendations.
- Domestic risks:
  - Political and social instability: Likelihood High; Expected impact Medium. Policy response: improve social dialogue and inclusiveness of government policies.
  - Extended fuel shortages: Likelihood Medium; Expected impact High. Policy response: rapid restoration of fuel import and storage infrastructure.
  - BCRG’s monetary policy miscalibration: Likelihood Medium; Expected impact Medium. Policy responses: implement prudent monetary policy (avoiding abrupt loosening); scale up investment in agriculture; reduce gradually untargeted subsidies on fuel and energy; take a data-dependent approach for monetary policymaking.
  - Intensified sovereign-bank nexus (see above): Likelihood Medium; Expected impact Medium. Policy response: keep monetary financing under its limits and step-up government securities market development.

### Mining revenue losses, reforms, and enforcement
- Aggregate estimated losses and recovery potential:
  - Annual revenue losses for 2019-20 are tentatively estimated at 2¼ percent of GDP.
  - Of that, 1.7 percent of GDP could be recuperated through strengthened tax audits to ensure mining companies declare actual sale prices.
- Mining tax revenue trends:
  - Mining tax revenue declined from around 3 percent of GDP in 2010-2012 to 2.1 percent of GDP in 2023.
  - Mining tax collection did not keep pace with mining sector growth since 2016; drivers include tax exemptions and transfer mispricing and thin capitalization schemes.
- 2022 decree on reference price for bauxite:
  - July 2022 decree sets a reference price for the FOB export price for Guinea’s bauxite based on the CBIX index for sale price delivered in China; prices below reference can be used if justified to tax administration by proper documentation.
  - The decree was applied starting September 2022 after a two-month grace/explanation period.
  - IGF-assisted computations for the last quarter of 2022 set bauxite reference prices in the range of US$38.5-54.6 per metric tonne, compared to declared export prices of less than US$15 by some operators prior to the decree.
  - Post-decree declared prices increased but remained below computed reference prices; available data for the last quarter of 2022 suggest mispricing rates between 11 percent and 38 percent.
  - An intergovernmental committee estimated potential misreporting by bauxite companies on turnover of some $580 million over the last four months of 2022.
- Implementation and enforcement constraints:
  - Limited access to the database on bauxite prices (previously provided by GIZ) hinders calculation of adequate reference prices.
  - Tax department staff capacity constraints in analyzing mining companies’ financial accounts limit meaningful tax audits.
  - Risk of mis-reporting of quality and quantity of bauxite exports; National Geology Laboratory was instrumental in certification but was seriously damaged by the gasoline deposit explosion, reducing quality-control capacity.
- Policy and capacity development recommendations:
  - Conduct tax audits on companies suspected of misreporting; use CIT returns for 2023 (expected in April 2024) to better evaluate decree implementation.
  - Further IMF capacity development in revenue administration is recommended, including:
    - (i) International taxation: support on effective implementation of the reference price, broader transfer pricing issues, treaty/withholding tax abuses, and tax auditing of mining companies (in coordination with IGF/OECD).
    - (ii) Financial monitoring: resume work on financial monitoring of mining projects to improve revenue forecasting and identify tax risks for audits.
- Coverage of loss estimates:
  - Revenue losses were estimated for 2019-2020 for 12 companies (9 bauxite, 3 industrial gold) with available data.
  - Companies classified into two convention categories: (i) 8 conventions pre-dating the 2013 mining code; and (ii) 4 conventions signed after the 2013 mining code.
  - Estimates were based on plausible assumptions on costs and prices referenced in Text Table 1.

*Source: Guinean authorities; and IMF staff calculations.*

### 5.      Potential revenue losses are substantial.  Revenue losses for 2019-2020 were tentatively

### 5. Potential revenue losses are substantial

### Estimated revenue losses (2019–2020)
- Total tentatively estimated revenue losses for 2019-2020: around US$640 million.
- Breakdown by year:
  - US$ 275 million in 2019 (2.0 percent of GDP).
  - US$364 million in 2020 (2.6 percent of GDP).
- Loss components:
  - US$ 448 million due to potential transfer mispricing.
  - US$ 71 million due to tax exemptions.
  - US$118 million due to the revenue loss from transfer mispricing on tax-exempted operations.
- Notes on methodology and assumptions:
  - Half of this potential revenue loss (US$330 million) is imputed to only one major bauxite company, attributed to an undervalued sale price of US$ 12 per metric ton.
  - The following taxes are considered in the calculations: the CIT (30 percent), the contribution to local development (0.5 percent of turnover), the extraction tax/the export tax (0.075 percent of the bauxite price based on the LME aluminum price), dividends to the government (15 percent participation), and the withholding tax on dividends (10 percent).
  - These calculations used assumptions on costs and the quality of bauxite and need to be compared with actual information in the tax returns submitted by mining companies to determine the actual revenue loss.
  - The estimated annual revenue loss due to potential transfer mispricing (some 1.7 percent of GDP) could be recovered through strengthened tax audits and strict application of the 2022 decree on the reference price for bauxite.
  - Given that the market price for bauxite used in the authorities’ calculations appears lower than the reference price computed for 2022, the revenue loss from bauxite may be higher.
  - These estimates were conducted under the leadership of the economic and fiscal advisor of Ministry of Mines and Geology.
  - Article 4 of the 2013 mining code provided a transition period in which amendments to the previous conventions would be “negotiated” with the government.

### Key commodity price and cost inputs used (2019 and 2020)
- Deductible costs:
  - Bauxite: US$ per tonne — 18.0 (2019), 18.0 (2020).
  - Alumina: US$ per tonne — 250.0 (2019), 250.0 (2020).
  - Gold: US$ per oz — 1,206.0 (2019), 1,397.0 (2020).
- Prices:
  - Bauxite: US$ per tonne — 32.0 (2019), 30.0 (2020).
  - Alumina: US$ per tonne — 326.9 (2019), 484.4 (2020).
  - Aluminum: US$ per tonne — 1,794.5 (2019), 1,704.4 (2020).
  - Gold: US$ per oz — 1,392.5 (2019), 1,770.3 (2020).

### Policy recommendations on tax exemptions and enforcement
- Strengthen monitoring of tax exemptions and enhance enforcement in case of noncompliance.
- Use audits of tax exemptions to:
  - Ascertain that mining companies have respected their contractual obligations.
  - Assess whether the reasons underlying the granting of tax exemptions are still valid.
  - Ensure that tax exemptions are not automatically renewed at their expiration (for example, holidays period time or clauses allowing full interest deductibility).
- Refrain from granting tax exemptions outside the mining code.
- Strengthen tax audits and strictly apply the 2022 decree on the reference price for bauxite to recover estimated losses from transfer mispricing.

### Artisanal gold sector: taxation and formalization
- Policy and tax history:
  - In 2022, the government introduced a tax of $200 per kilo on individual gold exporters (the 1 percent export tax was suspended in 2016).
  - Due to informal gold trading with neighboring countries, the tax was reduced to $50 per kilo.
- Production trends:
  - Artisanal production declined from 40 tonnes in 2021 to 35.2 tonnes in 2022 and 29.1 tonnes in 2023.
- Formalization measures:
  - Authorities are establishing a survey of artisanal gold mining.
  - An electronic data base of artisanal gold miners will be established in 2024 with support from GIZ, based on a survey conducted by INS.
- Observation: The artisanal gold sector is mostly untaxed and informal cross-border trade has influenced tax policy and collection.

