Press Release No. 11/431

Press Release No. 11/431
November 23, 2011

A mission of the International Monetary Fund (IMF) headed by Mr. Harry Snoek visited Guinea during November 10–22, 2011 to review developments, to conduct the discussions for the 2011 Article IV consultation¹, and to seek to reach understandings with the Guinean authorities on a macroeconomic and financial program that could be supported by the IMF under its Extended Credit Facility. The mission met with President Alpha Condé, Prime Minister Mohamed Saïd Fofana, Minister of Economy and Finance Kerfalla Yansané, Deputy Minister of Budget Mohamed Diaré, Governor of the Central Bank of the Republic of Guinea (BCRG) Lounceny Nabé, and other senior government officials and development partners, as well as with representatives of the Comité National de Transition and civil society.

At the end of the mission, Mr. Snoek issued the following statement today in Conakry:

“Guinea made good progress under its 2011 economic program, which, at the authorities’ request, is being monitored by IMF staff. Helped by the normalization of the political situation and high growth in agriculture, the economy is likely to grow by some 4 percent in 2011. Following the serious lapses in controlling government spending in 2009-10, the new government has taken important steps to stabilize the fiscal position, eliminating the need to obtain new credit from the BCRG. Freed from the burden of financing the budget, the BCRG moved to tighten monetary policy and has succeeded in containing the pace of inflation and laying the basis for reducing the inflation rate in the period ahead. Public financial management has been strengthened, especially through the use of cash-based budget management, while the adoption of a new mining code is expected to increase the share of revenues from exploitation of natural resources that will accrue to the State.

“The main objective of the government’s macroeconomic and financial policies over the coming years is to substantially reduce inflation while implementing a broad range of reforms aimed at promoting economic growth and reducing poverty. Investment in the mining sector is increasing rapidly and should generate substantial additional budgetary revenues starting in 2015. In the meantime policies supported by large one-off revenue from the mining sector will focus on improving Guinea’s weak infrastructure base, thereby helping to support broad-based growth that will benefit the entire population. The government intends to complete the process toward the completion point of the Enhanced Heavily Indebted Poor Countries Initiative in 2012; this would provide permanent relief from the heavy burden of Guinea’s external debts, freeing up resources for other purposes.

“The outlook for faster economic growth in the coming years is favorable. Government investment is projected to increase sharply in 2012, financed by one-off revenue from the mining sector and by a resumption of donor assistance. With a strong reform effort and high investment in the mining sector, annual growth should be in the range of 4–5 percent. But careful management of the one-off revenues received from the mining sector will be important to ensure that public spending can be maintained after these resources have been exhausted.

“The mission has reached agreement ad referendum on key elements of a macroeconomic and financial program, notably on the budget for 2012 that could be supported by the IMF under the Extended Credit Facility. Discussions will continue in the coming weeks, with the aim being to submit the program for approval to the IMF’s Executive Board early in 2012.

“The mission wishes to thank the authorities for their excellent cooperation and warm hospitality.”

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¹ Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities.