Guinea: Financial Sector Stability Review

IMF Staff Country Reports, February 12, 2020

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Guinea: Financial Sector Stability Review

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Bibliographic details

• Published: February 12, 2020
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9781513529844.002

Summary

• IMF conducted a Financial Sector Stability Review of the Republic of Guinea in June 2019.
• Review date on page: February 12, 2020.
• Main conclusion: current economic situation is benign and the economic outlook is currently positive, but financial soundness indicators (FSIs) point to increasing vulnerabilities and possibly some idiosyncratic stress in the banking sector.
• Rapid financial inclusion growth driven by quick adoption of mobile money services.
• Data quality and availability issues hinder more in-depth assessment of financial stability and potential vulnerabilities.
• Financial sector structure acts, to some extent, as a mitigant because all banks are part of foreign financial groups that they can fall back on during periods of stress.
• Recommendation emphasis: develop capacity now to handle potential financial stability vulnerabilities.

Key findings and analysis

• Financial soundness indicators (FSIs):
  • Point to increasing vulnerabilities.
  • Suggest possibly some idiosyncratic stress in the banking sector.
• Economic environment:
  • Current economic situation described as benign.
  • Economic outlook described as currently positive.
• Financial inclusion:
  • Growing rapidly, with mobile money services quickly adopted.
• Structure of banking sector:
  • All banks are part of foreign financial groups, providing potential external support in stress periods.
• Data limitations:
  • Data quality and availability issues make more detailed financial stability assessment difficult.
  • These issues affect the ability to assess vulnerabilities across the banking sector and, later, other financial sectors.

Policy recommendations and priorities

• Strengthen supervisory capacity:
  • Significantly improve on- and offsite supervision of the banking sector.
• Improve data:
  • Significantly improve the availability and quality of data on the banking sector first, and subsequently for other financial sectors.
• Regulatory modernization:
  • Modernize the regulatory framework for banks.
• Sequencing:
  • Prioritize supervisory capacity and data quality improvements now, while the economic situation is benign, to prepare for potential future vulnerabilities.

Content in this bundle

• Guinea: Financial Sector Stability Review; IMF Country Report No. 20/42; October 2019
  • Guinea: Financial Sector Stability Review; IMF Country Report No. 20/42; October 2019 (Markdown version)
  • Guinea: Financial Sector Stability Review; IMF Country Report No. 20/42; October 2019 (PDF)