## _cr15108

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---

### Recent developments and economic outlook
- Ebola epidemic timeline and scale (as of March 1, 2015):
  - Number of cases: 3,219
  - Number of deaths: 2,129
  - Months since beginning of epidemic: 14
- Epidemic geography and transmission:
  - Concentrated in the south-east border region and around Conakry, with more recent spread northwards to bauxite and gold producing regions.
  - Community engagement remains a challenge; transmission surge driven by Conakry and western prefecture of Forecariah.
- Macroeconomic impact and outlook:
  - Real GDP growth estimated to have slowed to 0.4 percent in 2014.
  - Real GDP projected to contract by 0.3 percent in 2015.
  - Growth in 2014 is estimated at 0.4 percent, compared with 2.3 percent in 2013.
  - "Real GDP is projected to contract in 2015."
  - Sectoral effects: most sectors affected, especially agriculture, hotel services, transport and trade.
  - Transmission channels: border closures and controls; population displacements creating farm labor shortages; fewer international visitors; falloff in foreign investment.
  - Inflation continued to decline, despite the modest exchange rate depreciation, while international reserves were maintained at a satisfactory level.
  - Poverty is estimated to have increased; poverty, which is already widespread, is estimated to have increased.

### Health response, fiscal needs, and economic losses
- Immediate and medium-term health financing:
  - Immediate response plan cost: $348 million.
  - Health System Recovery Plan investments envisaged up to $1.3 billion.
  - Government launched the Ebola Zéro campaign aiming to eradicate Ebola in the next 60 days (as of the document).
  - Nine treatment/transit centers functional; monitoring of contacts increased to 90 percent.
- Aggregate balance of payments and fiscal impact:
  - Balance of payments need estimated at $444 million in 2014–15, covered by loans (50 percent) and grants.
  - Cumulative real output loss estimated at about 13.0 percent of GDP.
  - Cumulative fiscal impact estimated at 10.9 percent of GDP, comprising:
    - Revenue loss: 5.9 percent of GDP
    - Additional spending: 5.0 percent of GDP
- Health System Recovery Plan investment breakdown (as presented):
  - Infrastructure 94 77.4
  - Construction 31 023.4
  - Renovation 63 748.0
  - Equipment 27 320.6
  - Medical 21 216.0
  - Laboratories 5 84.4
  - Other 4 0.3
  - Training 14 1.1
  - Medication 40 3.0
  - Other 52 3.9
  - Total 1,326 100.0

### IMF program performance and policy adjustments
- ECF program performance and financing:
  - Performance under the ECF arrangement described as satisfactory despite the shock.
  - The Executive Board completed the 5th review of the ECF arrangement on February 11, 2015.
  - A 42.1 percent increase in access equivalent to SDR 45.135 million was approved to help cope with Ebola; 25 percent of quota (SDR 26.775 million) was disbursed as budget support.
  - This support complements a disbursement under the RCF (25 percent of quota).
  - February 2015: Executive Board approval of a US$63.6 million disbursement to Guinea under its existing program supported by an Extended Credit Facility arrangement.
  - September 2014: US$41 million in emergency assistance to Guinea under the Rapid Credit Facility approved to help in the fight against Ebola.
- Policy adjustments:
  - Fiscal: 2014 basic fiscal balance was allowed to widen; 2015 budget foresees a widened deficit for Ebola-related and health-sector spending.
  - Monetary: policy set to be relaxed to provide adequate liquidity to the private sector and facilitate bank financing of the government budget.
  - Authorities created a special earmarked budget account (BAS) to record international assistance and government resources for Ebola response; an evaluation of fiscal safeguards will be conducted with Fund staff.
- Staff actions and timing:
  - Staff will undertake a comprehensive review of policies under the ECF at the time of the 6th review, expected in the first half of 2015.
  - Staff proposes Executive Board consideration of the authorities’ request on a Lapse of Time basis given the recent completion of the 5th review and absence of major program design changes.

