## _cr14298

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---

### Executive summary and overview
- Guinea experiencing an Ebola outbreak that is a humanitarian crisis with significant economic impact.
- Preliminary macro effects and policy stance:
  - 2014 real GDP growth projected at 2.4 percent (down from 4.5 percent projected at the beginning of the year).
  - 2015 growth projected to rebound to 4.1 percent assuming control during Q1 2015 (0.2 percentage point below projections at the time of the 4th review).
  - End-2014 inflation projected to reach 9.4 percent (about 1 percentage point above the program target), with inflation expected to resume a declining trend in 2015.
  - Poverty indicators expected to worsen in 2014–15 as the outbreak affects the poor most severely.
  - As of September 11: 909 cases and 571 deaths reported (compared with 690 cases and 460 deaths on August 29); disease affects predominantly working age people and women (55 percent).
- Program performance: Performance under the ECF-supported program remained satisfactory; preliminary data indicate all end-June 2014 performance criteria were met. Progress on structural reform continues.

### Fund requests and staff recommendation
- Authorities requested additional IMF financial assistance for urgent fiscal and balance of payments needs.
- Staff supports a disbursement under the Rapid Credit Facility (RCF) of 25 percent of quota: SDR 26.775 million (about US$41.4 million).
  - Authorities request full RCF financing be made available as budget support.
- Because a review associated with the most recent availability date has not been completed, additional assistance cannot be provided as an augmentation of access under the ECF arrangement at this time.
- Staff supports modification of end-September indicative targets and end-December 2014 performance criteria under the ECF arrangement, including program adjustors to allow additional domestic financing if external financing falls short.

### Macroeconomic impact of the Ebola outbreak (selected)
- Growth and inflation:
  - 2014 real GDP growth: 2.4 percent (projected).
  - 2015 real GDP growth: 4.1 percent (projected, conditional on outbreak control).
  - End-2014 inflation: 9.4 percent (projected).
- External sector:
  - External current account projected to deteriorate by 1.2 percent of GDP due to lower agricultural exports, higher food imports, lower artisanal gold exports, lower expatriate-related inflows, and increasing capital outflows.
  - Maintaining initial ECF target for international reserves would result in an external financing gap of US$129 million.
- Humanitarian and socio-economic channels:
  - Health services under strain; food shortages in severely affected areas; disruption of border trade and movement of goods; investor pullback; expected increases in poverty, especially among informal workers and rural inhabitants abandoning farmland.

### Fiscal response, emergency plan, and financing needs
- Emergency response plan cost (provisional): US$85 million (1.3 percent of GDP).
- Fiscal impacts compared to revised 2014 budget at 4th review:
  - Revenue projected lower by 0.7 percent of (revised) GDP, mainly attributable to Ebola.
  - Basic balance deficit will increase to 5.5 percent of GDP compared with 4 percent of (unrevised) GDP under the ECF-supported program.
- Text Table 1 — Changes to Fiscal Projections, 2014 (selected rows preserved exactly as in source):
  - Total revenue change: -522 GNF Billions, -74.6 USD Millions, -1.1 Percent of GDP.
  - Tax Revenue: -350 GNF Billions, -50.0 USD Millions, -0.7 Percent of GDP.
  - Grants: -172 GNF Billions, -24.6 USD Millions, -0.4 Percent of GDP.
  - Spending (higher): 359 GNF Billions, 51.2 USD Millions, 0.8 Percent of GDP.
  - Of which Ebola-related: 595 GNF Billions, 85.0 USD Millions, 1.3 Percent of GDP.
  - Total Impact (higher deficit): 881 GNF Billions, 125.8 USD Millions, 1.9 Percent of GDP.
  - Financing Gap: 902 GNF Billions, 128.8 USD Millions, 1.9 Percent of GDP.
  - Possible financing sources: World Bank 175 GNF Billions / 25.0 USD Millions / 0.4 Percent of GDP; African Development Bank 42 GNF Billions / 6.0 USD Millions / 0.1 Percent of GDP; IMF 290 GNF Billions / 41.4 USD Millions / 0.6 Percent of GDP.
  - Additional financing/Adjustment measures: 395 GNF Billions / 56.5 USD Millions / 0.8 Percent of GDP.
- Authorities intend to seek donor financing to cover the financing gap of 1.9 percent of GDP (US$129 million) in 2014.
- Authorities request the RCF disbursement be made for budget support (US$41.4 million) and propose an ECF program adjustor to permit additional domestic financing if external financing falls short to ensure full execution of the emergency response plan without undue compression of the public investment program.

### Monetary and exchange rate policy response
- Authorities plan to delay previously planned monetary easing (including reducing the reserve requirement) given heightened uncertainty and exchange rate pressure.
- BCRG actions:
  - Maintain tighter stance on bank liquidity to reduce capital flight and external financing needs.
  - Temporarily increase sales in the weekly foreign exchange auction to bolster confidence in the local currency and contain upward pressure on inflation.
- Reserves implication:
  - Without domestic adjustment or external financing, gross official reserves would decline from the program target of 3.7 months of imports to 3.2 months of imports.

### Program performance, structural reforms, and safeguards
- Program performance:
  - All end-June 2014 performance criteria under the ECF-supported program were preliminarily met.
  - Authorities delaying planned monetary easing and relaxing fiscal targets to protect the public investment budget in response to the crisis.
- Structural reforms:
  - High-level reform committee reviewed draft law on public enterprises and submitted it to the government (structural benchmark for end-September).
  - Prior actions implemented include: adoption of central bank investment policy for international reserves (June 25, 2014); approval of draft law revising the investment code; adoption of procurement implementing regulations; joint instructions to EDG to manage operations without additional government support.
- Safeguards assessment:
  - The April 2012 safeguards assessment found risks somewhat improved since 2007; BCRG progress includes verification of monetary data at test dates, publication of audited annual financial statements, formalization of an investment policy and guidelines, and adoption of a new central bank law strengthening autonomy.
  - Remaining needs: better oversight on controls and improved financial reporting practices.
  - RCF disbursement triggers need for an update of the previous safeguards assessment.

### RCF request, capacity to repay, and staff recommendation
- RCF request and use:
  - Request: disbursement under the RCF equivalent to 25 percent of quota (SDR 26.775 million or about US$41.4 million).
  - Authorities request financing be made available in its entirety as budget support to address urgent fiscal needs and provide foreign exchange support.
- Capacity to repay and debt dynamics (selected):
  - Total amount of outstanding credit from the Fund, once RCF is disbursed: 111 percent of quota (credit outstanding total series and percent of quota reported in the projections).
  - Repayments to the Fund projected to rise over the medium-term but remain low relative to exports of goods and services and fiscal revenue.
  - Given commitment to fiscal consolidation and structural reforms, staff assesses Guinea will have capacity to repay the Fund as debt service falls due.
- Staff recommendation:
  - Staff supports the RCF disbursement of SDR 26.775 million and supports modifications of end-September indicative targets and end-December 2014 performance criteria under the ECF, including revisions to program adjustors.

### Debt sustainability (LIC-DSA) — selected findings
- Assessment: Guinea continues to be assessed at a moderate risk of debt distress.
- Debt stock and arrears:
  - Following HIPC completion point, end-2012 external public debt: $1.3 billion (23 percent of GDP).
  - End-2013 external public debt: $1.6 billion (25.3 percent of GDP).
  - Outstanding external debt arrears: $186 million (11 percent of total debt), virtually all to non-Paris club official bilateral creditors.
- LIC-DSA updates and assumptions:
  - Incorporates delay in Simandou construction: production and exports expected to begin in late 2019 and 2020 (previously 2017).
  - Includes a new projected nonconcessional loan for Kaleta-Conakry transmission line: expected about $80 million (4.8 percent of end-2013 external debt stock and 1.2 percent of projected 2014 GDP); grant element slightly less than 30 percent; loan not yet signed.
  - LIC-DSA incorporates the requested RCF disbursement and seeks Ebola response financing as grants.
- Selected debt indicators (as reported):
  - PV of PPG external debt (percent of GDP): 2014 "12.7"; 2015 "15.2"; 2020 "15.2"; 2025 "16.1"; 2032 "16.6".
  - PV of PPG external debt (percent of exports): 2014 "51.3"; 2015 "70.2"; 2020 "73.5"; 2025 "83.2"; 2032 "81.5".
  - PV of PPG external debt (percent of government revenues): 2014 "69.1"; 2015 "81.6"; 2020 "78.9"; 2025 "82.3"; 2032 "83.4".
  - Debt service-to-exports ratio (percent): 2014 "13.7"; 2015 "15.2"; 2020 "3.9"; 2025 "3.3"; 2032 "4.3".
  - PPG debt service-to-revenue ratio (percent): 2014 "25.8"; 2015 "22.5"; 2020 "5.2"; 2025 "3.9"; 2032 "4.6".
- Conclusion: Results of the external LIC-DSA confirm that Guinea’s debt dynamics are sustainable under the baseline, but stress tests show vulnerabilities to shocks.

### Risk Assessment Matrix (selected risks, likelihood, impact, and policy responses)
- Protracted slower growth in advanced and emerging economies: Relative Likelihood "High"; Impact "Regional political risks"; Policy response: maintain fiscal discipline; redirect priority spending to social sector.
- A prolonged and uncontained outbreak of Ebola: Relative Likelihood "Low to Medium"; Impact "High"; Policy response: deploy countercyclical fiscal and monetary policies; ensure deterioration of fiscal position remains within available financing; intensify structural reform.
- A deterioration in the domestic socio-political and security situation: Relative Likelihood "Low to Medium"; Impact "High"; Policy response: refocus reforms on less sensitive areas; aim at maintaining fiscal control.
- Growth slowdown in China: Relative Likelihood "Low"; Impact "Medium"; Policy response: intensify structural reform, improve business climate, allow moderate monetary easing.

### Letter of Intent and policy commitments (Conakry, September 18, 2014)
- Request to IMF: RCF financing of 25 percent of quota (SDR 26.775 million) to be disbursed immediately to the Treasury account at the Central Bank to provide immediate budget support.
- Program stance and adjustments:
  - Guinea to continue implementing ECF-supported program; end-June 2014 PCs preliminarily met.
  - Authorities request modifications to end-September 2014 indicative targets and end-December 2014 performance criteria, including adjustors to allow domestic financing if external contributions fall short.
  - Government commits to consult IMF staff before adopting additional measures that would affect program policies and not to introduce measures that would compound balance of payments difficulties.
  - BCRG committed to a safeguards assessment update and to provide IMF staff access to external audit reports.