### Simandou iron ore project — macroeconomic and social implications (summary of Annex VIII)
- Project scale and timeline:
  - Production could total almost 120 million mt after completion.
  - Development based on private investments totaling about US$20 billion until 2030.
  - First production planned for the end of 2025, with possible delays.
- Macroeconomic impacts (model-based):
  - If production began in 2025, the level of real GDP would be 26 to 55 percent higher by 2030 compared to a baseline without the project, depending on how potential tax revenues are spent.
  - The project could induce a currency appreciation of around 3 to 5 percent in 2025 and 2 to 4 percent in 2030.
  - Employment could increase by about 4 to 10 percent in 2030.
  - Lower bound estimates assume tax revenues from the project equivalent to 3 percent of GDP would be spent on consumption; upper bound estimates presume they are used for general public investment.
- Poverty and inequality implications:
  - Spending tax revenues equivalent to 3 percent of GDP on infrastructure could lower the poverty rate by 24 percent points.
  - Combining public investment in education with infrastructure reduces poverty even more.
- Policy recommendations related to Simandou:
  - Invest potential tax revenues in education and infrastructure to support higher growth and stronger poverty reduction.
  - Limit tax exemptions for iron ore mining companies and apply a fair export price, especially for firms of the same holding company.
  - Explore transfer pricing reform similar to that implemented for bauxite.
  - Strengthen customs authorities' capacity to control mining exports.

### Natural disasters, climate policies, and resilience investment (summary of Annex IX)
- Climate and disaster context:
  - Natural disasters (especially floods) have become more frequent and severe in Guinea; coping capacity among the lowest.
  - Guinea’s GHG emissions in 2022: agriculture and LULUCF together accounted for 73.4 percent of the total; the energy sector contributed 13.7 percent.
  - The share of CO2 in total GHG emissions averages at 45.3 percent from 2000 to 2022.
  - Annual CO2 emissions experienced a dramatic acceleration in 2014 and have broadly increased since 1965.
- Energy and hydropower:
  - Share of electricity generated with hydro and marine powers stayed above 60 percent since 2016 and increased to 87 percent in 2021.
  - Together with 1 percent from solar, renewables accounted for 88 percent of electricity generation in 2021.
  - The Souapiti Dam has a capacity of 450 MW and is a significant element of Guinea’s hydropower expansion.
- Resilience investment simulations (DIGNAD model):
  - Three scenarios simulated for an ex ante additional 1 percent of GDP investment (2024–2028) with a disaster in 2029:
    - Scenario 1: 1 percent of GDP investment on standard infrastructures financed by concessional debt.
    - Scenario 2: 1 percent of GDP investment on resilient infrastructures financed by concessional debt.
    - Scenario 3: resilient investment financed by grants plus public investment efficiency (PIE) reforms increasing PIE by 20 percentage points.
  - Scenario 3 yields the best macroeconomic outcomes: lower economic damage, lower required ex post reconstruction investment, and the smallest increase in public debt.
- Adaptation and mitigation financing needs and recommendations:
  - Guinea’s National Adaptation Plan would cost at least US$14 billion (more than 70 percent of 2021 GDP) to implement over the medium term (authorities’ estimate).
  - Tapping grants, “windfall revenues” (such as those from Simandou), and concessional financing for resilience investments is crucial to preserve medium-term debt sustainability.
  - Complement financing with reforms to raise public investment efficiency and accelerate implementation of TA recommendations on C-PIMA and climate budgeting.
  - For mitigation: sign and enforce the climate executive decree; engage multilateral partners to design/implement carbon pricing (including Emission Trading System); reduce emissions from agriculture; slow down or reverse deforestation; complete compilation of granular climate data.
  - Accelerate completion of transmission infrastructure to fully utilize Souapiti and other hydropower dams and enhance Souapiti’s commercial viability.
  - Continue expansion into solar energy while avoiding over-capacity through feasibility studies and market analyses.

*Source: IMF staff estimates and analysis in the cited chapter and annexes.*

### 2.      The authorities’ commitment to the implementation of CD recommendations is

### 2.      The authorities’ commitment to the implementation of CD recommendations is

### Capacity constraints and CD strategy
- The authorities’ commitment to implementing CD recommendations is hampered by capacity constraints.
- The CD strategy aims to:
  - Ensure adequate integration of CD recommendations with policy advice in the context of surveillance.
  - Support effectiveness and avoid overlap of CD activities through enhanced coordination with IMF CD departments, AFRITAC West 1, and other CD providers.

### CD priorities and objectives (summary of Table 1)
- Monetary Policy
  - Finalizing the amendments of the BCRG Law to strengthen its governance and oversight autonomy provisions and enhance its decision-making structures.
  - Enhance BCRG’s financial stability function and establish a framework for financial stability surveillance.
  - Improve BCRG’s liquidity management and forecasting.
  - Support the modernization of the monetary policy framework.
- Public Financial Management
  - Enhance the capacity of the Ministry of Finance to plan, implement and sustain PFM reforms.
  - Improve public investment execution, controls, and transparency.
  - Expand the coverage of the Treasury Single Account.
  - Strengthen capacity to manage fiscal risks arising from public autonomous entities and PPP.
  - Improve budget preparation, including the introduction of program budgeting.
  - Improve PIM including climate considerations and investment multiyear budgeting (AE/CP).
  - Introduce climate and gender in public financial management.
- Revenue Administration
  - Expand digital tax management to all taxpayers.
  - Match tax and customs databases.
  - Apply a risk-based approach to detecting non-compliance.
  - Develop a medium-term strategy to prioritize revenue administrative reforms.
  - Strengthen the management, governance arrangements and the core functions of the tax administration, building on the recently concluded Tax Administration Diagnostic Assessment Tool (TADAT).
  - Strengthen the core functions of the customs administration.
- Debt Management
  - Support the development and the functioning of the government debt market.
  - Strengthen debt management capacity, including by improving the formulation and implementation of a sound medium-term debt management strategy.
  - Improve the debt management institutional framework.
- Tax Policy
  - Conduct an audit of tax exemptions in the mining sector to support revenue mobilization.
  - Enforce the existing transfer pricing mechanism in the mining sector, with an emphasis on bauxite.
  - Draft and adopt implementation texts of the new Tax Code.
- Expenditure Policies
  - Improve the quality of expenditure via a reduction in regressive subsidies.
  - Assess the cost for reaching the SDGs in the areas of education, health, and infrastructure (roads, electricity, water/sanitation).
- Government Finance Statistics
  - Finalize the migration of budgetary central government statistics to GFSM 2014.
  - Produce the consolidated TOFE of the general government.
  - Produce the budgetary central government’s statement of operations, the statement of sources and uses of cash, the financial balance sheet, and the statement of debt.
  - Sensitize the authorities on the importance of public finance statistics in evaluating fiscal policies.
- External Sector
  - Improve the quality of BOP statistics, particularly on imports, the financial account, and the artisanal gold sector.
  - Improve mining sector data quality in external sector statistics.
- Real Sector Statistics
  - Improve the timeliness of publication of real sector statistics.
  - Finalize the national accounts rebasing project and develop quarterly national accounts estimates.
  - Improve mining (artisanal gold) and non-mining sector data collection/dissemination.
  - Develop more high-frequency indicators (including the producer price index); improve source data on gold exports.
- Data Transparency and Dissemination
  - Strengthen performance under the e-GDDS and take actions to advance toward the SDDS.
- Governance and Anti-Corruption
  - Implementation of the asset declaration regime.
  - Implementation of risk-based AML/CFT supervision.
  - Strengthening the capacity of the financial intelligence unit (FIU).
  - Amending the BCRG law.
- Macro Frameworks
  - Support the development of macro models and forecasting tools in the Ministry of Planning and the Ministry of Finance to strengthen policy analysis and decision making.
- Frameworks for Crisis Management, Bank Resolution, and Safety Nets
  - Building on the amendments in the banking law, TA will be provided to implement the special bank resolution regime, including capacity development, resolvability analysis and drafting of resolution strategies.
- Emergency Liquidity Assistance
  - Operationalize the ELA framework.