### CCR Trust debt relief request, approval, and use
- Eligibility and request:
  - Guinea eligible for debt relief equivalent to 20 percent of quota or SDR21.42 million (about US$30 million): PRGT-eligible with 2014 annual per capita income of $542 below prevailing IDA cut-off.
  - Authorities requested debt relief predicated on (i) exceptional balance of payments need from the Ebola epidemic (qualifying public health disaster) and (ii) sound macroeconomic policy framework and response.
- Approval and terms:
  - On March 18, the Executive Board approved a grant equivalent to SDR 21.42 million (about US$29.8 million or 20 percent of quota) in immediate debt relief under the CCR Trust.
  - The Executive Board’s decision was taken without a meeting.
  - The grant is to immediately repay outstanding debt and free up resources for relief, containment and recovery efforts.
- Use and timing:
  - Debt relief will cover Guinea’s debt service obligations to the Fund falling due in 2017–19.
  - Guinea has no Fund debt service obligations during 2015–16; CCR Trust relief would be used to pay debt service as it falls due in 2017–19, up to 20 percent of quota.
  - Authorities intend to use proceeds to support international reserves in financing the long-term health system rehabilitation.
  - Coverage objective: debt relief will help cover most of Guinea’s debt service falling due to the IMF in 2017–19 that amounts to SDR 24.37 million.
- Staff view and expectations:
  - Staff regards the Ebola epidemic as a Qualifying Public Health Disaster (QHPD).
  - Staff supports the request for debt relief under the CC window and finds the macroeconomic policy framework appropriate.
  - Staff welcomes substantial international contributions and notes additional external concessional financing would help address the epidemic and safeguard fiscal and external sustainability.
  - The grant should also help to catalyse further assistance from the international community, preferably grants.
  - Over the medium term, building a resilient health system should remain a priority.

### Debt profile and projected debt stock (highlights)
- CCR debt relief coverage and repayments:
  - Multiple PRGT Repayment (ECF) items identified as eligible for CCR debt relief; many individual repayments of 1,836,000 SDR are listed, each representing 1.7 percent of quota increments cumulatively reaching up to 20.0 percent of quota.
  - A PRGT Interest entry of 130,363 SDR is listed for 30-Jun-19 with 0.1 percent of quota.
  - Cumulative Debt Relief shown as Cum. % of Quota reaching 20.0 percent.
- Projected debt stock figures (selected entries, in millions of US Dollars):
  - Total debt stock (2014): 1,737.8
  - Multilaterals (2014): 690.8
  - IMF (2014): 173.4
  - Official bilateral (2014): 984.5
  - Paris Club (2014): 231.4
  - China (2014): 350.8
- Memorandum item:
  - CCR Debt Relief projections shown as 2.7, 14.3, 13.0

### Government objectives, policy stance, and structural priorities
- Government objectives for 2015:
  - Promote strong and inclusive growth, and the eradication of the Ebola epidemic.
- Near-term policy stance:
  - Monetary policy: "We will loosen monetary policy to an extent compatible with our economic stability objectives."
  - Fiscal policy: "We will increase the fiscal deficit in line with available domestic financing and concessional external financing."
  - Budget execution: "We will continue to execute the budget based on available financing in order to meet our fiscal objectives."
  - Macroeconomic targets to be maintained include keeping inflation below 10 percent in 2015 and reserve coverage of imports at roughly 3 months.
- Structural reform priorities and constraints:
  - Progress in structural reforms has been slow, largely due to Ebola-related capacity constraints and delays in technical assistance.
  - Priority reform areas:
    - Strengthen the business climate, including in the mining and electricity sectors.
    - Improved monitoring and supervision of the banking sector.
    - Strengthen the health sector and social safety nets.
  - Authorities’ commitments: ensure transparency in Ebola-related spending and complete structural reform agenda to underpin a revival in growth.
- Transparency commitment regarding CCR request:
  - Agreement "to the publication of all the documents submitted to the Executive Board in relation to this request."

*Italic: Source — IMF staff report content provided in the PDF chapter "1. Key Economic and Financial Indicators, 2013–17" (Guinea) and related Executive Board documentation and Press Release No. 15/137 (March 26, 2015).*

### 1. Key Economic and Financial Indicators, 2013–17 ________________________________________ 8

### _cr15108 - 1. Key Economic and Financial Indicators, 2013–17 ________________________________________ 8

### Recent developments and economic outlook
- The ongoing Ebola epidemic began in early 2014, spread to Conakry and neighboring countries, and by March 1, 2015 had:
  - Number of cases: 3,219
  - Number of deaths: 2,129
  - Months since beginning of epidemic: 14
- Epidemic geography and transmission:
  - Concentrated in the south-east border region and around Conakry, with more recent spread northwards to bauxite and gold producing regions.
  - Community engagement remains a challenge; transmission surge driven by Conakry and western prefecture of Forecariah.
- Macroeconomic impact and outlook:
  - Real GDP growth estimated to have slowed to 0.4 percent in 2014.
  - Real GDP projected to contract by 0.3 percent in 2015.
  - Poverty estimated to have increased significantly due to decline in per capita growth.

