{
  "title": "IMF Executive Board Concludes the 2016 Article IV Consultation with Guinea",
  "publication": "IMF News, July 25, 2016",
  "sourceUrl": "https://www.imf.org/en/news/articles/2016/07/25/21/03/pr16359-guinea-imf-executive-board-concludes-the-2016-article-iv-consultation",
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  "overlayPath": "/en/news/articles/2016/07/25/21/03/pr16359-guinea-imf-executive-board-concludes-the-2016-article-iv-consultation/index.md",
  "summary": "Economic growth averaged 1.8 percent during 2012–15, significantly below the performance of peers.",
  "publishDate": "2016-07-25",
  "sections": [
    {
      "heading": "Recent economic performance and shocks",
      "content": "- Economic growth averaged 1.8 percent during 2012–15, significantly below the performance of peers.\n- GDP per capita is estimated to have fallen, likely inducing an increase in poverty.\n- Key shocks: Ebola epidemic, sharp decline in commodity prices, and political uncertainty."
    },
    {
      "heading": "2016 recovery and near-term indicators",
      "content": "- Growth is projected to rebound to 3.7 percent in 2016, supported by higher electricity provision from the Kaleta hydroelectric dam and a strong increase in bauxite production.\n- Inflation increased to 7.9 percent in April 2016 driven by stronger domestic demand and a weaker exchange rate.\n- Bank credit to the private sector continued to grow at rapid rates.\n- Reserve buffers increased and stabilized at 2.4 months of imports, after significant losses in 2014–15."
    },
    {
      "heading": "Medium-term outlook and risks",
      "content": "- Growth is projected to average 4.5 percent over the next five years.\n- Inflation is projected to decline gradually to 5 percent by 2019.\n- The basic fiscal balance is projected to remain around ½ percent of GDP, reflecting financing constraints and prudent policies to strengthen reserves.\n- Main downside risks: a sharper-than expected global growth slowdown that would delay mining projects; deterioration in the region’s security; a resurgence of the Ebola epidemic; and political uncertainty."
    },
    {
      "heading": "Authorities’ economic strategy (2016–22) — goals and channels",
      "content": "- Aim: unlocking broad-based and inclusive growth driven by investments in electricity, roads, and agriculture.\n- Role of the private sector: new mining projects, new transformation units of agricultural products, and large residential housing projects and administrative buildings through PPPs."
    },
    {
      "heading": "Executive Board assessment — findings and policy advice",
      "content": "- Directors welcomed recovery from Ebola and progress under the Fund-supported program, including a strong fiscal adjustment in the first quarter of 2016.\n- Noted that the epidemic and commodity-price decline caused a serious socioeconomic setback.\n- Supported the authorities’ plan to scale up public investment to foster broad-based growth and improve living conditions, but underscored the need to safeguard fiscal sustainability.\n- Fiscal policy recommendations:\n  - Implement the planned fiscal adjustment in 2016 to strengthen fiscal buffers, including against fiscal risks from the energy sector.\n  - Build fiscal space for priority investment and social spending by:\n    - improving tax administration and compliance,\n    - tapping the unrealized tax potential,\n    - containing the government wage bill and energy subsidies,\n    - enhancing the efficiency of public spending,\n    - pursuing improvements in public financial management.\n  - Exercise caution in undertaking large public investments; take into account available financing and ensure a strong process for selecting and managing investment projects.\n  - Limit recourse to nonconcessional finance; seek concessional financing to the extent possible.\n  - Redouble efforts to strengthen debt management and reduce domestic arrears.\n- Monetary and exchange rate policy recommendations:\n  - Support for a prudent monetary policy stance aimed at raising international reserves cover and containing inflation.\n  - Welcome work on a draft central bank law intended to reduce fiscal dominance and facilitate monetary policy; encourage consideration of other recommendations from the updated Safeguards Assessment.\n  - Welcome reform of the foreign exchange system and recommend proceeding with next steps to close remaining exchange rate misalignment.\n  - Note that transitioning to exchange rate flexibility in the medium term will help safeguard competitiveness and international reserves.\n- Financial sector and inclusion:\n  - Call for enhancing risk-based supervision, improving financial intermediation and inclusion.\n  - Look forward to reform of the National Strategy for Financial Inclusion and to strengthening the AML/CFT regime.\n- Structural reforms and governance:\n  - Emphasized addressing structural impediments to higher growth and diversification.\n  - Welcomed efforts to enact a new mining code and reform agriculture.\n  - Urged completion of reforms under the ECF-supported arrangement and continued efforts to enhance the business climate, strengthen governance, and improve public service delivery."