### Key findings, commitments, and policy responses in the Letter of Intent (May 6, 2024)
- Fire incident and impact
  - Night of December 17 to 18, 2023: fire at main oil depot in Kaloum district.
  - Human and social impact: 24 people killed; 454 injured; some 2,141 households affected; numerous people displaced.
  - Economic disruptions: closures of gas stations and schools; three-week stoppage in Kaloum district starting December 19, 2023; significant effects on movement of persons, goods, and agricultural products.
  - Forecast revisions: growth forecasts for 2024 revised downward 1.6 percent; inflation expected to increase by 3.2 percentage points to 11 percent in 2024.
  - Fiscal and external impact: fiscal deficit could reach 3 percent of GDP in 2024; current account deterioration of 10 percent of GDP expected; foreign exchange reserves decline to 2.5 months of imports.
- Request for IMF support
  - Request emergency financial assistance equivalent to 25 percent of our quota, or SDR 53.55 million, in the form of budgetary support under the Rapid Credit Facility (RCF).
  - Emergency disbursement intended to shore up budgetary resources for the fire response plan.
- Use of emergency resources (planned allocations)
  - US$18.5 million for decontamination of the site and start of work to build a modern fuel depot (assessment of decontamination cost to be prepared before June 2024).
  - US$13 million for social transfers in cash and in kind to the households affected, including US$5 million for the distribution of food stuffs and health care.
  - US$35 million for the construction of housing and school and health infrastructure and the repair of damaged public buildings.
  - US$5 million to help households recover using lines of credit from banks to finance income-generating microprojects, including necessary safeguard measures.
- Policy adjustments and commitments
  - Continue negotiations with Côte d’Ivoire and Sierra Leone and develop new oil supply mechanism from the port of Conakry.
  - Hold selling prices of petroleum products steady to mitigate the price shock.
  - Launch national mobilization to provide free care for victims.
  - Seek concessional financing where possible.
  - External financing mobilization to implement response plan; commit not to introduce new policies that would aggravate balance of payments difficulties; continue allowing exchange rate flexibility.
  - BCRG to limit foreign exchange interventions while following rule-based intervention strategy.
  - Maintain budget financing by the BCRG within statutory limits of 5 percent of the average budgetary revenue over the last three years, except under Article 36 exceptional circumstances; IMF staff will be consulted beforehand.
  - BCRG preparedness: (i) adjust the policy rate in the context of bank refinancing operations; (ii) refrain from including future bond issues held by banks in required reserves and instead adjust the adequate rate of required reserves; (iii) restore required reserves to support price stability.
- Fiscal and debt sustainability stance
  - Overall fiscal deficit targeted at 3 percent of GDP in 2024.
  - Bring fiscal deficit below 3 percent of GDP in 2025 and below the medium-term objective of 2½ percent of GDP thereafter.
  - Plans to improve execution of infrastructure investment and prepare a plan to eliminate costly fuel and electricity subsidies while strengthening social protection.
- Prior actions for transparency and governance
  - Publish all public procurement contracts for management of Food Shock Window (FSW) resources on Ministry of the Budget website, including selection procedures and beneficial ownership.
  - Publish all monthly and/or quarterly reports prepared between December 2022 and end-March 2024 on FSW resource use on the website.
  - Share with IMF staff the provisional report of the Court of Audit on implementation of the Court’s recommendations on Covid-19 emergency financing, pending publication by end-June 2024.
- Additional RCF transparency measures (commitments)
  - Prepare an action plan by June 30, 2024, for completion of the audit by the Court of Audit on FSW resources, with evaluation by end-December 2024.
  - Publish full final report of the Court of Audit on implementation of recommendations of its audit of the Covid-19 resources on the Court’s website by end-June 2024.
  - Sign an agreement with the BCRG to open an account in the Single Treasury Account for the RCF resources for the Kaloum fire, specifying accounting procedures, rules, and accountability and control measures.
  - Publish complete budget execution reports on expenditures executed on RCF resources every three months and once a year, no later than 30 days following the end of the quarter, in addition to annual reports.
  - Each quarter publish all public procurement contracts related to RCF resources on the Ministry of the Budget website, including supplier selection procedures and, consistent with the FATF standard, information on beneficial ownership of persons or entities awarded such contracts, based on the FATF definition of beneficiary companies; explore adding a legal definition and requirement to collect and publish beneficial ownership information consistent with FATF Recommendation 24.2024 and publish the results.
  - Ensure audit reports highlight resources received and their use based on the GFSM 2014 budget nomenclature.
  - Deposit RCF resources in the Single Treasury Account and disburse payments for all related expenditures from the Single Treasury Account.
  - Adopt proper budgeting of targeted programs, with specific tagging to make them visible and transparent.
- Safeguards and central bank governance commitments
  - Abide by amendments of the BCRG law prepared in consultation with IMF staff to strengthen BCRG autonomy and governance bodies by June 2024.
  - Strengthen governance and supervision of the BCRG by adopting the bylaws of the BCRG Board of Directors and the Cabinet Council (Conseil de Cabinet) by June 2024.
  - Gradually eliminate purchases of unrefined gold by March 2025 and in the interim start implementing risk mitigating measures proposed by external auditors.
  - Ensure timely preparation of the audited financial statements of the BCRG and authorize IMF staff discussions with the central bank’s external Audit and access to external audit reports.
  - BCRG and Ministry of Finance to establish a framework agreement on responsibilities for servicing financial obligations to the IMF.
- Public financial management strengthening
  - Strengthen resources of higher audit bodies (Court of Audit, Office of the Inspector General of Finance, Office of the State Inspector General) and activities of the Court for the Prosecution of Financial and Economic Offenses (CRIEF).
- Commitment to continued IMF engagement
  - Continue close cooperation with IMF towards an arrangement on a structural program as soon as possible; accept that structural reforms will be necessary and commit to continuing discussions, technical assistance, and possibly a formal program.
- Transparency for publication
  - Authorize the IMF to publish the letter of intent and the staff report for the RCF disbursement request.

### Debt sustainability assessment (selected highlights)
- Guinea remains at moderate risk of external debt distress.
- Overall public debt distress risk assessed as moderate, though mechanical risk signals point to a high risk; judgment applied because breaches of thresholds for PV of overall public debt-to-GDP ratio are marginal in 2024-25 and within decimal point in 2026-27.
- Start of exploitation of the Simandou project, currently anticipated by end-2025 and not yet included in the baseline, can be an important mitigating factor if realized.
- Total debt service-to-revenue ratio is on a declining trend.
- Stress tests indicate debt vulnerabilities would increase under adverse shocks; under the most extreme stress test (negative shock to exports), all solvency and liquidity indicators breach thresholds for prolonged periods.
- Public debt stood at 40.3 percent of GDP at end-2023, with domestic debt exceeding external debt which declined to 19.7 percent.
- The Composite Indicator (CI) for Guinea is 2.51 based on the October 2023 WEO and the 2022 CPIA index, classifying Guinea’s debt-carrying capacity as weak.
- Risk rating summary (May 6, 2024):
  - Risk of external debt distress: Moderate
  - Overall risk of debt distress: Moderate
  - Granularity in the risk rating: Some space to absorb shocks
  - Application of judgment: Yes

*Source: 1ginea2024001 - 2.      The authorities’ commitment to the implementation of CD recommendations is (IMF PDF).*

### 1.      The definition of public debt used in this DSA covers central government debt, central

### 1ginea2024001 - 1.      The definition of public debt used in this DSA covers central government debt, central

### Definition of public and publicly guaranteed (PPG) debt
- Coverage: central government debt, central government-guaranteed debt, and central bank debt contracted on behalf of the government.
- Exclusions: other elements of public sector debt (e.g., non-guaranteed SOE debt) not included due to data constraints and assessed as not relevant; local government debt exposure limited; non-guaranteed SOE debt likely small.
- Souapiti hydropower loan:
  - Loan amount: US$1.2 billion, about 10 percent of 2018 GDP.
  - Signed on September 4, 2018.
  - Per loan terms the government is the debtor and ultimately responsible for servicing the loan.
  - Grant element: 29 percent.
  - Construction carried out by an SPV (Guinean government 51 percent, China International Water & Electricity Corporation 49 percent); government on-lends and is assumed to service the loan with an income stream from the SPV; no additional collateral pledged.