### Health response and fiscal/financing needs
- Immediate response and longer-term plans:
  - Immediate response plan cost: $348 million.
  - Health System Recovery Plan investments envisaged up to $1.3 billion.
  - Government launched the Ebola Zéro campaign aiming to eradicate Ebola in the next 60 days (as of the document).
  - Nine treatment/transit centers functional; monitoring of contacts increased to 90 percent.
- Aggregate economic losses and fiscal impact:
  - Balance of payments need estimated at $444 million in 2014–15, covered by loans (50 percent) and grants.
  - Cumulative real output loss estimated at about 13.0 percent of GDP.
  - Cumulative fiscal impact estimated at 10.9 percent of GDP, comprising:
    - Revenue loss: 5.9 percent of GDP
    - Additional spending: 5.0 percent of GDP

### IMF program performance and support measures
- ECF performance:
  - Performance under the ECF arrangement described as satisfactory despite the shock.
  - The Executive Board completed the 5th review of the ECF arrangement on February 11, 2015.
  - A 42.1 percent increase in access equivalent to SDR 45.135 million was approved to help cope with Ebola; 25 percent of quota (SDR 26.775 million) was disbursed as budget support.
  - This support complements a disbursement under the RCF (25 percent of quota).
- Policy adjustments:
  - Fiscal: 2014 basic fiscal balance was allowed to widen; 2015 budget foresees a widened deficit for Ebola-related and health-sector spending.
  - Monetary: policy set to be relaxed to provide adequate liquidity to the private sector and facilitate bank financing of the government budget.
  - Authorities created a special earmarked budget account (BAS) to record international assistance and government resources for Ebola response; an evaluation of fiscal safeguards will be conducted with Fund staff.

### Request for CCR Trust debt relief under Catastrophe Containment (CC) window
- Eligibility and request:
  - Guinea eligible for debt relief equivalent to 20 percent of quota or SDR21.42 million (about US$30 million): PRGT-eligible with 2014 annual per capita income of $542 below prevailing IDA cut-off.
  - Authorities requested debt relief predicated on (i) exceptional balance of payments need from the Ebola epidemic (qualifying public health disaster) and (ii) sound macroeconomic policy framework and response.
- Use and timing of relief:
  - Debt relief will cover Guinea’s debt service obligations to the Fund falling due in 2017–19.
  - Guinea has no Fund debt service obligations during 2015–16; CCR Trust relief would be used to pay debt service as it falls due in 2017–19, up to 20 percent of quota.
  - Authorities intend to use proceeds to support international reserves in financing the long-term health system rehabilitation.
- Staff view:
  - Staff regards the Ebola epidemic as a Qualifying Public Health Disaster (QHPD).
  - Staff supports the request for debt relief under the CC window and finds the macroeconomic policy framework appropriate.
  - Staff welcomes substantial international contributions and notes additional external concessional financing would help address the epidemic and safeguard fiscal and external sustainability.
  - Over the medium term, building a resilient health system should remain a priority.

### Debt profile and debt service to the IMF (highlights)
- Debt relief covers Fund debt service due 2017–19 (Table 2 summary):
  - Multiple PRGT Repayment (ECF) items listed with individual original disbursement dates and due dates; many individual repayments of 1,836,000 SDR are identified as eligible for CCR debt relief, each representing 1.7 percent of quota increments cumulatively reaching up to 20.0 percent of quota.
  - A PRGT Interest entry of 130,363 SDR is listed for 30-Jun-19 with 0.1 percent of quota.
  - The table shows cumulative Debt Relief as Cum. % of Quota reaching 20.0 percent.
- Projected effects and debt stock notes (selected items from Text Table 2):
  - Total projected debt stock figures across 2014–2019 presented in millions of US Dollars (selected entries):
    - Total debt stock (2014): 1,737.8
    - Multilaterals (2014): 690.8
    - IMF (2014): 173.4
    - Official bilateral (2014): 984.5
    - Paris Club (2014): 231.4
    - China (2014): 350.8
  - Memorandum item: CCR Debt Relief projections shown as 2.7, 14.3, 13.0 (years not explicitly labeled in extract).

### Staff actions and next steps
- Reviews and timing:
  - Staff will undertake a comprehensive review of policies under the ECF at the time of the 6th review, expected in the first half of 2015.
  - Staff proposes Executive Board consideration of the authorities’ request on a Lapse of Time basis given the recent completion of the 5th review and absence of major program design changes.