### Selected program tables and indicators (selected reported values)
- Basic fiscal balance (floor; cumulative change for the year), selected values (Billions of Guinean francs):
  - Mar. (PC): -1,486; Act. (Prel.): -1,188; Dec. 2014 projections (Rev. Prog.): -2,628.
- Net domestic assets of the central bank (ceiling; stock), selected values (Billions of Guinean francs):
  - Target: 4,540; Act. (Prel.): 3,815 (Status: Met); Dec. 2014 projections (Rev. Proj.): 5,318.
- Net international reserves of the central bank (floor; stock), selected values (US$ millions):
  - Mar. target: 427; Act. (Prel.): 567 (Status: Met); Dec. 2014 projections (Rev. Proj.): 516.
- Macroeconomic indicators (selected):
  - GDP at constant prices (annual percentage change): 2013: 2.3; 2014 (Proj.): 3.5 (table entries include historical series).
  - Consumer prices (average, annual percentage change): 2013: 11.9; 2014 (Proj.): 7.8 (table entries include historical series).
  - Current account balance (including official transfers), percent of GDP: 2013: -21.1; 2014 (Proj.): -16.9.
- External sector and reserves (selected):
  - Gross available reserves (months of imports, excluding imports for large foreign-financed mining projects): 2013: 3.5; 2014 (Proj.): 3.7.
  - Merchandise exports, f.o.b. (US$ millions): 2013: 1,431; 2014 (Est./Proj.): 1,400 / 1,338.

### African Development Bank (AfDB) Country Strategy and Ebola response (selected)
- CSP period: 2012–16; approved March 1, 2012. Two pillars: (i) economic and financial governance; (ii) infrastructure for development.
- AfDB emergency support to Ebola response:
  - April 2014: emergency support of USD 2 million (UA equivalent to USD 3 million) as grant to MRU countries.
  - July 2014: approved UA 40 million equivalent to USD 60 million grant for countries fighting Ebola and to support the Regional Coordinating Center for Ebola in Guinea.
- AfDB planned lending and projects include energy (Kaleta transmission), regional interconnection (CLSG), institutional support for mining contract management, and support to private sector operations (Simandou infrastructure financing indicated).

### Transparency commitment and signatories
- Authorities agree to publication of all documents submitted to the Executive Board in relation to this request.
- Signatories: Mohamed Diaré — State Minister of Economy and Finance, Republic of Guinea; Lounceny Nabé — Governor, Central Bank of the Republic of Guinea.

*IMF staff report and authorities’ Letter of Intent and Supplement to the Technical Memorandum of Understanding (September 18–19, 2014).*

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Overview
- Guinea is suffering from an outbreak of Ebola that has become a humanitarian crisis with a significant economic impact.
- Preliminary estimates suggest a negative impact on 2014 growth, a substantial government revenue shortfall, additional critical spending needs for the Ebola response, and the start of a market exchange rate depreciation.
- Authorities intend to adopt tighter monetary policy to address the transitory balance of payments shock.
- Performance under the ECF-supported program has remained satisfactory; preliminary data indicate that all performance criteria (PCs) for end-June 2014 were met. Progress on structural reform continues.

### Fund requests and staff recommendation
- The authorities requested additional IMF financial assistance to meet urgent fiscal and balance of payments needs not anticipated at the time of the recent program review.
- Because a review associated with the most recent availability date has not yet been completed, additional assistance cannot be provided as an augmentation of access under the ECF arrangement at this time.
- The authorities requested a disbursement under the Rapid Credit Facility (RCF) because the urgent balance of payments need is characterized by a financing gap that, if not addressed, would result in an immediate and severe economic disruption; the shock is sudden and exogenous and the need is expected to be resolved within one year with no major policy adjustments necessary.
- Staff supports the authorities’ request for a disbursement under the RCF of 25 percent of quota (SDR 26.775 million).
- Staff also supports modification of the end-September indicative targets and end-December 2014 PCs under the ECF arrangement, including program adjustors.

### Impact of the Ebola outbreak and macroeconomic projections
- 2014 real GDP growth is projected at 2.4 percent compared to 4.5 percent projected at the beginning of the year.
- Assuming the outbreak is under control during the first quarter of 2015, growth is projected to rebound to 4.1 percent in 2015 (0.2 percentage point below projections at the time of the 4th review under the ECF arrangement).
- End-2014 inflation is projected to reach 9.4 percent, about 1 percentage point above the program target, with inflation expected to resume a declining trend in 2015.
- Poverty indicators are expected to worsen in 2014–15 as the Ebola outbreak affects the poor most severely.
- The external current account is projected to deteriorate by 1.2 percent of GDP due to a decline in agricultural exports and higher food imports; artisanal gold exports and inflows related to expatriate workers are also projected to be lower while capital outflows are increasing.
- Maintaining the initial target for international reserves under the ECF-supported program would result in an external financing gap of US$129 million.

### Fiscal response and financing needs
- The emergency response plan costs are provisionally estimated at $85 million (1.3 percent of GDP).
- Compared to the revised 2014 budget discussed at the time of the 4th review under the ECF arrangement:
  - Revenue is projected to be lower by 0.7 percent of (revised) GDP, mainly attributable to the Ebola epidemic.
  - Additional current spending for the electricity sector and a small shortfall in budget support grants will be offset by lower investment spending.
  - The basic balance deficit will increase to 5.5 percent of GDP compared with 4 percent of (unrevised) GDP under the ECF-supported program.
- Text Table 1 (Changes to Fiscal Projections, 2014) highlights:
  - Total revenue change: -522 GNF Billions, -74.6 USD Millions, -1.1 Percent of GDP.
  - Tax Revenue: -350 GNF Billions, -50.0 USD Millions, -0.7 Percent of GDP.
  - Grants: -172 GNF Billions, -24.6 USD Millions, -0.4 Percent of GDP.
  - Spending (higher): 359 GNF Billions, 51.2 USD Millions, 0.8 Percent of GDP.
  - Of which Ebola-related: 595 GNF Billions, 85.0 USD Millions, 1.3 Percent of GDP.
  - Total Impact (higher deficit): 881 GNF Billions, 125.8 USD Millions, 1.9 Percent of GDP.
  - Financing Gap: 902 GNF Billions, 128.8 USD Millions, 1.9 Percent of GDP.
  - Possible financing sources: World Bank 175 GNF Billions / 25.0 USD Millions / 0.4 Percent of GDP; African Development Bank 42 GNF Billions / 6.0 USD Millions / 0.1 Percent of GDP; IMF 290 GNF Billions / 41.4 USD Millions / 0.6 Percent of GDP.
  - Additional financing/Adjustment measures: 395 GNF Billions / 56.5 USD Millions / 0.8 Percent of GDP.

- The government intends to seek donor financing to cover the financing gap of 1.9 percent of GDP (US$129 million) in 2014.
- Authorities request that the RCF disbursement be made for budget support (US$41.4 million) and propose an ECF program adjustor to allow additional domestic financing if external financing falls short to ensure full execution of the emergency response plan without undue compression of the public investment program.

### Monetary and exchange rate policy
- In light of heightened uncertainty and pressure on the exchange rate, the authorities plan to delay the monetary easing they had planned (including reducing the reserve requirement).
- The Ebola outbreak has driven increased volatility and speculative pressure on the exchange rate; authorities decided to maintain a tighter stance on bank liquidity to reduce capital flight and external financing needs.
- The central bank has temporarily increased its sales in the weekly foreign exchange auction to bolster confidence in the local currency and contain upward pressure on inflation.
- Without domestic adjustment or external financing, gross official reserves would decline from the program target of 3.7 months of imports to 3.2 months of imports.

### Program performance and reforms
- All end-June 2014 performance criteria under the ECF-supported program were preliminarily met.
- Progress in structural reforms: the high-level committee monitoring reforms reviewed the draft law on public enterprises and submitted it to the government for approval (a structural benchmark under the program for end-September).
- Authorities are delaying a planned easing of monetary policy and relaxing fiscal targets to protect the public investment budget in response to the crisis.

### Humanitarian and socio-economic impacts noted
- As of September 11, 909 cases and 571 deaths were reported, compared with 690 cases and 460 deaths on August 29.
- The disease affects predominantly working age people and women (55 percent).
- Channels of socio-economic impact include:
  - Health services under tremendous strain.
  - Food shortages surfacing in severely affected areas.
  - Disruption of border trade and movement of goods; maritime imports may be affected.
  - Pull back by foreign investors due to fear of infection and uncertainties.
  - Expected increases in poverty, particularly among vulnerable informal-sector workers and rural inhabitants abandoning farmland.

*IMF staff report, September 19, 2014.*

### 12.      The authorities are requesting a disbursement under the RCF equivalent to 25 percent

### 12.      The authorities are requesting a disbursement under the RCF equivalent to 25 percent

### RCF request and purpose
- The authorities are requesting a disbursement under the RCF equivalent to 25 percent of quota (SDR 26.775 million or about US$41.4 million).
- The authorities request that this financing be made available in its entirety as budget support.
- Intended effects:
  - Provide timely support to address urgent fiscal needs.
  - Provide additional foreign exchange to avoid a sharp drop in international reserves.
- Rationale for RCF rather than augmenting the ECF:
  - Disbursements under Guinea’s ECF arrangement are delayed due to delays in program implementation associated with the 2013 parliamentary elections.
  - The balance of payments need addressed by the RCF is caused primarily by a sudden exogenous shock which does not necessitate major policy adjustments.