### Contingent liability tailored stress test (combined)
- Purpose: capture public sector exposure to SOEs, PPPs, financial market shocks, and payments arrears to suppliers.
- Conservative approach given limited data; follows default DSA parameters used in 2022 DSA.
- Aggregate shock to central government debt ratio: 11.2 percent of GDP, composed of:
  - SOE debt shock: 2 percent of GDP.
  - PPP shock: 35 percent of PPP stock, equivalent to 1.33 percent of GDP.
  - Financial market shock: 5 percent of GDP.
  - Arrears to suppliers: 2.9 percent of GDP.

### Recent debt developments (key figures)
- Public debt ratio:
  - 2023: 40.3 percent of GDP.
  - 2022: 40.0 percent of GDP.
- External public debt:
  - 2023: 19.7 percent of GDP (declined from 21.4 percent in 2022).
  - External arrears: 0.6 percent of GDP at end-2023.
- Domestic debt:
  - 2023: 20.6 percent of GDP (up from 18.6 percent at end-2022).
  - Increase driven by resort to longer term Treasury instruments and consolidated central bank liabilities.
- Debt composition and shares:
  - Share of external debt in total debt: 48.9 percent at end-2023 (53.4 percent at end-2022).
  - Multilateral debt: 24.3 percent at end-2023 (26.2 percent at end-2022).
  - Official bilateral creditors: 18.3 percent of total PPG.
  - Commercial creditors: 6.4 percent of total PPG (increase from 5.0 percent at end-2022), mostly owed to ICBC.
- Selected stock figures (end-2023 unless otherwise indicated):
  - Total PPG Debt: 9,265 (percent of GDP: 40.3).
  - Domestic Debt: 4,734 (percent of GDP: 20.6).
  - External Debt: 4,531 (percent of GDP: 19.7).
  - External arrears: 134 (percent of GDP: 0.6).
- Specific creditor notes:
  - IMF disbursement in 2022: SDR 53.55 million (25 percent of Guinea’s quota) under the Food Shock Window (FSW).
  - Souapiti loan listed among non-Paris bilateral exposures to China in the creditor breakdown.
- Domestic arrears and audits:
  - Audit of arrears 2014–2020 completed November 2023: validated arrears stock GNF 2,075 billion (1.2 percent of GDP).
  - Government will repay these obligations starting 2024 per clearance strategy adopted October 2023.
  - Additional audit pending for arrears after 2020; potential to increase stock of debt.
  - Staff view domestic payments arrears as capacity challenges rather than solvency or liquidity issues.

### Pandemic-related relief, SDRs, and rescheduling
- IMF CCRT relief: about SDR 69.2 million (covers April 14, 2020 to April 13, 2022).
- DSA incorporates US$22 million received in 2022 to reduce IMF debt service payments.
- DSSI rescheduling: US$89 million in debt service payments due 2020–21 rescheduled to 2022–25 (more than half corresponds to C2D rescheduling, which is excluded from the DSA stock).
- SDR allocation:
  - Total allocation converted in January 2022: US$284.5 million.
  - Conversion passed both asset and liability to the government.
  - Net SDR position negative; net interest obligation reflected in future interest expenditures and incorporated in present value of debt.
  - Uses: infrastructure spending, repayment of central bank advances, and some 2021 arrears.

### Underlying macroeconomic assumptions (selected projections and risks)
- Real GDP growth:
  - 2022: 4.0 percent.
  - 2023: 5.7 percent.
  - 2024 (projection): 4.1 percent (impacted by Conakry fuel depot explosion on December 18, 2023).
  - 2025 (projection): 5.6 percent.
  - Medium-term: expected to remain strong supported by increased production capacity and mining investment; Simandou start of production anticipated by end-2025 is an upside risk (not included in macroframework).
- Inflation:
  - 2022: 10.5 percent.
  - 2023: 7.8 percent.
  - 2024 (projection): 11 percent (driven by fuel shortages from the December 18, 2023 explosion), then projected to gradually decline over the medium term.
- Fiscal balances:
  - Overall fiscal deficit (including grants):
    - 2022: 0.8 percent of GDP.
    - 2023: 1.6 percent of GDP.
    - 2024 (projection): 3.0 percent of GDP.
    - Medium-term: expected to stabilize at around 2½ percent thereafter.
  - Primary fiscal deficit: expected to average 1.6 percent of GDP over 2024–27.
  - Revenue mobilization: expected gradual increase of government revenue by about 1 percent of GDP over 2024–27.
- Grants:
  - 2023: 0.9 percent of GDP (declined from 1.2 percent in 2020).
  - Expected to decline to 0.5 percent of GDP by 2024.
- Key risks to the outlook:
  - Downside: slowdown in global growth reducing bauxite demand; worsening political situation/social instability weakening non-mining sector; escalation of conflicts triggering trade disruptions and inflation; greater government resort to bank financing crowding out private credit; central bank lending beyond statutory limit fueling inflation; extended fuel shortages affecting investment and growth and causing macroeconomic instability.
  - Mitigation: Economic Recovery Plan (PRE) diversification efforts and inclusive political dialogue.
  - Upside: start of Simandou iron ore production by end-2025.

*International Monetary Fund staff summary contained in the DSA chapter.*

### 0.1 percent of GDP in the long-term due to the shift toward long-term loans in Guinea’s

### 1ginea2024001 - 0.1 percent of GDP in the long-term due to the shift toward long-term loans in Guinea’s

### External and current account developments
- The non-interest current account deficit (including transfers) widened to 8.4 percent of GDP in 2023 from 2.3 percent in 2021, as export growth in 2023 was hindered by sluggish external demand while food imports increased.
- The current account balance (including official transfers) series: -2.1, -7.4, -6.8, -2.6, -1.4, -2.5, -8.6, -8.7, -8.7, -8.8, -0.4, -1.2, -1.9, -6.1, -7.4 (as presented in the source table).
- Projected average current account deficit during 2024-25: around 10.1 percent of GDP (partly reflecting the adverse impact of the explosion and high remuneration in mining operations), before dropping to 8.4 percent in 2026 and 7.9 percent in 2028.
- Strong FDI, including for the bauxite sector and some infrastructure for the Simandou iron ore project during 2023-25, will contribute to financing expected deficits, but BOP dynamics remain challenging in the near term, particularly due to the explosion.

### External financing mix, terms, and projections
- Projected Total External Financing (USD million) by year: 483.9 (2023), 844.4 (2024), 659.4 (2025), 1,091.1 (2026), 1,345.7 (2027), 788.4 (2028).
- Multilaterals expected to be significant: Multilaterals totals by year: 314.7, 397.1, 471.6, 567.4, 550.3, 452.5 (2023–2028).
  - World Bank: 80.6, 117.7, 172.2, 172.2, 242.1, 218.0 (with WB (IDA - regular): 0.0, 0.0, 0.0, 172.2, 242.1, 218.0; WB (IDA - 50Y loans): 80.6, 117.7, 172.2, 0.0, 0.0, 0.0).
- External borrowing assumed to increase by a smaller amount compared with the last DSA, averaging 2.3 percent of GDP in 2024-2025 and moderating slowly toward 2.0 percent of GDP in 2043.
- Average grant element of new external borrowing expected to average 27.6 percent over 2024-28, gradually decreasing to 20.9 percent by 2044.
- IDA-20 envelope from the World Bank included in baseline: US$515 million in 2024-26.
- Multilaterals excluding the World Bank and IMF expected to provide an average of 30.6 percent of the external financing mix during 2024-28; Islamic Development Bank largest share at 18.2 percent.
- Official bilateral creditors expected to account for on average 35.1 percent of external financing in 2024-2028; Paris Club expected to provide some 14.4 percent of total official bilateral loans.
- Commercial creditors expected to provide about 13.3 percent of projected disbursements during 2024-28; ICBC estimated 11.4 percent of external financing as non-concessional project loans in 2023.
- Specific project-related timing change: two remaining loan disbursements for the Souapiti hydropower project from Eximbank China delayed to 2026 and 2027.