_Italic: Source — IMF staff report content provided in the PDF chapter "1. Key Economic and Financial Indicators, 2013–17" (Guinea)._

### 3. The government is determined to continue implementing its ECF-supported program in

### _cr15108 - 3. The government is determined to continue implementing its ECF-supported program in

### Government objectives and near-term policy stance
- Objectives for 2015: promoting strong and inclusive growth, and the eradication of the Ebola epidemic.
- Monetary policy: "We will loosen monetary policy to an extent compatible with our economic stability objectives."
- Fiscal policy: "We will increase the fiscal deficit in line with available domestic financing and concessional external financing."
- Budget execution: "We will continue to execute the budget based on available financing in order to meet our fiscal objectives."
- Macroeconomic targets and outcomes to be maintained: keeping inflation below 10 percent in 2015 and reserve coverage of imports at roughly 3 months.
- Structural reforms focus (despite technical assistance constraints): public financial management, the business environment, and the electricity sector.

### Debt relief request under the Catastrophe Containment and Relief (CCR) Trust
- Request: debt relief in an amount of SDR 21.42 million, equivalent to 20 percent of quota, under the Catastrophe Containment and Relief Trust.
- Rationale: the Ebola outbreak constitutes a Public Health Disaster that has caused significant economic disruptions and created significant fiscal and balance of payments needs.
- Intended use of proceeds: "We will use the proceeds of the debt relief to finance investments contemplated in the Health System Recovery Plan."
- Coverage objective: debt relief will help cover most of Guinea’s debt service falling due to the IMF in 2017–19 that amounts to SDR 24.37 million.
- Transparency commitment: agreement "to the publication of all the documents submitted to the Executive Board in relation to this request."

### IMF Executive Board decision and related financing (Press Release No. 15/137, March 26, 2015)
- Approval: On March 18, the Executive Board approved a grant equivalent to SDR 21.42 million (about US$29.8 million or 20 percent of quota) in immediate debt relief under the CCR Trust.
- Decision process: "The Executive Board’s decision was taken without a meeting."
- Purpose of CCR grant: to immediately repay outstanding debt and free up resources for relief, containment and recovery efforts in the fight against the Ebola epidemic.
- Complementary IMF support already provided or approved:
  - February 2015: Executive Board approval of a US$63.6 million disbursement to Guinea under its existing program supported by an Extended Credit Facility arrangement.
  - September 2014: US$41 million in emergency assistance to Guinea under the Rapid Credit Facility approved to help in the fight against Ebola.
- Expected catalytic effect: "The grant should also help to catalyse further assistance from the international community, preferably grants."

### Recent macroeconomic developments and near-term outlook
- GDP and growth:
  - Growth in 2014 is estimated at 0.4 percent, compared with 2.3 percent in 2013.
  - "Real GDP is projected to contract in 2015."
- Sectoral impact: most sectors affected, especially agriculture, hotel services, transport and trade.
- Key transmission channels of economic disruption: border closures and controls; population displacements creating farm labor shortages; fewer international visitors; falloff in foreign investment.
- Inflation and reserves: "Inflation continued to decline, despite the modest exchange rate depreciation, while international reserves were maintained at a satisfactory level."
- Fiscal adjustment: "Fiscal policy has been adjusted to accommodate a sizeable revenue shortfall and additional spending needs to combat the Ebola epidemic."
- Poverty: "Against this backdrop, poverty, which is already widespread, is estimated to have increased."

### Structural reforms and priorities for recovery
- Implementation constraints: progress in structural reforms has been slow, largely due to Ebola-related capacity constraints and delays in technical assistance.
- Authorities’ commitments: ensure transparency in Ebola-related spending and complete structural reform agenda to underpin a revival in growth.
- Priority reform areas to spur growth and poverty reduction:
  - Strengthen the business climate, including in the mining and electricity sectors.
  - Improved monitoring and supervision of the banking sector.
  - Strengthen the health sector and social safety nets.

### Health System Recovery Plan investment breakdown (percent of total and amounts)
- Infrastructure 94 77.4
- Construction 31 023.4
- Renovation 63 748.0
- Equipment 27 320.6
- Medical 21 216.0
- Laboratories 5 84.4
- Other 4 0.3
- Training 14 1.1
- Medication 40 3.0
- Other 52 3.9
- Total 1,326 100.0

*Source: IMF — Executive Board documentation and Press Release No. 15/137 (March 26, 2015).*

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