### Capacity to repay and debt dynamics
- Total amount of outstanding credit from the Fund, once the RCF is disbursed: 111 percent of quota.
- Repayments to the Fund are projected to rise over the medium-term but would still be at a low level relative to exports of goods and services and fiscal revenue.
- Given that the RCF financing will be used in its entirety to provide budget support, authorities are preparing a framework agreement between the government of Guinea and the central bank (BCRG) on their respective roles and responsibilities for servicing financial obligations to the Fund.
- While the country remains vulnerable to exogenous shocks, overall external debt service ratios to exports of goods and services and fiscal revenue remain low.
- The authorities’ commitment to fiscal consolidation (Appendix I) and fiscal structural reforms (as evidenced by progress made under the current ECF arrangement) suggest that Guinea will have the capacity to repay the Fund as debt service falls due.

### Debt sustainability and donor support
- The attached Debt Sustainability Analysis (Appendix II) shows that the new IMF financing and additional donor support would not change Guinea’s debt distress rating.
- The RCF could help trigger additional donor support to fully close the fiscal and external gaps.

### Safeguards assessment
- Under the IMF’s safeguards policy, the RCF disbursement triggers the need for an update of the previous assessment, which was completed in April 2012.
- The April 2012 assessment concluded that the risks of misuse and misreporting were somewhat improved since the 2007 assessment.
- Progress made by the BCRG since the previous assessment includes:
  - Verification of monetary data at test dates.
  - Publication of audited annual financial statements.
  - Formalization of an investment policy and guidelines.
  - Adoption of a new central bank law strengthening its autonomy.
- Remaining needs for the BCRG:
  - Take further steps to exercise better oversight on controls.
  - Improve financial reporting practices.

### Program issues and proposed adjustments
- Authorities’ macroeconomic policies remain guided by the objectives of the ECF-supported program.
- Staff proposes modifying the program’s indicative targets for end-September and PCs for end-December 2014 to accommodate:
  - Projected higher fiscal deficit.
  - Higher net domestic assets of the central bank (Table 5).
- Modifications include the introduction of an adjustor to allow the authorities to offset a shortfall in external financing of the government’s Ebola response plan with additional domestic financing and lower net international reserves (Attachment I, ¶3–¶5).

### Staff appraisal and recommendations
- Economic impact of the Ebola epidemic:
  - Significant impact on Guinea’s economy, including substantial loss of life.
  - Economic growth and government revenue are falling short of program targets.
  - Exchange rate has come under pressure.
  - Per capita growth is expected to be negative for a third consecutive year.
  - The outbreak is further straining weak technical capacity and institutions.
- Assessment of program performance:
  - Performance under the ECF-supported program has been satisfactory despite the difficult environment.
  - Staff welcomes the authorities’ continuing commitment to program objectives.
  - Staff supports a temporary widening of the 2014 fiscal deficit to accommodate the impact of the epidemic, including the costs of the emergency response plan that is under preparation.
  - Staff recommends that the authorities continue a close dialogue with external partners to ensure that the response plan is fully financed.
- Monetary policy stance:
  - Delay in further relaxation of monetary policy is warranted given indications of increasing capital outflows.
  - Staff supports the central bank’s stepped-up intervention in the foreign exchange auction, given the temporary nature of the shock.

*IMF staff report excerpt.*

### 20.      Staff supports the authorities’ request for a disbursement under the Rapid Credit

### Staff recommendation on RCF disbursement and program modifications

### IMF staff recommendation and rationale
- Staff supports the authorities’ request for a disbursement under the Rapid Credit Facility in the amount of SDR 26.775 million (25 percent of quota).
- Given the large financing needs for the response plan, which is critical for bringing the epidemic under control, staff supports the request that the disbursement be made directly in the form of budget support.
- Staff supports the authorities’ request for modifications of the end-September indicative targets and the end-December 2014 performance criteria under the ECF arrangement, including revisions to the program adjustors.

### Fiscal and program context (selected figures from the authorities’ program tables)
- Basic fiscal balance (floor; cumulative change for the year), selected values (Billions of Guinean francs):
  - Mar. (PC): -1,486
  - Act. (Prel.): -1,188
  - Dec. 2014 projections (Rev. Prog.): -2,628
- Net domestic assets of the central bank (ceiling; stock), selected values (Billions of Guinean francs):
  - Target: 4,540
  - Act. (Prel.): 3,815 (Status: Met)
  - Dec. 2014 projections (Rev. Proj.): 5,318
- Net international reserves of the central bank (floor; stock), selected values (US$ millions):
  - Mar. target: 427
  - Act. (Prel.): 567 (Status: Met)
  - Dec. 2014 projections (Rev. Proj.): 516
- Net domestic bank financing of the government (ceiling; cumulative change for the year), selected values (Billions of Guinean francs):
  - Mar. target: 1,221
  - Act. (Prel.): 1,165 (Status: Met)
  - Dec. 2014 projections (Rev. Proj.): 1,452
- Expenditure in priority sectors (floor), selected values (Billions of Guinean francs):
  - Mar. target: 4,200 (Status: Not Met; Act.: 3,321)
  - Sep. indicative: 1,060 (Status: Not Met; Act.: 743)
  - Dec. 2014 proposed indicative: 4,706

### Macroeconomic indicators (selected)
- GDP at constant prices (annual percentage change), selected years:
  - 2008: 4.9
  - 2009: -0.3
  - 2010: 1.9
  - 2011: 3.9
  - 2012: 3.8
  - 2013: 2.3
  - 2014 (Proj.): 3.5
- Consumer prices (average, annual percentage change), selected years:
  - 2008: 18.4
  - 2009: 4.7
  - 2010: 15.5
  - 2011: 21.4
  - 2012: 15.2
  - 2013: 11.9
  - 2014 (Proj.): 7.8
- Current account balance (including official transfers), percent of GDP:
  - 2008: -10.5
  - 2009: -8.5
  - 2010: -10.2
  - 2011: -19.3
  - 2012: -25.9
  - 2013: -21.1
  - 2014 (Proj.): -16.9

### Selected public finance aggregates (percent of GDP and GNF billions)
- Total revenue and grants (percent of GDP), selected:
  - 2012: 19.8
  - 2013: 24.9
  - 2014 (Prog./Rev. Prog. entries): 23.9 / 23.1
- Total expenditure and net lending (percent of GDP), selected:
  - 2012: 25.1
  - 2013: 28.9
  - 2014 (Prog./Rev. Prog. entries): 23.2 / 24.0
- Nominal GDP (GNF billions), selected:
  - 2011: 33,739
  - 2012: 39,591
  - 2013: 43,048
  - 2014 (Proj.): 47,388

### Banking and monetary indicators (selected)
- Reserve money (end period, Billions of GNF), selected:
  - 2010: 6,980
  - 2012: 6,431
  - 2013: 6,978
  - Mar. 2014 (Act.): 7,855
- Broad money (M2; Billions of GNF), selected:
  - 2010: 10,366
  - 2012: 11,450
  - 2013: 13,068
  - Mar. 2014 (Act.): 14,470
- Deposit dollarization (percent), selected:
  - 2009: 27.8
  - 2010: 21.5
  - 2011: 28.2
  - 2012: 34.9
  - 2013: 32.6

### External sector and reserves (selected)
- Gross available reserves (months of imports, excluding imports for large foreign-financed mining projects), selected:
  - 2008: 0.6
  - 2009: 0.8
  - 2010: 0.6
  - 2011: 4.4
  - 2012: 3.4
  - 2013: 3.5
  - 2014 (Proj.): 3.7
- Merchandise exports, f.o.b. (US$ millions), selected:
  - 2008: 1,460
  - 2009: 1,215
  - 2010: 1,372
  - 2011: 1,534
  - 2012: 1,512
  - 2013: 1,431
  - 2014 (Est./Proj.): 1,400 / 1,338

*Source: IMF staff assessment and program tables contained in the supplied document.*

### 1. Gross financing requirements

### 1. Gross financing requirements

### Key financing requirements (annual figures as reported)
- Gross financing requirements: 1,714; 1,797; 1,437; 1,525
- External current account deficit: 1,515; 1,684; 1,342; 1,331
- Capital account balance 1/: -41; -12; -12; -15
- Debt amortization: 217; 334; 970
- Change in arrears, net 2/: 250; 139; -412; 5
- Gross reserves accumulation: -211; -476; 113
- IMF repayments 2/: -160; 00

(Notes in source: 1/ Excludes public transfers. 2/ For 2012, Paris Club debt relief for end-2011 arrears and maturities falling due agreed under April 2012 Paris Club agreement. HIPC/MDRI relief is assumed to be delivered effective October 2012. In 2014, projected debt relief on outstanding debt (all in arrears) to non-Paris Club official and commercial creditors.)

### Available financing (annual figures as reported)
- Total available financing: 1,714; 1,739; 1,409; 1,396
- Foreign direct investment, net 3/: 609; 1,164; 748; 762
- Identified disbursements: 286; 443; 311; 507
  - Grants: 152; 194; 92; 355
  - Project: 968; 867; 252
  - Program: 561; 062; 6103
  - Loans: 134; 248; 218; 152
    - Project: 622; 091; 831; 13
    - Program: 723; 935; 39
- Other flows: 471; 035; 00
- Debt relief 2/: 348; 133; 112; 7
- HIPC completion point debt relief 2/: 1,902
- HIPC completion point debt cancellation 2/: -1,902

(Notes in source: 3/ Includes private short term financial flows.)

### Residual financing and additional support
- Residual financing: 0; 58; 0129
- ECF and RCF disbursement: 580; 41
  - World Bank: 25
  - African Development Bank: 6
  - Additional financing/Adjustment measures: 56

Sources: Guinean authorities; and IMF staff estimates and projections.

