IMF Executive Board Completes Fourth Review Under the Extended Credit Facility Arrangement and Approves US$23.5 Million Disbursement for Guinea
IMF News, April 1, 2020
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- Published: April 1, 2020
Key decisions and disbursement
- The Executive Board completed the fourth review of Guinea’s economic performance under the Extended Credit Facility (ECF) on April 1, 2020.
- The completion enables the immediate disbursement of the equivalent of SDR 17.213 million (about US$23.5 million).
- Total disbursements under the arrangement now amount to the equivalent of SDR 86.062 million (about US$117.6 million).
- Guinea’s three-year ECF arrangement was approved on December 11, 2017, for the equivalent of SDR 120.488 million (about US$170.1 million at the time of the arrangement’s approval, or 56.25 percent of Guinea’s quota).
Program objectives and recent performance
- The ECF arrangement aims at:
- strengthening resilience,
- scaling-up public investment in infrastructure while preserving stability,
- strengthening social safety nets,
- promoting private sector development.
- Guinea’s performance under the ECF-supported program against end-June 2019 targets was described as satisfactory.
- The authorities implemented corrective actions to achieve the end-2019 program targets.
IMF assessment, risks, and immediate support related to COVID-19
- The IMF noted that Guinea faces significant downside risks related to the COVID-19 pandemic and will remain closely engaged as the situation evolves and financing needs change.
- The authorities have finalized a National Emergency Preparedness and Response Plan for a COVID-19 outbreak, with technical support of international development partners; key measures focus on prevention and mitigation of an eventual outbreak.
- The IMF stated it fully supports the adoption and implementation of the authorities’ COVID-19 Emergency Plan.
Policy recommendations and structural priorities (as stated by Mr. Mitsuhiro Furusawa, Acting Chair and Deputy Managing Director)
- Fiscal policy and public investment:
- Creating fiscal space for priority spending is pivotal to foster broad-based growth in the years to come.
- Achieving a basic fiscal surplus in 2020 will contribute to containing inflation and preserving debt sustainability.
- Mobilizing additional tax revenues and reducing untargeted electricity subsidies will generate resources to scale-up public investments and strengthen social safety nets.
- Implementing programmed tax revenue measures, adopting an automatic petroleum prices adjustment mechanism, and advancing the multi-year tariff electricity reform are key.
- A prudent external borrowing strategy will support scaling-up public investments, notably in infrastructure.
- Strengthening public investment management will support the fiscal strategy and enhance governance.
- Exchange rate and monetary policy:
- Allowing greater exchange rate flexibility is important to preserve buffers against external shocks.
- Continuing to limit central bank interventions in the foreign exchange market will be important.
- Reforms to strengthen market forces in the foreign exchange market have progressed well.
- Moving ahead with the implementation of a rule-based central bank’s intervention strategy will reduce discretion.
- Continuing to limit central bank’s lending to the government in line with program objectives is needed to reduce inflation.
- A more active liquidity management will also support achieving monetary targets.
- Financial sector and governance:
- Strengthening banking supervision and regulation will support financial stability.
- Authorities are advancing growth-supporting structural reforms.
- Strengthening the anti-corruption framework and the business climate will enhance governance and support private sector development.
- Implementing the new asset declaration regime and further strengthening the AML/CFT regime will be important.
IMF Press Release No. 20/127 (April 1, 2020).
