## IMF Executive Board Concludes the 2016 Article IV Consultation with Guinea _IMF News, July 25, 2016_ ## Source details **Canonical URL:** [IMF Executive Board Concludes the 2016 Article IV Consultation with Guinea](https://www.imf.org/en/news/articles/2016/07/25/21/03/pr16359-guinea-imf-executive-board-concludes-the-2016-article-iv-consultation) ## Other formats - [Markdown version](/en/news/articles/2016/07/25/21/03/pr16359-guinea-imf-executive-board-concludes-the-2016-article-iv-consultation/index.md) - [Structured JSON version](/en/news/articles/2016/07/25/21/03/pr16359-guinea-imf-executive-board-concludes-the-2016-article-iv-consultation/index.json) - [Bundle manifest](/en/news/articles/2016/07/25/21/03/pr16359-guinea-imf-executive-board-concludes-the-2016-article-iv-consultation/bundle-manifest.json) ## Bibliographic details - Published: July 25, 2016 --- ### Recent economic performance and shocks - 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. ### 2016 recovery and near-term indicators - 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. ### Medium-term outlook and risks - 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. ### Authorities’ economic strategy (2016–22) — goals and channels - 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. ### Executive Board assessment — findings and policy advice - 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: - Implement the planned fiscal adjustment in 2016 to strengthen fiscal buffers, including against fiscal risks from the energy sector. - Build fiscal space for priority investment and social spending by: - improving tax administration and compliance, - tapping the unrealized tax potential, - containing the government wage bill and energy subsidies, - enhancing the efficiency of public spending, - pursuing improvements in public financial management. - Exercise caution in undertaking large public investments; take into account available financing and ensure a strong process for selecting and managing investment projects. - Limit recourse to nonconcessional finance; seek concessional financing to the extent possible. - Redouble efforts to strengthen debt management and reduce domestic arrears. - Monetary and exchange rate policy recommendations: - Support for a prudent monetary policy stance aimed at raising international reserves cover and containing inflation. - 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. - Welcome reform of the foreign exchange system and recommend proceeding with next steps to close remaining exchange rate misalignment. - Note that transitioning to exchange rate flexibility in the medium term will help safeguard competitiveness and international reserves. - Financial sector and inclusion: - Call for enhancing risk-based supervision, improving financial intermediation and inclusion. - Look forward to reform of the National Strategy for Financial Inclusion and to strengthening the AML/CFT regime. - Structural reforms and governance: - Emphasized addressing structural impediments to higher growth and diversification. - Welcomed efforts to enact a new mining code and reform agriculture. - Urged completion of reforms under the ECF-supported arrangement and continued efforts to enhance the business climate, strengthen governance, and improve public service delivery. ### Selected economic indicators (2013–21) — key figures from the publication - 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): - 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. - 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. - 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. - 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. - External sector: - 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. - Central government finances (percent of GDP): - 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. - 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. - 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. - 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. - 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. - National accounts: - Gross capital formation: 2013: 9.3; 2014: 16.9; 2015: 16.5. - 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. - Debt: - 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. - 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. *IMF Communications Department — Press Release, July 25, 2016.* --- ## References - [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) _Source: https://www.imf.org/en/news/articles/2016/07/25/21/03/pr16359-guinea-imf-executive-board-concludes-the-2016-article-iv-consultation_