---

### Indicators of Capacity to Repay the IMF (As of July 31, 2014; SDR millions, unless otherwise indicated)

### Fund obligations based on existing credit / Credit outstanding (2014–2025)
- Credit outstanding (existing): 73.94; 73.94; 73.94; 72.11; 62.42; 49.5; 7; 34.88; 20.20; 7.34; 1.84; 0.00; 0.00
- Percent of quota: 69.04; 69.04; 69.04; 67.33; 58.29; 46.2; 9; 32.57; 18.86; 6.86; 1.71; 0.00; 0.00
- Repayment of principal: 0.00; 0.00; 0.00; 1.84; 9.68; 12.85; 14.69; 14.69; 12.85; 5.51; 1.84; 0.00
- Charges and interest: 0.00; 0.19; 0.19; 0.18; 0.17; 0.14; 0.11; 0.07; 0.03; 0.01; 0.00; 0.00

### Fund obligations from prospective drawings under the ECF and new RCF 1/ (2014–2025)
- Credit outstanding (prospective): 45.14; 81.86; 81.86; 81.86; 81.86; 81.86; 69.16; 52.79; 36.42; 20.04; 3.67; 0.00
- Percent of quota: 42.15; 76.43; 76.43; 76.43; 76.42; 76.42; 64.57; 49.28; 34.00; 18.72; 3.43; 0.00
- Repayment of principal: 0.00; 0.00; 0.00; 0.00; 0.00; 0.00; 12.70; 16.37; 16.37; 16.37; 16.37; 3.67
- Charges and interest: 0.00; 0.19; 0.20; 0.20; 0.20; 0.20; 0.19; 0.15; 0.11; 0.07; 0.03; 0.00

### Total obligations based on existing and prospective credit (2014–2025)
- Credit outstanding total: 119.08; 155.80; 155.80; 153.97; 144.28; 131.43; 104.04; 72.99; 43.76; 21.88; 3.67; 0.00
- Percent of quota: 111.19; 145.47; 145.47; 143.76; 134.71; 122.71; 97.14; 68.14; 40.86; 20.43; 3.43; 0.00
- Percent of gross foreign available reserves: 24.97; 26.13; 27.69; 27.60; 24.30; 18.25; 12.67; 7.18; 4.05; 1.91; 0.29; 0.00
- Repayment of principal: 0.00; 0.00; 0.00; 1.84; 9.68; 12.85; 27.39; 31.06; 29.22; 21.88; 18.21; 3.67
- Charges and interest: 0.00; 0.37; 0.39; 0.39; 0.37; 0.35; 0.29; 0.22; 0.14; 0.08; 0.03; 0.00
- Total payments to the IMF: 0.00; 0.37; 0.39; 2.22; 10.06; 13.20; 27.68; 31.28; 29.37; 21.96; 18.23; 3.67
- Percent of exports of goods and services: 0.00; 0.04; 0.04; 0.19; 0.83; 1.06; 1.15; 0.81; 0.56; 0.36; 0.26; 0.05
- Percent of external public debt service: 0.00; 0.63; 0.66; 3.66; 13.91; 17.45; 37.02; 62.00; 61.47; 47.51; 42.44; 8.47

Memorandum items:
- Disbursements: 63.5; 36.7
- Exports of goods and services, US$ millions: 1,468.1; 1,537.4; 1,567.8; 1,783.9; 1,831.9; 1,881.6; 3,606.3; 5,826.0; 7,838.9; 9,170.1; 10,464.5; 11,626.7

(Notes in source: 1/ Includes disbursment of 25% of Quota under the proposed RCF in 2014. Projections. Sources: Guinean authorities; and IMF staff projections.)

---

### Risk Assessment Matrix (RAM): Sources of risks, likelihood, impact, and policy responses

### Growth slowdown in China
- Relative Likelihood: Low
- Impact if realized: Medium
  - Investment in large new (iron ore) mining projects would likely be delayed, lowering medium-term growth and government revenue.
- Policy response:
  - Intensify structural reform and efforts to improve the overall business climate to promote investment in non-mining sectors.
  - Allow moderate monetary easing to limit the impact on growth.

### Protracted period of slower growth in advanced and emerging economies
- Relative Likelihood: High (Advanced economies); High (Elsewhere)
- Impact if realized: Regional political risks in the Middle East and Eastern Europe
- Policy response:
  - Seek to maintain fiscal discipline.
  - Redirect priority spending to the social sector.

### A prolonged and uncontained outbreak of Ebola
- Relative Likelihood: Low to Medium
- Impact if realized: High
  - Additionally to the human toll, investor sentiment and consumer confidence could deteriorate markedly, and investments in large-scale mining projects could be delayed. Medium-term growth would be affected negatively.
- Policy response:
  - Deploy countercyclical fiscal and monetary policies.
  - The deterioration of the fiscal position should remain within the limits of available financing.
  - Intensify structural reform.

### A deterioration in the domestic socio-political and security situation
- Relative Likelihood: Low to Medium
- Impact if realized: High
  - Investment and growth would be negatively affected, and poverty would risk increasing; development of natural resources would be delayed. Program implementation would risk weakening and key structural reforms being postponed. Macroeconomic stability would be at risk.
- Policy response:
  - Refocus reform on areas less sensitive to socio-political environment.
  - Aim at maintaining fiscal control.

---

### Letter of Intent: Request, economic impact of Ebola, and policy commitments (Conakry, September 18, 2014)

### Request to the IMF
- Request additional financial support under the Rapid Credit Facility (RCF) for an amount of 25 percent of quota (SDR 26.775 million).
- Request that the full amount be made available immediately upon approval and be disbursed to the Treasury account at the Central Bank of the Republic of Guinea to provide immediate budget support.

### Program performance and macroeconomic context
- Guinea continues to implement the program supported under the Extended Credit Facility (ECF) satisfactorily.
- Preliminary data suggest that the end-June 2014 performance criteria under the program have been met.
- Preliminary assessment of Ebola impact:
  - GDP growth projected to be lower by 1½ percentage points compared to estimates of some months ago.
  - Projection for 2014 inflation raised by about one percentage point.
  - Gross reserves coverage risks missing the program target.

### Fiscal impact of the Ebola epidemic and emergency response plan
- Estimated total cost of emergency response plan: US$85 million (1.3 percent of GDP) in 2014.
- During first half of the year, US$8.5 million was spent on combating the outbreak; government contributed US$1.4 million.
- Assurances mobilized so far: US$31 million from the World Bank (US$25 million) and the African Development Bank (US$6 million).

Text Table 1. Changes to Fiscal Projections, 2014 (GNF Billions; USD Millions; Percent of GDP)
- Revenue (- Lower): -522; -74.6; -1.1
  - Tax Revenue: -350; -50.0; -0.7
  - Grants: -172; -24.6; -0.4
- Spending (+ Higher): 359; 51.2; 0.8
  - Current spending: 753; 107.5; 1.6
  - Salary and Wages: 0; 0.0; 0.0
  - Goods and services: 66; 9.4; 0.1
  - Transfers and subsidies: 98; 14.1; 0.2
  - Ebola-related: 595; 85.0; 1.3
- Capital spending: -394; -56.3; -0.8
  - Domestically financed: -394; -56.3; -0.8
  - Of which: Measures of offset non-Ebola related revenue shortfalls and higher spending: -222; -31.7; -0.5
  - Externally financed: 0; 0.0; 0.0
- Total Impact (+ = Higher Deficit): 881; 125.8; 1.9
- Memorandum items: Fund Contribution 1/: 287; 41; 0.6

(Notes in source: 1/ Additional financing. Sources: Guinean authorities and IMF staff estimates.)

### External accounts and financing gap
- Current account deficit projected to widen by US$75 million due to lower exports of agricultural products and artisanal gold, higher food imports, and lower inflows related to expatriate workers and business travelers.
- Indications of increasing private capital outflows.
- External financing gap projected at US$129 million.

### Structural reform, financial sector, and monetary policy
- Structural reform agenda risks delays due to difficulties in mobilizing technical assistance and postponed missions because of Ebola.
- Financial sector impact expected to be limited given banks’ limited exposure to affected people and districts; however, lower economic activity will reduce demand for bank credit and higher expected inflation could reduce banks’ profitability.
- Central Bank of the Republic of Guinea (BCRG) intends to maintain a more conservative policy stance than envisioned under the ECF:
  - Delay considering further relaxation of monetary policy given indications of increasing capital outflows.
  - Temporarily increase sales in weekly foreign exchange auctions to bolster confidence in the currency, avoid depreciation, and contain upward pressures on inflation.

### Program adjustments and commitments
- Government requests modifications to end-September 2014 indicative targets and end-December 2014 performance criteria under the ECF arrangement, including ECF-supported program adjustors to allow use of domestic financing for the emergency response plan if external contributions fall short.
- RCF disbursement intended to help close immediate balance of payments and fiscal financing need resulting from Ebola.
- Government asserts capacity to repay the Fund remains strong and projects that repayment ratios to fiscal revenue and exports of goods and services will remain manageable, peaking at 1.5 percent in 2020 and 1.1 percent in 2020, respectively.
- Government undertakes to consult IMF staff before adopting additional measures that would affect program policies and not to introduce measures that would compound Guinea’s balance of payments difficulties.
- BCRG committed to undergo a safeguards assessment update by the IMF and to provide IMF staff access to its most recently completed external audit reports and to authorize external auditors to hold discussions with IMF staff.

---

*Sources: Guinean authorities; IMF staff estimates and projections; Letter of Intent dated September 18, 2014.*

### 15. In line with our commitment to transparency in government operations, we agree to the

### 15. In line with our commitment to transparency in government operations, we agree to the publication of all the documents submitted to the Executive Board in relation to this request.

### Transparency commitment
- Agreement to the publication of all the documents submitted to the Executive Board in relation to this request.