### Domestic debt and borrowing strategy
- Government has reduced reliance on central bank advances, cleared a significant fraction of verified domestic arrears, and increased maturity of domestic government debt.
- Medium-term assumption: government to continue gradually repaying outstanding stock of verified arrears in full and to increase share of medium-term T-bonds in domestic borrowing.
- Commercial banks’ exposure to the public sector rose from 15.2 percent in 2014 to 29.6 percent of banks’ total assets at end-2023.
- Government deposits amounted to about 2.5 percent of GDP in January 2024.

### Output, inflation, and fiscal aggregates (selected series from source tables)
- Real GDP Growth (annual percent change) series (by data points shown): 4.3, 4.7, 5.6, 5.5, 5.0, 5.6, 4.0, 5.7, 5.8, 5.0, 1.3, -0.7, 0.1, 0.3, 0.0 (as presented).
- Mining (annual percent change) series (selected): 6.6, 11.8, 11.1, 5.1, 5.1, 2.9, 6.8, 9.4, 11.7, 5.1, -3.7, -5.0, -1.7, 6.6, 0.0.
- Non-mining (annual percent change) series (selected): 3.7, 2.9, 4.1, 5.6, 5.0, 6.3, 3.3, 4.8, 4.0, 4.9, 2.6, 0.4, 0.7, -1.5, 0.0.
- Inflation Average (percent) series (selected): 12.6, 12.2, 11.4, 8.3, 7.8, 12.6, 10.5, 7.8, 9.7, 7.5, 0.0, -1.7, -3.6, 1.4, -0.3.
- Central government finances (percent of GDP) — Total revenue and grants: 13.6, 13.1, 13.0, 15.0, 15.6, 13.5, 13.7, 13.9, 13.6, 14.4, -0.1, 0.6, 0.9, -1.4, -1.2.
- Expenditures and net lending: 15.3, 14.4, 15.3, 17.6, 18.0, 15.2, 14.5, 15.5, 16.2, 16.3, -0.2, 0.1, 0.2, -1.4, -1.7.
- Overall balance including grants: -1.7, -1.3, -2.3, -2.6, -2.4, -1.7, -0.8, -1.6, -2.6, -1.9, 0.0, 0.5, 0.7, 0.0, 0.4.

### Debt sustainability, stress tests, and risk assessment
- Composite Indicator (CI) for Guinea: 2.51; CI rating: Weak.
- Guinea’s overall CPIA score: 3.4 (scale 1-6); economic management cluster score: 3.8; public sector management and institutions cluster score: 3.0.
- External debt: Guinea stands at moderate risk of external debt distress. Under baseline, PV of external debt-to-GDP expected to remain within 18-20 percent of GDP during 2024-27, declining to 16.4 percent by 2044.
- Under extreme shocks (noted in stress tests), PV external debt-to-GDP could exceed 50 percent during 2026-2030; PV debt-to-exports could jump to 355 percent in 2027 under the most extreme shock.
- Under baseline, PV of total public debt-to-GDP exceeds the threshold of 35 percent during 2024-27 (breaches marginal in 2024-25 and within decimal point in 2026-27); PV of total public debt-to-GDP projected to fall from 37.6 percent in 2024 to 35.8 percent in 2026 and below 30 percent of GDP from 2036.
- Recent updates: domestic debt actuals higher than previously projected — domestic debt 18.6 percent of GDP at end-2022 and 20.6 percent of GDP at end-2023 (vs. projected declines in the 2022 DSA).
- Outstanding obligations to the Fund as of December 31, 2023: SDR322.3 million (about 2.3 percent of GDP).

### Scenario and stress-test design
- Two tailored stress tests triggered: (i) contingent liabilities stress test reflecting Guinea’s PPP stock and expected increase in arrears after audit; (ii) commodity price shock consisting of a 31 percent drop in metals prices and a 19 percent drop in minerals prices, tailored to bauxite and gold.
- Under various stress tests and an alternative historical scenario, several external debt indicators breach thresholds over the full forecast horizon, with shocks to exports being most detrimental, followed by a shock to GDP combined with depreciation.
- Historical scenarios for external debt reflect historical current account deficits averaging nearly 15 percent of GDP in 2012-2022.

### Policy recommendations and priorities
- Pursue prudent macroeconomic, fiscal, and financial policies, including:
  - Maximizing the share of concessional borrowing.
  - Strengthening debt management capacity.
  - Enhancing public investment management.
- Continue technical reforms to improve tax management and revenue mobilization:
  - World Bank’s Sustainable Development Finance Policy supports operationalizing a digitally interconnected tax system and strengthening transfer price determination for mining company taxes; IMF TA also supports these efforts.
- Broaden investor base in the government securities market to reduce reliance on commercial banks and mitigate crowding out of private sector credit; implement the government securities market action plan designed by AFRITAC West in 2022.
- Authorities to identify strategy for repayment of arrears using government deposits.

### Key vulnerabilities and upside risks
- Key downside risks:
  - Shock to exports (largest model-identified risk).
  - Shift to non-concessional or less concessional external borrowing.
  - New audits confirming higher stock of domestic arrears.
- Upside risk:
  - Simandou iron-ore project (potential to improve outlook if realized).

*Source: IMF staff report for Guinea (text and tables provided in the supplied content).*

### 18.      The authorities broadly agreed with the conclusions of the DSA. They highlighted their

### 1ginea2024001 - 18.      The authorities broadly agreed with the conclusions of the DSA. They highlighted their

### Authorities' response and policy intentions
- The authorities "broadly agreed with the conclusions of the DSA."
- They emphasized commitment to maintaining "a sustainable level of debt that helps a moderate risk of debt distress."
- They are "considering a faster repayment of domestic debt."
- They concurred with the importance of "maximizing concessional financing" but noted the "unavailability of concessional loans."
- They "stressed the importance of enhancing the quality and management of investment projects."
- They "requested Fund technical assistance to the National debt department on the DSA framework."

### External Debt Sustainability Framework — baseline indicators and projections
- External debt (nominal) 1/: 22.6 21.4 19.7 21.2 21.1 22.1 23.9 23.4 22.9 21.0 12.0 21.4 22.2
- of which: public and publicly guaranteed (PPG): 22.6 21.4 19.7 21.2 21.1 22.1 23.9 23.4 22.9 21.0 12.0 21.4 22.2
- Change in external debt: -5.4 -1.2 -1.7 1.5 -0.1 1.0 1.7 -0.5 -0.5 -0.6 -0.9
- Identified net debt-creating flows: -11.9 -5.7 -3.8 1.0 -0.8 -1.5 -0.8 -0.4 0.0 0.6 1.9 0.9 -0.1
- Non-interest current account deficit: 2.3 8.4 8.4 10.3 9.7 8.4 7.4 7.9 8.3 9.0 10.6 13.2 8.7
- Deficit in balance of goods and services: -8.9 0.1 0.6 3.6 2.8 0.7 0.1 0.0 1.0 1.3 2.2 8.6 1.3
- Exports: 62.9 42.3 35.4 33.9 35.2 35.7 35.9 36.0 36.0 35.9 35.9
- Imports: 54.0 42.5 36.0 37.5 38.1 36.4 36.0 36.0 35.9 36.9 37.2 38.1
- Net current transfers (negative = inflow): -2.6 -3.1 -2.8 -2.6 -2.4 -2.3 -2.2 -2.1 -2.0 -1.6 -1.0 -1.6 -2.0
- Net FDI (negative = inflow): -10.5 -10.5 -9.3 -8.9 -9.7 -9.1 -7.5 -7.5 -7.5 -7.5 -7.5 -10.5 -8.0
- Endogenous debt dynamics 2/: -3.7 -3.6 -2.9 -0.4 -0.8 -0.9 -0.7 -0.8 -0.8 -0.9 -1.2
- Residual 3/: 6.4 4.5 2.1 0.4 0.7 2.5 2.6 0.0 -0.4 -1.2 -2.8 -0.6 0.2
- Sustainability indicators:
  - PV of PPG external debt-to-GDP ratio: 17.4 18.7 18.5 19.2 20.3 19.9 19.5 18.8 16.4
  - PV of PPG external debt-to-exports ratio: 49.1 55.3 52.6 53.6 56.7 55.2 54.3 52.2 45.7
  - PPG debt service-to-exports ratio: 0.6 1.2 2.7 3.2 4.0 4.8 4.6 4.9 4.7 4.1 4.3
  - PPG debt service-to-revenue ratio: 3.0 3.9 7.3 8.5 10.8 12.8 12.0 12.7 11.9 10.3 10.9
  - Gross external financing need (Billion of U.S. dollars): -1.3 -0.3 0.0 0.6 0.4 0.3 0.5 0.7 0.9 1.5 4.6