    },
    {
      "heading": "Selected economic indicators (2013–21) — key figures from the publication",
      "content": "- GDP at constant prices (annual percent change): 2013: 2.3; 2014: 1.1; 2015: 0.1; 2016 Est.: 4.0; 2017 Prog.¹: 3.7; 2018 Proj.: 4.3; 2019: 4.5; 2020: 4.8; 2021: 5.0.\n- Consumer price index (end of period): 2013: 10.5; 2014: 9.0; 2015: 7.3; 2016 Est.: 8.5; 2017 Prog.¹: 9.1; 2018 Proj.: 7.5; 2019: 6.0.\n- Money and credit (percent of broad money stock at beginning of period):\n  - Net domestic assets: 2013: 14.4; 2014: 20.6; 2015: 31.2; 2016 Est.: 6.6; 2017 Prog.¹: 3.9; 2018 Proj.: 3.5.\n  - Net claims on government: 2013: 10.2; 2014: 17.2; 2015: -0.9; 2016 Est.: 1.8; 2017 Prog.¹: -1.0; 2018 Proj.: -1.4.\n  - Credit to non-government sector: 2013: 9.7; 2014: 13.7; 2015: 10.8; 2016 Est.: 5.7; 2017 Prog.¹: 5.1; 2018 Proj.: 5.5; 2019: 5.3; 2020: 4.4.\n  - Broad money (M2): 2013: 14.1; 2014: 12.3; 2015: 20.3; 2016 Est.: 11.0; 2017 Prog.¹: 11.2; 2018 Proj.: 18.9; 2019: 7.7; 2020: 14.8; 2021: 12.2.\n- External sector:\n  - Gross available reserves (months of imports)³: 2013: 3.0; 2014: 2.1; 2015: 3.2; 2016 Est.: 3.4; 2017 Prog.¹: 3.8.\n- Central government finances (percent of GDP):\n  - Total revenue and grants: 2013: 19.9; 2014: 21.9; 2015: 19.0; 2016 Est.: 24.3; 2017 Prog.¹: 23.5; 2018 Proj.: 23.9; 2019: 24.5; 2020: 24.6.\n  - Revenue: 2013: 18.4; 2014: 17.9; 2015: 17.5; 2016 Est.: 19.7; 2017 Prog.¹: 19.8; 2018 Proj.: 20.1; 2019: 20.4.\n  - Total expenditure and net lending: 2013: 25.1; 2014: 26.1; 2015: 27.8; 2016 Est.: 25.6; 2017 Prog.¹: 24.7; 2018 Proj.: 24.8; 2019: 24.9.\n  - Overall budget balance, incl. grants: 2013: -5.2; 2014: -4.1; 2015: -8.7; 2016 Est.: -1.3; 2017 Prog.¹: -1.2; 2018 Proj.: -0.6; 2019: -0.3; 2020: -0.2.\n  - Basic fiscal balance: 2013: -2.8; 2014: -6.4; 2015: -6.9; 2016 Est.: -0.4; 2017 Prog.¹: -0.5; 2018 Proj.: -0.7.\n- National accounts:\n  - Gross capital formation: 2013: 9.3; 2014: 16.9; 2015: 16.5.\n  - Savings: 2013: -8.0; 2014: -8.5; 2015: 2.2; 2016 Est.: 3.3; 2017 Prog.¹: 0.7; 2018 Proj.: 0.4; 2019: -3.5.\n- Debt:\n  - External public debt, incl. IMF: 2013: 21.8; 2014: 25.5; 2015: 25.4; 2016 Est.: 28.4; 2017 Prog.¹: 30.7; 2018 Proj.: 31.4; 2019: 30.6.\n  - Total public debt, incl. IMF: 2013: 41.9; 2014: 43.1; 2015: 49.1; 2016 Est.: 44.7; 2017 Prog.¹: 48.6; 2018 Proj.: 48.1; 2019: 46.4; 2020: 44.4; 2021: 42.1; (final row) 38.6.\n\nIMF Communications Department — Press Release, July 25, 2016.\n\n---\n\n\n References\n\n- Guinea and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.imf.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2016/07/25/21/03/pr16359-guinea-imf-executive-board-concludes-the-2016-article-iv-consultation"
    }
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    "Published: July 25, 2016",
    "Economic growth averaged 1.8 percent during 2012–15, significantly below the performance of peers.",