### Signatories
- Mohamed Diaré — State Minister of Economy and Finance, Republic of Guinea
- Lounceny Nabé — Governor, Central Bank of the Republic of Guinea

### Attachment
- Supplement to the Technical Memorandum of Understanding under the ECF-Supported Program

### Quantitative performance criteria and indicative targets (Table 1: selected indicators and reported values)
- Basic fiscal balance (floor; cumulative change for the year): -1,486; -1,355; -1,188 Met; -354; -429; -2 Met; -635; -109 Met; -1,399; -1,570; -1,915; -2,628
- Net domestic assets of the central bank (ceiling; stock): 4,540; 4,757; 3,815 Met; 4,785; 4782; 4,372 Met; 5,018; 4,117 Met; 4,789; 4,789; 5,028; 5,318
- Net domestic bank financing of the government (ceiling; cumulative change for the year): 1,221; 1,438; 1,165 Met; 639; 636; 209 Met; 879; 43 Met; 1,077; 1,077; 1,162; 1,452
- Net international reserves of the central bank (floor; stock); US$ millions: 2 427 352 567 Met; 481; 481; 542 Met; 459; 552 Met; 513; 513; 516; 516
- New nonconcessional medium- or long-term external debt contracted or guaranteed by the government or central bank (ceiling); US$ millions: 3,4,6 363 ... 363 Met; 0; 0; 0 Met; 0; 0 Met; 80; 80; 80; 80
- Stock of outstanding short-term external debt contracted or guaranteed by the government or the central bank (ceiling); US$ millions: 4 000Met 000Met 00Met 0   0   0   0
- New external arrears (ceiling): 4 000Met 000Met 00Met 0   0   0   0
- Expenditure in priority sectors (floor) 5: 4,200 ... 3,321 Not Met; 1,060 ... 743 Not Met; 2,167 ... ... 2633; 2,633; 4,706; 4,706
- Memorandum item — Reserve money (ceiling): 6,770 ... 6,978 ... 7,360 ... 7,413 ... 7,441 7,129 ... 7306 7,306 7,855 7,830

Notes from table footnotes (selected)
- Definitions and adjustors are included in the technical memorandum of understanding (TMU).
- Calculated using the program exchange rates.
- External debt contracted or guaranteed other than with a grant element equivalent to 35 percent or more, calculated using a discount rate based on the OECD commercial interest rates. Excludes borrowing from the IMF.
- Continuous performance criterion.
- Priority sectors include education, health, agriculture, energy, justice, social affairs, and public works (as defined in the TMU).
- For 2013 the ceiling is for loans contracted with China's EXIMBANK (US$334.65 million), ECOWAS (US$10.53 million), and the OFID (US$17 million). These loans were contracted in 2012-13; they became effective starting from late 2012. The $80 million ceiling for 2014 is tied to new debt to finance the Kaleta hydroelectric dam-Conakry transmission line project.
- Indicative targets for the 4th Review under the ECF arrangement.
- Proposed revised indicative targets.
- PCs for the 4th Review under the ECF arrangement.
- Proposed revised PCs.

### Prior actions for completion of the Fourth Review and revised structural benchmarks (Table 2: selected measures, dates, implementation status, rationale)
- Prior Actions (implemented)
  - Adoption by the Board of Directors of the Central Bank of the investment policy for international reserves in accordance with IMF recommendations and international standards — June 25, 2014 — Implemented — Rationale: Minimize risk of losses and ensure the liquidity of Central Bank reserves
  - Approval by the government of a draft law revising the investment code — Before July 25, 2014 — Implemented — Rationale: Reduce tax expenditures and improve the environment for the private sector
  - Adoption by the government of the implementing regulations relating to (i) the Public Procurement Regulatory Authority (ARMP); (ii) the Administration and Control of Large Projects and Public Procurement (ACGP); (iii) the National Directorate of Public Procurement (DNMP); and thresholds for awarding public contracts — Before July 25, 2014 — Implemented — Rationale: Bring the procurement framework in line with international standards
  - Joint instructions by the Minister of State for the Economy and Finance and the Ministry of Energy and Hydrology to EDG to manage operations so no government financial support beyond the revised budget is needed and to avoid supplier arrears — Before July 25, 2014 — Implemented — Rationale: Reduce fiscal risks

- Structural Benchmarks (implementation status and dates)
  - Adopt the draft law on public entities to make them consistent with the new Budget Framework Law (LORF) and the General Regulations on Fiscal Management and Public Accounting (RGGBCP) — End-September 2014 — A draft law was reviewed by the reform coordination committee and submitted to the Government for its approval on August 21st 2014 — Rationale: Limit the risks for the government budget and strengthen central control over external public debt
  - Revise the relations between autonomous agencies collection public revenue with a view to transferring the accounts from autonomous public entities (EPAs) and local governments to the Treasury master account at the BCRG — End-September 2014 — Discussions have started with the autonomous agencies to clarify their relations with the Treasury — Rationale: Ensure the integrity of the government’s budget and improve its cash management
  - Adopt and implement the recommendation of the study on the role of SOGUIPAMI and its relationship with the public administration — End September 2014 — The consultant’s final report has been approved by the surveillance committee and will be sent to the government for its approval — Rationale: Maintain the government’s assets in the mining sector under government control, protect government revenues, and limit financial risks
  - Adopt, in consultation with donors, a new budget nomenclature, including a functional classification — End-September 2014 — A draft budget nomenclature developed with IMF TA has been reviewed in two validation workshops in mid-June and mid-July — Rationale: Improve the monitoring of poverty reduction efforts
  - Produce management and administrative government accounts for 2011–12 — End-December 2014 — A large proportion of the accounts of the main accounting posts have been deposited and are being reviewed before they are sent to accounts chamber of the supreme court — Rationale: Improve public financial management and transparency
  - Adopt a civil service reform plan, based on the results of the ongoing biometric survey and the action plan for HCREMA — End-December 2014 — Work is ongoing with the assistance of a cabinet recruited with WB support — Rationale: Restrain the wage bill and improve the productivity of the public administration
  - Recruit a management partner for EDG with the assistance of the World Bank and the IFC — End-December 2014 — The call for bids was launched in mid-August — Rationale: Improve power supply and reduce fiscal risk
  - Approve a timetable for clearing domestic payment arrears, distinguishing between arrears from the budget years 2011–13 and those from 2005–10 — End-December 2014 — The call for bids was launched by the AFD on April 30 2014. Three bids were received and opened at the AFD on July 1. The review of the bids is ongoing — Rationale: Support private sector growth and enhance government credibility

### Supplement to the Technical Memorandum of Understanding (TMU) — September 19, 2014 (selected points)
- Purpose: Updates understandings in the TMU dated July 18 2014 regarding baseline projections for foreign assistance and the methodology for calculating the program’s adjusted performance criteria and indicative targets.
- Quantitative performance criteria and indicative targets modified as specified in Table 1 attached to the authorities Letter of Intent dated September 18 2014.
- The quantitative performance targets are calculated on the basis of projected amounts of:
  - (1) net external assistance;
  - (2) exceptional revenues from the mining sector;
  - (3) the net change in program arrears; and
  - (4) the net change in the float.
- Definitions for net external assistance and net change in program arrears remain as specified in the TMU dated July 18 2014.

### External assistance, program arrears, exceptional mining revenue and float (selected lines from data table; Billions of Guinean francs, cumulative from the beginning of the fiscal year)
- Header row labeling: Sept. Dec. 2013 2014 2015 Dec. Mar. Jun. Sept.
- Net external assistance: 365-12768932-140-7943644251,210230
- Net external assistance, excluding Ebola: 365-12768932-140-794364425615230
- Budget support: 6261741,05141900446369594993590
- Grants: 76817700309369594720590
- Loans: 28324200137002730
- External debt service: -242-280-314-413-140-16-352-27-195-389-361
  - Interest: -56-57-76-72-3728-5418594104153
  - Principal: -186-223-238-341-103-43-298-212-289-492-513
- Net change in non-program arrears and debt relief: -19-21-48260802226110
- Net change in non-program arrears: -340-21-1,01126-2188-72022-31-878-214
- Debt relief: 321096302180720057889214
- External assistance for Ebola response plan 1/: ........................... 595...
- Program arrears: 000000000
- Exceptional mining revenue: 0000000004351,750
- Change in the float: -18542-244-178-101-104-720550

Sources: Guinean authorities and IMF staff calculations.
- Footnote 1/: The distribution between grants and loans, except for the IMF contribution, is undetermined at this time.

### Adjustments to program targets (selected rules)
- The floor for net international reserves (NIR), ceilings on net domestic assets (NDA) of the BCRG and bank financing of the government, and the floor for the basic fiscal balance will be adjusted if net external assistance, net change in “program” arrears, exceptional mining revenues, and/or the net change in the float differ from projected amounts.
- Adjustments for net external assistance:
  - If net external assistance exceeds program forecasts, the floor for the basic fiscal balance will be adjusted downward by an amount equal to the surplus external assistance (allowing the entire surplus to be used for supplementary expenditures). The floor for NIR and the ceilings on NDA of the BCRG and bank financing of the government will not be adjusted.
  - If net external assistance is below program forecasts, the floor on NIR will be adjusted downward by 80 percent of the shortfall, and the ceilings for NDA of the BCRG and bank financing of the government will be adjusted upward by 80 percent of the shortfall. The floor for the basic fiscal balance will be adjusted upward by 20 percent of the shortfall (requiring a fiscal adjustment equivalent to 20 percent of the shortfall).
- Adjustments for other deviations (including net change in “program” arrears, exceptional mining revenues, and net change in the float) remain as specified in the TMU dated July 18 2014.
- Any surpluses or shortfalls will be calculated using the program exchange rate.

### Update to the Low-Income Country Debt Sustainability Analysis (LIC-DSA) — selected findings and assumptions
- Assessment: Guinea continues to be assessed at a moderate risk of debt distress.
- Methodology: Updates the LIC-DSA presented in IMF Country Report No. 13/192; uses a higher and unified discount rate of 5 percent (previously 3 percent) introduced in October 2013.
- Main drivers of the moderate risk rating:
  - Vulnerability to adverse shocks to growth, exports, foreign direct investment flows, fiscal performance, and delays in mining projects coming on stream.
  - Importance of implementing a prudent debt policy, relying primarily on concessional loans and grants, and avoiding excessive ramping up of external debt in the short term.
  - Continued need to maintain macroeconomic stability, improve project implementation capacity and the business climate, establish sound governance in the mining sector, and strengthen debt management.
  - Structural reforms to remove bottlenecks, improve productivity, and support economic diversification to minimize potential Dutch disease effects from mining sector expansion.
- Debt stock and arrears:
  - Following HIPC completion point, end-2012 external public debt: $1.3 billion (23 percent of GDP).
  - End-2013 external public debt: $1.6 billion (25.3 percent of GDP).
  - Outstanding external debt arrears: $186 million (11 percent of total debt), virtually all to non-Paris club official bilateral creditors.
  - LIC-DSA incorporates a phased clearance of arrears through partial cancellation and rescheduling (in the context of the HIPC completion point).
- Changes in baseline macroeconomic assumptions:
  - New model-based estimates for financial flows associated with Simandou iron ore mine and an expansion of an existing bauxite mine have been incorporated.
  - Delay in Simandou construction pushed back sharp rises in FDI inflows, imports, production and exports: production and exports now expected to begin in late 2019 and 2020 (previously 2017).
  - Bauxite expansion included with two-step increases in bauxite exports in 2017 and 2022.
  - LIC-DSA incorporates the economic consequences of the Ebola outbreak; WHO estimate referenced that it may take 6-9 months before the outbreak is under control with strong international action; epidemic projected to have a short-term temporary impact with GDP growth lower and the basic primary fiscal deficit higher in 2014–15; medium and long term growth projected higher than in the last DSA on account of mining projects, higher electricity supply, and stronger structural reform impact.
- Changes in debt assumptions:
  - One new projected nonconcessional loan incorporated for renovation and extension of electricity transmission line between Kaleta hydro-electric dam and Conakry: expected amount about $80 million (4.8 percent of end-2013 external debt stock and 1.2 percent of projected 2014 GDP); grant element slightly less than 30 percent; loan not yet signed.
  - China Eximbank loan ($335 million) for Kaleta dam signed in early 2013 — disbursements to date and projected are broadly as initially assumed.
  - LIC-DSA includes the disbursement under the Rapid Credit Facility requested by the Guinean authorities.
  - Government’s emergency response plan to the Ebola outbreak not fully financed; authorities seeking additional donor assistance in the form of grants — LIC-DSA incorporates sought financing as grants.
  - As compared to the last LIC-DSA, the rate of debt accumulation in the outer years is somewhat higher due to a lower primary fiscal balance and higher external borrowing; the net effect of a higher discount rate, higher external borrowing and slightly higher nominal GDP results in slightly higher debt indicators in terms of GDP in later years; PV of external debt is considerably lower in the near term reflecting the higher discount rate and a slightly lower initial external debt stock.