### Key macroeconomic assumptions used in the external DSA
- Real GDP growth (in percent): 5.6 4.0 5.7 4.1 5.6 5.8 5.6 5.6 5.6 5.0 5.0 6.1 5.2
- GDP deflator in US dollar terms (change in percent): 9.7 15.4 11.1 6.3 1.3 0.8 1.2 1.2 1.1 2.0 2.0 4.6 2.0
- Effective interest rate (percent) 4/: 0.8 1.1 1.5 2.1 1.4 1.4 2.0 2.0 2.0 0.3 -4.6 1.1 1.5
- Growth of exports of G&S (US dollar terms, in percent): 14.1 -19.3 -1.8 5.8 11.2 8.3 7.1 7.2 6.8 7.1 7.1 21.0 7.4
- Growth of imports of G&S (US dollar terms, in percent): -12.7 -5.7 -0.6 15.3 8.6 2.1 5.5 6.8 9.8 7.3 7.5 16.5 7.7
- Grant element of new public sector borrowing (in percent): 21.2 34.0 27.8 26.7 28.2 27.9 22.4 20.9 ... 26.0
- Government revenues (excluding grants, in percent of GDP): 12.9 13.2 13.0 12.9 13.1 13.5 13.7 13.9 14.1 14.4 14.1 13.5 13.9
- Aid flows (in Billion of US dollars) 5/: 0.1 0.1 0.2 0.2 0.2 0.2 0.3 0.2 0.3 0.2 0.2
- Grant-equivalent financing (in percent of GDP) 6/: 1.2 0.9 1.1 1.2 0.7 0.7 0.6 0.5 ... 0.8
- Grant-equivalent financing (in percent of external financing) 6/: 31.2 36.4 29.3 28.0 30.4 30.2 25.0 23.8 ... 28.9
- Nominal GDP (Billion of US dollars): 16 20 23 25 27 29 31 33 35 50 99
- Nominal dollar GDP growth: 15.8 20.0 17.4 10.6 7.0 6.7 6.8 6.9 6.8 7.1 10.9 7.3

### Public Sector Debt Framework — baseline indicators and projections
- Public sector debt 1/: 42.4 40.1 40.3 39.3 38.0 38.0 38.4 37.7 37.1 32.7 20.4 41.5 36.5
- of which: external debt: 22.6 21.4 19.7 21.2 21.1 22.1 23.9 23.4 22.9 21.0 12.0 21.4 22.2
- Change in public sector debt: -5.0 -2.4 0.2 -1.0 -1.3 0.1 0.4 -0.7 -0.6 -1.1 -1.1
- Identified debt-creating flows: -7.8 -3.2 -3.8 -0.9 -1.2 -0.9 -0.6 -0.6 -0.5 -1.1 -1.1 -2.5 -0.8
- Primary deficit: 1.1 -0.1 0.9 2.0 1.4 1.5 1.4 1.5 1.4 0.8 0.7 1.3 1.3
- Revenue and grants: 13.3 13.7 13.9 13.4 13.2 13.6 13.8 14.0 14.2 14.5 14.2 14.7 14.0
- Primary (noninterest) expenditure: 14.4 13.6 14.8 15.4 14.6 15.1 15.2 15.4 15.6 15.3 14.9 15.9 15.3
- Automatic debt dynamics: -8.9 -3.2 -4.7 -2.7 -2.7 -2.4 -2.0 -2.1 -2.0 -1.9 -1.8
- Residual: 2.8 0.9 4.0 -0.1 -0.1 1.0 0.9 -0.1 -0.1 0.0 0.0 3.4 0.1
- Sustainability indicators:
  - PV of public debt-to-GDP ratio 2/: 38.0 37.6 36.1 35.8 35.5 34.8 34.2 31.0 25.3
  - PV of public debt-to-revenue and grants ratio: 273.6 280.5 273.3 263.1 257.2 249.2 241.5 213.4 178.1
  - Debt service-to-revenue and grants ratio 3/: 66.8 76.5 26.8 29.7 32.8 37.2 37.5 33.4 35.8 34.9 31.0
  - Gross financing need 4/: 10.0 10.4 4.6 5.8 5.7 7.6 7.6 6.1 6.5 5.8 5.1

### Sensitivity analysis and stress testing — key messages
- Multiple sensitivity and bound tests are reported for 2024–34 covering shocks to real GDP growth, primary balance, exports, other flows, and depreciation.
- Stress tests identify "Exports" and "Combined contingent liabilities" among the most extreme shocks driving higher ratios in many indicators.
- Tailored tests include "Combined contingent liabilities", "Commodity price" shocks, and indicate potential breaches of thresholds in some scenarios (tables flag bold values where breaches occur).

### Realism tool and drivers of debt dynamics
- Figures decompose drivers of external and public debt dynamics into contributions from: nominal interest rate, real GDP growth, price and exchange rate changes, current account + FDI, primary deficit, other debt-creating flows, and residuals.
- Public and private investment paths and contributions to real GDP growth are shown in the realism tool for 5-year averages.

### Policy implications and requests
- Authorities plan to prioritize faster domestic debt repayment and improving investment project quality and management.
- They emphasized maximizing concessional financing but flagged unavailability of concessional loans.
- They formally requested "Fund technical assistance to the National debt department on the DSA framework."

*Sources: Country authorities; and staff estimates and projections.*

### 1990. The size of 3-year adjustment from program inception is found on the horizontal axis; the

### GUINEA—STAFF REPORT FOR THE 2024 ARTICLE IV CONSULTATION AND REQUEST FOR DISBURSEMENT UNDER THE RAPID CREDIT FACILITY—INFORMATIONAL ANNEX

### Fiscal Adjustment, Debt Metrics, and Growth Path Illustrations
- 3-Year Adjustment in Primary Balance (Percentage points of GDP) is shown across a distribution where "3-year PB adjustment greater than 2.5 percentage points of GDP in approx. top quartile."
- Time series and projection markers shown for years 2018–2025, with historical and projected lines labeled: Baseline, Multiplier = 0.2, Multiplier = 0.4, Multiplier = 0.6, Multiplier = 0.8.
- Figure timelines extend through 2029 and 2034 for projected debt and debt-service indicators.
- Debt and debt-service indicator panels include:
  - Debt service-to-revenue ratio (time series through 2024–2034).
  - PV of debt-to-exports ratio (time series through 2024–2034).
  - PV of debt-to-GDP ratio (time series through 2024–2034).
  - Debt service-to-exports ratio (time series through 2024–2034).
- Qualification thresholds used in the chart: For PV debt/GDP and PV debt/exports thresholds, x = 20 percent and y = 40 percent. For debt service/Exports and debt service/revenue thresholds, x = 12 percent and y = 35 percent.
- Chart notes: "This chart calculates the indicators for all countries for illustrative purposes, not just for those classified as moderate."