    "GDP per capita is estimated to have fallen, likely inducing an increase in poverty.",
    "Key shocks: Ebola epidemic, sharp decline in commodity prices, and political uncertainty.",
    "Growth is projected to rebound to 3.7 percent in 2016, supported by higher electricity provision from the Kaleta hydroelectric dam and a strong increase in bauxite production.",
    "Inflation increased to 7.9 percent in April 2016 driven by stronger domestic demand and a weaker exchange rate.",
    "Bank credit to the private sector continued to grow at rapid rates.",
    "Reserve buffers increased and stabilized at 2.4 months of imports, after significant losses in 2014–15.",
    "Growth is projected to average 4.5 percent over the next five years.",
    "Inflation is projected to decline gradually to 5 percent by 2019.",
    "The basic fiscal balance is projected to remain around ½ percent of GDP, reflecting financing constraints and prudent policies to strengthen reserves.",
    "Main downside risks: a sharper-than expected global growth slowdown that would delay mining projects; deterioration in the region’s security; a resurgence of the Ebola epidemic; and political uncertainty.",
    "Aim: unlocking broad-based and inclusive growth driven by investments in electricity, roads, and agriculture.",
    "Role of the private sector: new mining projects, new transformation units of agricultural products, and large residential housing projects and administrative buildings through PPPs.",
    "Directors welcomed recovery from Ebola and progress under the Fund-supported program, including a strong fiscal adjustment in the first quarter of 2016.",
    "Noted that the epidemic and commodity-price decline caused a serious socioeconomic setback.",
    "Supported the authorities’ plan to scale up public investment to foster broad-based growth and improve living conditions, but underscored the need to safeguard fiscal sustainability.",
    "Fiscal policy recommendations:",
    "Monetary and exchange rate policy recommendations:",
    "Financial sector and inclusion:",
    "Structural reforms and governance:",
    "GDP at constant prices (annual percent change): 2013: 2.3; 2014: 1.1; 2015: 0.1; 2016 Est.: 4.0; 2017 Prog.¹: 3.7; 2018 Proj.: 4.3; 2019: 4.5; 2020: 4.8; 2021: 5.0.",
    "Consumer price index (end of period): 2013: 10.5; 2014: 9.0; 2015: 7.3; 2016 Est.: 8.5; 2017 Prog.¹: 9.1; 2018 Proj.: 7.5; 2019: 6.0.",
    "Money and credit (percent of broad money stock at beginning of period):",
    "External sector:",
    "Central government finances (percent of GDP):",
    "National accounts:",
    "Debt:",
    "[Guinea and the IMF](http://www.imf.org/external/country/GIN/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[http://www.imf.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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