*Source: Authorities’ Letter of Intent, Staff Report, and Supplement to the Technical Memorandum of Understanding (September 19, 2014).*

### 5.      The results of the external LIC-DSA confirm that Guinea’s debt dynamics are sustainable.

### 5.      The results of the external LIC-DSA confirm that Guinea’s debt dynamics are sustainable.

### Baseline findings
- Under the baseline all debt indicators remain below the policy-dependent thresholds. 7
- The inclusion of domestic debt does not significantly change the conclusions of the external LIC-DSA, as no major recourse to the domestic financial market is assumed given the shallow undeveloped nature of the this market.

### Stress tests and alternative scenarios
- Stress tests and alternative scenarios show some breaches of the thresholds.
- These breaches are indicative of Guinea’s vulnerability to adverse shocks to:
  - growth,
  - exports,
  - foreign direct investment flows, and
  - fiscal performance.

### Central bank recapitalization
- Regarding the planned recapitalization of the central bank by the government:
  - Following a first injection, further planned recapitalization has been put on hold pending an evaluation of the central bank’s capital need.

*Source: IMF staff assessment as presented in the external LIC-DSA section.*

### 6.      The authorities broadly agreed with the assumptions and conclusions of this update of the

### _cr14298 - 6.      The authorities broadly agreed with the assumptions and conclusions of this update of the

### Authorities' view and data issues
- The authorities "broadly agreed with the assumptions and conclusions of this update of the LIC-DSA."
- Table notes: "In Table 3, the relatively large external debt dynamic residuals, after taking into account exceptional financing, reflect weaknesses in the coverage of balance of payments data."

### Outstanding external public debt (end-2013)
- Outstanding external public debt stock at end-2013: "$1.577 billion compared to $1.637 billion" (projected in the last LIC-DSA).
- Memo: Arrears "186.1...3.0"
  - Footnote: "The arrears are primarily to some non-Paris Club official bilateral creditors ($88.5 million) and commercial creditors ($65.6 million) and concern debt outstanding on which there is no remaining debt service obligations falling due. The Guinean authorities have invited these creditors for discussions on debt relief and a normalization of the arrears. In addition, there are some arrears to a Paris Club creditor for which a resolution is under discussion with the Guinean authorities."

### Structure of External Public Debt (Table 1, end-2013; US Dollars, millions; Percent of Total; Percent of GDP)
- Total: "1,577.3 100.0 25.3"
- Multilateral Creditors: "588.3 37.3 9.4"
  - IMF: "85.6 5.4 1.4"
  - World Bank: "168.1 10.7 2.7"
  - AfDB Group: "95.1 6.0 1.5"
  - IsDB: "122.2 7.7 2.0"
  - EU: "0.0 0.0 0.0"
  - Other Multilateral Creditors: "117.3 7.4 1.9"
- Official Bilateral Creditors: "923.5 58.5 14.8"
  - Paris Club: "288.8 18.3 4.6"
  - Non-Paris Club: "498.0 31.6 8.0"
  - Arab Funds: "136.6 8.7 2.2"
- Commercial Creditors: "65.6 4.2 1.1"

### Macro assumptions (Table 2: Guinea, LIC DSA Macroeconomic Assumptions, 2014–32; percent of GDP unless otherwise indicated)
- Nominal GDP ($ Million): 2014 "6,347.9"; 2015 "6,797.7"; 2020 "14,092.3"; 2025 "17,314.9"; 2032 "24,296.4"
- Real GDP (Percentage change): 2014 "5.2"; 2015 "5.4"; 2020 "6.4"; 2025 "3.2"; 2032 "3.6"
- Nominal GDP, excl. megaprojects ($ Million): 2014 "6,347.9"; 2015 "6,797.7"; 2020 "9,447.5"; 2025 "12,746.7"; 2032 "19,905.9"
- Real GDP, excl. megaprojects (Percentage change): 2014 "5.2"; 2015 "5.4"; 2020 "4.2"; 2025 "4.4"; 2032 "4.8"
- Fiscal accounts (percent of GDP):
  - Revenue and Grants: 2014 "24.0"; 2015 "23.6"; 2020 "25.9"; 2025 "26.5"; 2032 "26.9"
  - Primary Expenditure: 2014 "25.5"; 2015 "24.1"; 2020 "26.6"; 2025 "26.0"; 2032 "26.1"
  - Of which: Capital expenditure and net lending (selected years): 2014 "10.8"; 2015 "9.4"; 2020 "13.0"; 2025 "13.9"; 2032 "17.4"
  - Primary Fiscal Balance: 2014 "-1.5"; 2015 "-0.6"; 2020 "-0.7"; 2025 "0.5"; 2032 "0.8"
- New external borrowing (includes publicly guaranteed external borrowing): 2014 "3.1"; 2015 "1.7"; 2020 "1.6"; 2025 "0.5"; 2032 "0.1"
- Grant element of new external borrowing (%): 2014 "15.5"; 2015 "20.3"; 2020 "23.0"; 2025 "23.0"; 2032 "17.4"
- Balance of Payments:
  - Exports of goods and services (percent of GDP): 2014 "28.0"; 2015 "26.9"; 2020 "52.6"; 2025 "51.5"; 2032 "37.5"
  - Imports of goods and services: 2014 "-73.1"; 2015 "-67.8"; 2020 "-49.0"; 2025 "-46.8"; 2032 "-40.3"
  - Current account (including official transfers): 2014 "-46.9"; 2015 "-42.1"; 2020 "-7.0"; 2025 "-5.8"; 2032 "-10.5"
  - Foreign direct investment: 2014 "41.8"; 2015 "35.8"; 2020 "3.6"; 2025 "3.9"; 2032 "4.6"

### Debt sustainability indicators and projections (selected metrics from Table 3 and Table 5)
- PV of PPG external debt (percent of GDP; selected years): 2014 "12.7"; 2015 "15.2"; 2020 "15.2"; 2025 "16.1"; 2032 "16.6"
- PV of PPG external debt (in percent of exports): 2014 "51.3"; 2015 "70.2"; 2020 "73.5"; 2025 "83.2"; 2032 "81.5"
- PV of PPG external debt (in percent of government revenues): 2014 "69.1"; 2015 "81.6"; 2020 "78.9"; 2025 "82.3"; 2032 "83.4"
- Debt service-to-exports ratio (percent; selected years): 2014 "13.7"; 2015 "15.2"; 2020 "3.9"; 2025 "3.3"; 2032 "4.3"
- PPG debt service-to-revenue ratio (percent; selected years): 2014 "25.8"; 2015 "22.5"; 2020 "5.2"; 2025 "3.9"; 2032 "4.6"
- Total gross financing need (Billions of U.S. dollars; selected years): 2014 "0.8"; 2015 "1.0"; 2016 "1.2"; 2019 "0.6"; 2024 "0.4"
- Key macro assumptions (selected):
  - Real GDP growth (percent): historical and projections variously reported (examples): 2014 "3.9"; 2015 "3.8"; 2016 "2.3"; 2017 "2.6"; 2018 "1.4"; longer-run averages and projections are included in the tables.
  - Effective interest rate (percent): various values across years including "1.4", "1.2", "0.8", "1.4", "0.4", "1.0", "1.0", "1.2", "1.3", "1.3"
  - Growth of exports of G&S (US dollar terms, percent): examples include "12.3", "4.3", "-8.3", "6.4", "13.6"
  - Grant-equivalent financing (in percent of GDP; selected years): "8.7", "3.0", "2.9", "3.0", "2.8", "2.4", "1.2", "0.6", "1.0"
- Public sector debt (Table 5; percent of GDP):
  - Public sector debt: 2014 "43.4"; 2015 "40.6"; 2016 "40.4"; 2017 "39.8"; 2018 "39.8"; 2019 "39.6"
  - Of which: foreign-currency denominated: 2014 "67.5" (historical series), 2014 (PV figures) "12.7"; 2015 "15.2"
  - PV of public sector debt (percent of GDP; selected): 2014 "26.5"; 2015 "29.6"; 2024 "25.2"; 2034 "24.9"
  - Gross financing need (percent of GDP; selected): 2014 "4.7"; 2015 "7.1"; 2016 "6.0"; 2019 "3.3"
  - PV of public sector debt-to-revenue ratio (percent; selected): 2014 "133.4"; 2015 "123.8"; 2016 "130.0"; 2024 "119.4"; 2034 "117.6"

### Sensitivity analysis and stress tests (Figures 1–2; Tables 4 and 6; selected outcomes)
- Stress-testing methodology note: "The most extreme stress test is the test that yields the highest ratio on or before 2024."
- Table 4 (External debt sensitivity; selected outcomes, percent):
  - Baseline PV of debt-to-exports ratio (2014–34): baseline "15 15 16 17 17 18 14 8" (table shows year-specific series)
  - Alternative scenarios and bound tests include: A1 (historical averages), A2 (new loans on less favorable terms), B1–B6 (growth, export shocks, deflator, net flows, combination shock, one-time 30 percent depreciation).
  - Memorandum: "Grant element assumed on residual financing (i.e., financing required above baseline) 6/ 36 36 36 36 36 36 36 36 36 36 36 36"
- Table 6 (Public debt sensitivity; selected outcomes, percent):
  - Baseline PV of Debt-to-GDP Ratio (2014–34): "30 28 27 26 27 25 25 16 9"
  - Alternative scenarios include: A1 Real GDP growth and primary balance at historical averages; A2 Primary balance unchanged from 2014; A3 Permanently lower GDP growth.
  - Bound tests include B1–B5 (growth shock, primary balance shock, combinations, depreciation, other debt-creating flows).