### Relations with the IMF: Membership, Quota, and Facilities
- Membership: Joined September 28, 1963; Article VIII.
- Quota and holdings (SDR Million; percent of quota):
  - Quota 214.20 100.00
  - IMF's Holdings of Currency (Holdings Rate) 187.35 87.47
  - Reserve Tranche Position 26.85 12.54
- SDR Department:
  - Net cumulative allocation 307.77 100.00
  - Holdings 37.19 12.09
- Outstanding Purchases and Loans (SDR Million; %Quota):
  - RCF Loans 166.01 77.50
  - ECF Arrangements 146.38 68.34
- Selected ECF arrangements (Date of Expiration / Amount Approved / Amount Drawn):
  - ECF Dec 11, 2017 — Dec 10, 2020 — 120.49 — 120.49
  - ECF Feb 24, 2012 — Nov 07, 2016 — 173.66 — 173.66
  - ECF Dec 21, 2007 — Dec 20, 2010 — 69.62 — 24.48
- Outright Loans (Type / Date of Commitment / Date Drawn/Expired / Amount Approved / Amount Drawn):
  - RCF Dec 22, 2022 — Dec 27, 2022 — 53.55 — 53.55
  - RCF Jun 19, 2020 — Jun 23, 2020 — 107.10 — 107.10
  - RCF Sep 26, 2014 — Oct 02, 2014 — 26.78 — 26.78

### Projected Payments to the Fund (SDR Million; based on existing use of resources and present holdings of SDRs)
- Forthcoming principal:
  - 2024 Principal 27.65
  - 2025 Principal 38.06
  - 2026 Principal 51.03
  - 2027 Principal 45.52
  - 2028 Principal 52.79
- Forthcoming charges/interest:
  - 2024 Charges/Interest 8.29
  - 2025 Charges/Interest 11.08
  - 2026 Charges/Interest 11.09
  - 2027 Charges/Interest 11.09
  - 2028 Charges/Interest 11.09
- Total forthcoming payments:
  - 2024 Total 35.95
  - 2025 Total 49.14
  - 2026 Total 62.11
  - 2027 Total 56.61
  - 2028 Total 63.88

### HIPC, MDRI, and CCR Implementation
- HIPC Initiative (Enhanced Framework):
  - Decision point date Dec 2000
  - Assistance committed by all creditors (US$ Million) 639.00
  - IMF assistance (US$ million) 36.01 (SDR equivalent in millions 27.80)
  - Completion point date Sep 2012
- Disbursement of IMF assistance (SDR Million):
  - Assistance disbursed to the member 27.80
  - Interim assistance 11.30
  - Completion point balance 16.49
  - Additional disbursement of interest income 7.45
  - Total disbursements 35.25
- MDRI: Not Applicable
- Catastrophe Containment and Relief (CCR) — Date of Board Decision / Amount Committed (SDR million) / Amount Disbursed (SDR million):
  - Mar 18, 2015 — 21.42 — 21.42
  - Apr 13, 2020 — 16.37 — 16.37
  - Oct 02, 2020 — 16.37 — 16.37
  - Apr 01, 2021 — 18.21 — 18.21
  - Oct 06, 2021 — 1.84 — 1.84
  - Dec 15, 2021 — 16.37 — 16.37

### Safeguards Assessment and Central Bank Governance
- An update safeguards assessment of the BCRG completed in December 2023 found:
  - Limited progress in addressing the 2021 safeguards recommendations and emergence of new risks.
  - Key vulnerabilities: governance arrangements; management of foreign reserve; monetary financing; purchases of unrefined gold; arrangements with a state-owned oil importer (SONAP); and transparency and accountability mechanisms.
- Main recommendations:
  - Comprehensive governance reforms including through amendment of the BCRG Law.
  - Strengthen controls around central bank operations including on reserves management, transactions with state-owned entities and the government.
  - Address delays in publication of IFRS financial statements.
- Authorities’ response:
  - BCRG has initiated steps including drafting amendments to the BCRG law and staff engagement on other recommendations.

### Exchange Rate Arrangement and Article IV Consultation
- De jure exchange rate arrangement: managed floating; de facto arrangement classified as a stabilized arrangement.
- Guinea has accepted obligations of Article VIII, Sections 2, 3, and 4.
- The last Article IV consultation concluded by the Executive Board on December 22, 2022.
- IMF Mission Chief since July 2023: Ms. Pilar Garcia Martinez.
- IMF Resident Representative since August 2023: Mr. Neree Noumon.

### Statistical Issues and Data Quality (As of April 4, 2024)
- Assessment: Data have shortcomings but are broadly adequate for surveillance.
- National Accounts:
  - Real sector statistics incomplete and published with insufficient timeliness.
  - National Institute of Statistics (INS) working with AFRITAC West to update national accounts to 2008 SNA recommendations and use 2018 as new benchmark year.
  - Additional work required: compilation of current-year estimates, backcasted series, and quarterly estimates consistent with new base year.
  - Employment and population statistics published annually. 2018–19 National Household Living Standards Survey published December 2020.
- Price Statistics:
  - INS introduced an updated CPI in November 2022; data from August to November 2022 disseminated.
  - Geographic coverage expanded beyond Conakry to entire country; indexes for 8 regions (including Conakry) disseminated.
  - TA provided by AFRISTAT; methodology reflects WAEMU-harmonized CPI methods.
- Government Finance Statistics:
  - Ministry of Economy and Finance compiles comprehensive monthly budgetary central government data (revenues on a cash basis; expenditures on commitment and cash basis).
  - Transitioning presentation format to GFSM 2014.
  - January 2024 GFS TA mission: stock of recommendations on TOFE compilation; guidance for experimental expansion to extrabudgetary units and local governments; assistance preparing public sector debt statement by subsector.
  - TOFE methodology modernized and being reconciled with budgetary execution and financing data. Production of TOFE requires data outside general accounting system.
- Monetary and Financial Statistics:
  - Monetary data compiled and monthly shared with African Department.
  - STA TA in Nov–Dec 2020 finalized reporting using standardized report forms (SRFs); SRFs compiled and disseminated in IMF’s IFS (May 2021).
  - BCRG has not submitted MFS data to STA since 2022Q4.
  - BCRG reports Financial Access Survey indicators including mobile/internet banking, mobile money, gender-disaggregated data, and SDG Target 8.10 indicators.
- Financial Sector Surveillance:
  - BCRG has not submitted FSI data since 2022Q3; migration to new FSI forms not conducted.
  - An FSI TA mission is planned for FY25, possibly jointly with an MFS mission.
- External Sector Statistics:
  - Central Bank compiles quarterly balance of payments and annual IIP statistics in line with BPM6.
  - Improvements noted but gaps remain, especially on imports, financial account, and artisanal gold sector.
  - March 2021 TA addressed import-consistency issues given large increase in gold exports in 2021. INS conducted a 2022 survey on artisanal gold production; follow-up recommended at least every other year.
  - National Debt Directorate agreed to participate in World Bank’s Quarterly External Debt Statistics.
  - Central Bank indicated intent to subscribe to the SDDS and is preparing to report the International Reserves and Foreign Currency Liquidity template to the IMF.
- Data dissemination:
  - Guinea participates in the Enhanced General Data Dissemination System (e-GDDS); publishes data on its National Summary Data Page since November 2019.
  - No data ROSC available.
  - Authorities are working with STA on an SDDS subscription roadmap.

### Common Indicators Required for Surveillance (As of April 4, 2024)
- Exchange Rates: Date of Latest Information 03/29/2024; Date Received 03/29/2024; Frequency of Data D; Frequency of Reporting D; Frequency of Publication D.
- International Reserve Assets and Reserve Liabilities of the Monetary Authorities (1): Date of Latest Information 01/31/2024; Date Received 3/18/2024; Frequency M/M/M.
- Reserve/Base money: 01/31/2024; 03/18/2024; M/M/M.
- Broad Money: 01/31/2024; 03/18/2024; M/M/M.
- Central Bank Balance Sheet: 01/31/2024; 03/18/2024; M/M/M.
- Consolidated Balance Sheet of the Banking System: 01/31/2024; 03/18/2024; M/M/M.
- Interest Rates (2): 01/31/2024; 03/18/2024; M/M/M.
- Consumer Price Index: 01/31/2024; 03/04/2024; M/M/M.
- Revenue, Expenditure, Balance and Composition of Financing - General Government: NA (data not available due to capacity issues).
- Revenue, Expenditure, Balance and Composition of Financing - Central Government: Date of Latest Information 12/31/2023; Date Received 01/31/2024; Frequency M/M/M.
- Stocks of Central Government and Central Government-Guaranteed Debt: 12/31/2023; 01/31/2024; A/A/A.
- External Current Account Balance: 09/30/2023; 01/31/2024; Q/Q/Q.
- Exports and Imports of Goods and Services: 09/30/2023; 01/31/2024; Q/Q/Q.
- GDP/GNP: 12/31/2022; 01/31/2024; A/A/A.
- Gross External Debt: 12/31/2023; 01/31/2024; A/A/A.
- International Investment Position: 12/31/2022; 06/30/2023; A/A/A.
- Frequency key: Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A), Not Available (NA).