### Policy relevance, capacity-building, and safeguards
- Safeguards Assessment (Central Bank of the Republic of Guinea, BCRG):
  - An update of the 2007 Safeguards Assessment completed April 2012 found "risks of misuse and misreporting remain high, but are somewhat improved since the 2007 assessment."
  - Recommended measures to mitigate program risks included:
    - "(i) the verification of monetary data at test dates"
    - "(ii) the BCRG publish audited annual financial statements within statutory deadlines"
    - "(iii) the BCRG adopt and implement internationally-recognized financial reporting standards"
  - "The BCRG is working towards the implementation of these and other Safeguards Assessment recommendations."
- Technical assistance and Fund engagement (selected items, 2011–14):
  - Numerous technical assistance missions and resident advisors across Fiscal Affairs (FAD), AFRITAC West (AFW), Monetary and Capital Markets (MCM), Statistics (STA/ST), and Legal (LEG).
  - Examples of planned/ongoing assistance in 2014: FAD Fiscal forecasting and budgeting February 10-24, 2014; MCM Reserve management January 30 - February 7, 2014; AFW Public debt management September 1-12, 2014 (planned); FAD Public financial management (Resident Advisor) 2014 - 2015 (planned).
- Joint World Bank–Fund coordination (Joint matrix; selected items):
  - World Bank operations: Development Growth Corridor Project Q2 2016; Results-Based Lending (DPO) Q2 2015.
  - IMF program and TA: RCF Program request October 2014; ECF Fifth review December 2014; ongoing TA on mining tax policy, public financial management, monetary policy, banking supervision, and statistics.
  - Joint Bank-Fund Support for Medium-Term Debt Strategy Q4 2014.

*Prepared from the content unit: _cr14298 - 6.      The authorities broadly agreed with the assumptions and conclusions of this update of the (IMF staff report material provided).*

### 1. The Bank’s Country Strategy Paper (CSP) 2012–16, approved by the Board on st March

### 1. The Bank’s Country Strategy Paper (CSP) 2012–16, approved by the Board on st March

### Overview
- CSP period: 2012–16; approved by the Board on st March 1, 2012.
- Two pillars:
  - (i) economic and financial governance;
  - (ii) infrastructure for development.
- Mid-term review:
  - Planned for the second semester of 2014.
  - Will provide opportunity for dialogue on Bank support through PRSP implementation and outcomes of the Abu Dhabi Conference for 2014–2016.
  - The mid-term review planned in 2014 will most likely be delayed due to the Ebola crisis.

### Lending operations (announcements and envelopes)
- Abu Dhabi donor and investment conference announcement:
  - UA 163 million ($250 million) additional resources in targeted support to the country’s development program during the 2014–16 period through mobilisation of all AfDB financial and technical assistance instruments/vehicles.

### Governance sector (approved and restructured support)
- Approved and reallocated operations:
  - Budget support allocation of UA20 million in 2011.
  - Fragile State Facility (FSF) support of UA 2.5 million.
  - Restructured non-performing projects and reallocated UA 7.5 million to an economic governance project in 2011.
  - Institutional support project approved at end-2013 of UA 11.4 million focused on mining contract management, and on enhancing public investment and project management.
  - Budget support operation targeting private sector environment and PPPs frameworks, governance (mining, PFM, and public investment management) approved at the end of June 2014.
- FSF coverage:
  - Public administration capacity building, particularly in statistics and strategic planning.

### Energy sub-sector (projects, scope, and expected impacts)
- Projects signed end-2013, implementation beginning in 2014:
  - PREREC.2 (second Conakry Electrical Networks Rehabilitation and Extension Project): UA 11 million.
  - Côte d’Ivoire-Liberia-Sierra Leone-Guinea power regional interconnection project: UA 40.2 million; will construct 1,360 km of 225 kV transmission lines and 12 sub-stations.
- 2014 contribution:
  - Financing the interconnection project of the Gambia River Basin Development Organization (OMVG) involving construction of a dam and a 240 MW hydro-power plant at Kaleta (already financed by the government with a loan from China).
- 2015 plans:
  - Intend to approve a project aimed at enhancing the capacity of the government (Ministry and EDG) to manage the power sector and contributing to closing the gap of energy distribution in Conakry.
- Expected results from implementation of these three projects:
  - (i) an increase in the average electricity access rate;
  - (ii) a reduction in the kWh generating cost;
  - (iii) a reduction in the number of power outages;
  - (iv) the creation of temporary and permanent jobs;
  - (v) a reduction in greenhouse gas emissions.

### Transport sub-sector (regional road and port support)
- Planned road financing:
  - Danané (Côte d’Ivoire) - Frontier of Guinea and from the frontier to N’zoo-Lola (Guinea).
  - Part of a regional project including: Zantiébougou-Kolondiéba-Kadiana-Frontier of Côte d’Ivoire (140 km) linking Bamako to Abidjan and San-Pédro through the axis Tengréla-Boundiali-Séguéla-Daloa; and Duekoué-Guiglo-Bloléquin-Toulepleu-Frontier of Liberia.
  - Roads are part of the Transafrican Dakar-Abidjan-Lagos road.
  - Boké (Guinea)-Quebo (Guinea-Bissau) Road, part of the ECOWAS Regional Transport Programme.
- Rationale:
  - Integrative role aligned with NEPAD Short-Term Action Plan objective to have interstate roads without impediment to free movement of goods and persons.
- Port of Conakry:
  - Bank has begun discussions to support restructuring and extension of Port of Conakry activities.

### Support to private sector operations
- 2014–2016 support focus: specific private sector operations with high and transformative impact.
- Simandou mining project financing mobilization at government request:
  - AfDB envisages to provide an A loan of about UA 200 million equivalent to USD 300 million which will leverage at least a USD 900 million B loan.
  - Africa50 will also contribute to financing at a later stage.
  - AfDB will support capacity building and provide technical assistance to allow the government to fulfill commitments pertaining to Simandou implementation.

### Non-lending operations (ESWs, TA, PRSP support)
- Economic and sector work (ESWs) to be finalized in 2014 in collaboration with UNDP under the first FSF programme:
  - (i) study on financial sector reforms;
  - (ii) private sector profile;
  - (iii) studies relating to management of the Port of Conakry.
- Technical assistance and dialogue:
  - Specific technical assistance on PPP (PPP law and PPP Unit) and on mining sector governance.
- Continued support:
  - Implementation of PRSP (direct support to CTSP and SP-SRP in charge of coordinating monitoring of economic reforms programs and the PRSP), post-Abu Dhabi commitments implementation, and the link between macroeconomic/budget framework sector policies and the public investment plan.
  - FSF support to the National Statistics Development Strategy (NSDS) and the conduct of the Third General Population and Housing Census (RGPH-III).

### Trust funds and additional financing instruments
- In addition to ADF and FSF allocations, potential resource mobilization from:
  - ADB private sector window (including enclave operations in mining sector infrastructure);
  - Trust Fund resources to finance complementary operations in sectors covered by the 2012–16 CSP.
- Examples of instruments available:
  - Rural Water Supply and Sanitation Initiative (strategy could be prepared);
  - Partial Risk Guarantee Instrument;
  - Global Environment Fund;
  - Africa Carbon Facility and Green Fund.

### Response to the Ebola crisis
- Regional approach adopted by AfDB.
- Emergency support:
  - April 2014: emergency support of USD 2 million UA equivalent to USD 3 million grant to support Mano River Union (MRU) countries (Guinea, Liberia, Sierra Leone).
  - July 2014: approved UA 40 million equivalent to USD 60 million grant for countries fighting Ebola and to specifically support the work of the newly established Regional Coordinating Center for Ebola in Guinea.
- Ongoing and planned actions:
  - AfDB is working to finalize a combined Sector Budget Support and Technical Assistance Capacity Building Programme expected to be approved shortly.
  - Support aims to help government enhance immediate response and structure a medium to long term plan.