### Authorities’ Statement on RCF Request and Recent Shocks (Statement by Mr. Regis O. N'Sonde and Mrs. Raguiata Bah — May 6, 2024)
- Context:
  - Authorities appreciate the 2024 Article IV discussions and the Rapid Credit Facility (RCF) dialogue.
  - The RCF is viewed as essential to address consequences of the explosion of a major fuel import and storage facility in mid-December 2023.
- Impact of the explosion:
  - The explosion affected all sectors of the economy, claimed human lives and other casualties.
  - Entire gasoline storage and 40 percent of the total petroleum product supplies were destroyed.
  - Government response restricted movements and transportation to ensure safety, contributing to economic challenges.
- Request for support:
  - Authorities request budget support under the RCF equivalent to 25 percent of quota (SDR 53.55 million or about US$71.5 million).
  - Objective: restore fiscal stability, manage the crisis, and catalyze financial and in-kind assistance from other development partners.
- Recent resilience and interventions:
  - Despite food and cost-of-living crises, economy supported by mining sector.
  - Food Shock Window (FSW) interventions provided affordable fertilizers and seeds, money transfers, and food to vulnerable households in fragile areas.

_Italic: Prepared by African Department (In Consultation with other departments); April 24, 2024._

### 5. Economic growth has reached 5.7 percent in 2023, driven by the mining sector, but is

### 5. Economic growth has reached 5.7 percent in 2023, driven by the mining sector, but is

### Economic growth and outlook
- Economic growth reached 5.7 percent in 2023, driven by the mining sector.
- The growth rate of the mining sector stood at 9.4 percent in 2023.
- Growth in the non-mining sector was more subdued; agriculture is expected to expand by 4.8 percent in 2023, benefiting from the FSW emergency financing.
- The Fonds de Développement Agricole (FODA) used FSW funding to support farmers by facilitating access to rice and corn seeds, reducing transportation costs for fertilizers, and supporting mechanization.
- Growth is expected to slow to 4.1 percent in 2024 due to impeded economic activity in all sectors following the fire.
- The growth forecast for 2024 has been revised down by 1.6%.
- The medium-term outlook: authorities expect growth to average around 6.7 percent over 2025-28, reflecting increased mining production capacity and ongoing investment in new mines, notably Simandou iron ore operations.
- Authorities expect inflation to decline to 9.2 by 2027 on the back of tighter monetary policy and a stronger Guinean franc.

### Price developments and inflation
- Average inflation fell to 7.8 percent in December 2023, from 10.2 percent in 2022, mainly due to decreasing food prices and appreciation of the Guinean franc.
- The appreciation of the Guinean franc has helped contain inflation at 7.8 percent in 2023 as compared to 12.2 percent in 2022.
- In 2024, inflation is expected to rise to 11 percent due to scarcity of fuel affecting agricultural activities and transportation.

### Fiscal policy, revenue, and expenditures
- The overall fiscal deficit is projected to widen to 3.0 percent of GDP in 2024, against 2.4 percent in the pre-blast scenario.
- Urgent financing needs are estimated at US$164 million.
- Domestic revenue collection deteriorated slightly in 2023 owing to lower mining and non-tax revenue.
- Authorities are enforcing the July 2022 decree to limit transfer mispricing of bauxite to boost revenue.
- The tax department plans tax audits in 2024 to detect under-estimations.
- Non-mining tax revenue increased, supported by improved compliance following digitalization of tax declaration and the single taxpayer identifier.
- Public investment implementation was ramped-up by 1.1 percent to 4.5 percent of GDP.
- Subsidies to Electricité de Guinée were reduced in the budget by 0.6 percent of GDP since the 2024 budget.
- Authorities are easing the fiscal position in 2024 to accommodate additional expenditures while limiting the overall fiscal deficit to 3 percent of GDP and projecting the deficit to be below 3 percent in 2025.
- Going forward, authorities will mainly resort to concessional financing to keep Guinea’s debt at moderate risk of distress, though such financing remains scarce.

### Monetary policy and external buffers
- Banque Centrale de la République de Guinée (BCRG) reduced its policy rate to 11 percent from 11.5 percent and cut reserve requirements to 13 percent from 15 percent in September 2023 to support growth.
- In March 2024, the Monetary Policy Committee maintained the monetary stance unchanged.
- BCRG is ready to further tighten monetary policy as needed and has committed to keeping budget financing within statutory limits.
- The 2023 balance of payments was affected by a significant increase in food, fuel, and capital goods imports.
- Import coverage is expected to deteriorate to 2.4 months of import coverage in January 2024 from 3.4 months in December 2022.
- As a result of closer monitoring of repatriation requirements, approximately 42.3 percent of export revenue were repatriated in 2023, representing USD$432.9 million.
- BCRG will strengthen exchange rate flexibility, limit interventions on the foreign exchange market, and enforce exporters’ repatriation obligations to support reserve accumulation.

### Banking sector and financial inclusion
- The banking sector remains resilient and profitable.
- Financial inclusion is improving: mobile money account openings continue to steadily increase in rural and urban areas.

### Negative spillovers of the fire and emergency response
- The fire-related shock significantly constrained fuel availability, hindering operation of agricultural and industrial machinery, access to electricity, and transportation of goods.
- These constraints, combined with global cereal shortages and high food prices, placed heavy pressure on the cost of living.
- Authorities responded with urgent measures to supply food and health care through Agence Nationale d’Inclusion Economique et Sociale (ANIES) and Fonds de Développement Social et d’Indigence (FDSI).
- Alternative supply chains were established to restore fuel provision from neighboring countries.
- The Government is negotiating with Côte d’Ivoire and Sierra Leone to develop oil supply mechanisms.
- National mobilization established support mechanisms to provide free care to victims.
- Emergency financing under the RCF will support emergency relief, decontamination, reconstruction, and cash transfers to victims and help address the balance of payments shock.

### Structural reforms, mining, climate, and governance
- The Simandou iron ore project, with private investments totaling about US$20 billion, was finalized in April 2024 and should augment mining revenue and catalyze synergies in the rest of the economy.
- Authorities introduced a strong local content framework for Simandou to develop infrastructure and human capital.
- On climate change, authorities are progressing on policy design and implementation but face financing constraints for adaptation; they will integrate climate considerations into project planning and strengthen institutional coordination as recommended by C-PIMA technical assistance.
- On governance, progress noted in combatting corruption and strengthening AML/CFT: four commercial courts are delivering judgements; CENTIF moved to the central bank; CRIEF is prosecuting officials for corruption and embezzlement.

### Conclusion and policy direction
- Authorities have made significant efforts to mitigate explosion-related impacts and plan to negotiate an arrangement for a Fund-supported program incorporating transformational reforms to reduce vulnerability to shocks, enhance resilience, and promote sustainable development.
- The emergency financing through the RCF should provide near-term leverage to address vulnerabilities from the fire.
- Authorities’ engagement to reinvigorate macroeconomic stability is expected to facilitate further structural reform progress and the authorities seek Executive Directors’ support for a disbursement under the Rapid Credit Facility.

*Source: IMF staff report (content unit 1ginea2024001).*

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_Source: https://www.imf.org/-/media/files/publications/cr/2024/english/1ginea2024001.pdf_