*Source: _cr14298 - 1. The Bank’s Country Strategy Paper (CSP) 2012–16, approved by the Board on st March*

### 10. African Development Bank and Fund staff collaboration: sharing of information on the

### _cr14298 - 10. African Development Bank and Fund staff collaboration: sharing of information on the

### ADF 13 (2011–16) and FSF Operations Programming — Key lending and ESW figures
- Lending operations totals (UA million):
  - Pillar I – Economic and Financial Governance Support:
    - Budget support 2011: 20.0
    - Targeted support 2011: 2.5
    - Budget support 2014/15: 12.0
    - Targeted support for capacity building 2015: TBD
    - Sub-Total (Pillar I): 32.0; plus 2.5 (targeted support) = 34.5
  - Pillar II – Infrastructure Support (Energy, Transport, Mining, etc.):
    - CLSG Interconnection (electricity) 2013: ADF 16.0; Regional Funds 24.2; Total 40.2
    - Rehabilitation of electric power networks 2013: 11.0
    - Institutional support project - Public investment management and mining 2013: 11.4
    - OMVG 2015: ADB 20.0; Regional Funds 30.0; Total 50.0
    - Simandou - Infrastructure component 2015: Regional Funds 200.0; Total 200.0
    - Sub-Total (Pillar II): 58.4 (ADF) ; 54.2 (Regional Funds) ; Total 112.6
  - Grand totals (ADF / FSF / Regional Funds / ADB / Total):
    - Total ADF and related lines: 90.4
    - FSF (Pillar III): 2.5
    - Regional Funds: 54.2
    - Regional Funds (Simandou): 200.0
    - Aggregate Total: 347.1
- Economic and Sector Work (selected studies and years):
  - Study on financial sector reforms 2013: x
  - Private sector profile 2014: x
  - Guinea Vision 2035 2014: x

### Millennium Development Goals (selected indicators and values presented)
- Goal 1: Eradicate extreme poverty and hunger
  - Employment to population ratio, 15+, total (%): 69 69 69 69 69 65 70 (table entries shown as sequences)
  - Employment to population ratio, ages 15-24, total (%): 51 51 51 51 47 52
  - GDP per person employed (constant 1990 PPP $): 40 35 ...
  - Malnutrition prevalence, weight for age (% of children under 5): ... 29 23 ... 16 13
  - Poverty gap at $1.25 a day (PPP) (%): 63 30 ... 15 21 ...
  - Poverty headcount ratio at $1.25 a day (PPP) (% of population): 93 64 ... 43 48 ...
- Goal 2: Achieve universal primary education
  - Literacy rate, youth female (% of female ages 15-24): ... 60 22 100
  - Literacy rate, youth male (% of males ages 15-24): ... 76 38
  - Primary completion rate, total (% of cohort): 32 ... 70 58 54 100
  - Primary completion rate, total (% of relevant age group): 20 19 31 55 69 61 100
  - Total enrollment, primary (% net): 26 ... 45 65 ... 76 100
- Goal 3: Promote gender equality and empower women
  - Proportion of seats held by women in national parliament (%): ... 9 19 6 19 1 100
  - Ratio of female to male primary enrollment (%): 45 51 67 80 93 84 100
- Goal 4: Reduce child mortality
  - Immunization, measles (% of children ages 12-23 months): 35 61 42 51 72 58
  - Mortality rate, infant (per 1,000 births): 142 124 104 84 59 65
  - Mortality rate, under 5 (per 1,000): 241 209 171 135 64 100 178
- Goal 5: Improve maternal health
  - Births attended by skilled health staff (% of total): ... 38 50 45
  - Maternal mortality ratio (modeled estimate, per 100,000 live births): 1,100 1,000 950 800 560 690 >75% reduction
  - Contraceptive prevalence (% of women ages 15-49): ... 9 24 6
- Goal 6: Combat HIV/AIDS, malaria and other diseases
  - Incidence of tuberculosis (per 100,000 people): 248 249 234 211 255 178 Halt/reverse
  - Tuberculosis case detection rate (%, all forms): 13 18 27 34 58 56 Halt/reverse
- Goal 7: Ensure environmental sustainability
  - Forest area (% of land area): 30 29 28 27   5 27
  - Improved sanitation facilities (% of population with access): 8 11 13 15 30 19 57
  - Improved water source (% of population with access): 52 58 63 68 64 75 72
- Goal 8 and other indicators (selected):
  - Net ODA received per capita (current US$): 48 53 17 21 5 13 0
  - Debt service (PPG and IMF only, % of exports, excluding workers' remittances): 20 24 15 13 3 9
  - GNI per capita, Atlas method (current US$): 430 470 380 340 155 7440
  - Life expectancy at birth, total (years): 50 52 51 53 56 56
  - Population, total (millions): 6 8 9 10 12 11
- Sources indicated: World Development Indicators database, June 2014, and Guinean authorities (Third Poverty Reduction Strategy Paper, March 2013).
- Note: Figures in italics refer to periods other than those specified.

### Statistical Issues — Assessment of data adequacy and data standards
- General assessment:
  - Guinea’s data provision has shortcomings but is broadly adequate for surveillance.
  - Official data provision was suspended during 2009–10; mechanisms are being gradually restored.
- National accounts:
  - Real sector statistics are incomplete and published with insufficient timeliness.
  - Monthly surveys of mining, industrial and agricultural production are produced with delays.
  - Employment and population statistics are only published annually.
  - A program to produce annual input-output matrices was interrupted in 2009.
  - West AFRITAC provided missions to revise national accounts for 2003-08 and provisional estimates for 2009–10 with 2006 as the new base year; work completed but data pending validation before publication.
- Price statistics:
  - The monthly consumer price index (CPI) is being published in a timely manner.
- Government finance statistics:
  - Ministry of Economy and Finance compiles comprehensive monthly budgetary central government data: revenue on cash basis; expenditure on commitment and cash bases.
  - Many operations executed on behalf of the government were not recorded in TOFE during 2009–10; corrective measures have been taken.
  - Provision of monthly data to AFR has resumed.
  - Budget excludes a number of “satellite” accounts; efforts under way (post-2011 Treasury Single Account law) to incorporate them.
- Monetary statistics:
  - During 2009–10, many government accounts were created at the central bank and commercial banks outside treasury control causing large inconsistencies.
  - New government closing these accounts and bringing operations under the treasury net position.
  - Central bank and deposit money bank accounts and monetary survey are compiled and shared monthly with AFR.
  - Delays and data changes occurred due to migration to a new central bank accounting system.
  - Monetary data used to assess program performance are certified by an independent external auditor regularly.
  - January 2014: STA provided technical assistance to start reporting monetary data using standardized report forms (SRFs); another TA mission scheduled for the 2015 fiscal year.
- Balance of payments:
  - IMF statistics mission visited Conakry in April 2012 to assist balance of payments statistics.
  - National Committee for Harmonization of Balance of Payments Statistics reactivated since 2008.
  - Balance of payments survey implemented with a response rate of over 75 percent.
  - Central bank compiled BOP and IIP statistics in line with BPM5.
  - The BOP section has not used all central bank data sources to compile BOP and IIP statistics.
- Data standards:
  - Guinea participates in the General Data Dissemination System since 2003, but metadata have not been updated since then.
  - No data ROSC is available.

### IMF emergency response to the Ebola outbreak — Press Release highlights (September 26, 2014)
- IMF Executive Board approved expedited emergency financial assistance totaling US$130 million for Guinea, Liberia, and Sierra Leone.
  - Amounts: Guinea US$41 million; Liberia US$49 million; Sierra Leone US$40 million.
- Purpose: Help respond to the Ebola outbreak, cover part of immediate balance of payments and fiscal needs estimated at about US$100 million for each country.
- Preliminary IMF estimates of economic impact in 2014:
  - Growth could decline by at least 3-3½ percent in Liberia and Sierra Leone.
  - Growth could decline by about 1½ percent in Guinea.
- Other macro effects cited:
  - Inflationary pressures have flared up.
  - Sharp declines in tax revenues and substantially higher Ebola-related spending.
  - Combined preliminary staff estimate of financing gap: about US$300 million, provided contagion is stopped early next year.
  - IMF financing will cover almost half of this combined financing need.
- IMF actions:
  - Augmentation of access of 25 percent of quota under current ECF arrangements for Liberia and Sierra Leone (increase of almost 50 percent in financing under their existing arrangements).
  - 25 percent of quota financing under the Rapid Credit Facility (RCF) for Guinea.
- Statements emphasized need for additional bilateral and multilateral donor support to avoid painful domestic adjustment measures.

### Statement by Guinean authorities (Kossi Assimaidou and Siradiou Bah) — summary of impacts, needs, and program position (September 29, 2014)
- Context and request:
  - Authorities expressed appreciation for IMF and development partner support.
  - Ebola erupted in March 2014 in south-east Guinea and spread to Liberia and Sierra Leone.
  - Initial cost of the authorities’ health and security emergency response plan: USD 85 million or 1.3 percent of GDP.
  - Authorities requested IMF support under the Rapid Credit Facility (RCF); disbursement to be made to the Treasury account at the Central Bank to provide immediate budget support.
- Human and economic impact:
  - Thousands infected and more than five hundred deaths, including tens of health workers.
  - Disruptions: agriculture, artisanal diamond and gold mining, trade, transportation; departure of foreign workers; halted mining projects.
  - Closure of borders with five out of six neighboring countries; only three international airline companies serving the country (mostly for international aid shipment).
- Macroeconomic projections and fiscal implications for 2014:
  - 2014 real GDP growth estimated at 2.4 percent, against a projected growth rate of 4.5 percent at the beginning of the year.
  - Poverty indicators expected to worsen; inflation projected higher than under the ECF-program due to disruptions in agricultural and transportation activities.
  - Revenue collections lowered by 0.7 percent of GDP.
  - Unforeseen higher expenditure to contain the epidemic.
  - Fiscal deficit set to widen to 5.5 percent of GDP against a target of 4 percent of GDP under the ECF-supported program.
  - 2014 budget revised and submitted to parliament with a financing gap of 1.9 percent of GDP.
  - World Bank, African Development Bank and the European Union indicated contributions to finance the gap.
- Monetary and external sector implications:
  - Spread between the official and market exchange rates widened to reach more than 3 percent.
  - Projected gross official reserves could decline from the program target of 3.7 months of imports to 3.2 months in the absence of adjustment or external financing.
  - Authorities committed to maintain a tighter monetary stance and liquidity management, increase sales in weekly foreign exchange auctions to contain exchange rate pressures and upward inflationary pressure.
- Social effects and disruptions:
  - Labor mobility and movements of goods and services significantly restrained.
  - Opening of the new school year postponed.
  - Overwhelming demand for health services in a context of limited capacity.
- Program implementation and requests for program adjustments:
  - End-June 2014 performance criteria under the program have been met.
  - Good progress on structural reform and policy coordination.
  - Government held a retreat in August to monitor program implementation and reassess policy priorities.
  - Early September: revised 2014 budget submitted to National Assembly.
  - Authorities requested modifications of indicative targets for end-September and performance criteria set for end-December 2014, including modifications of the ECF-program adjustors to allow the use of domestic financing for the emergency plan if external financing falls short.
- Conclusion:
  - Authorities are determined to pursue ECF-supported reform agenda despite EVD challenges and seek Directors’ support for the RCF request.

*Italic: IMF staff compilation of content from the provided PDF chapter/section.*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2014/_cr14298.pdf_