Press Release No. 08/232

Press Release: Statement by an IMF Mission to the Republic of Guinea

October 2, 2008

An International Monetary Fund (IMF) mission, led by Mr. Jean Le Dem, visited the Republic of Guinea during September 17 to October 1, 2008 to conduct discussions on the second review under the Poverty Reduction and Growth Facility (PRGF) arrangement, approved by the IMF Executive Board in December 2007. The mission issued the following statement in Conakry on October 1:

"Return to normal economic activity after the general strikes in early 2007 and strong demand in the construction sector are expected to lead to GDP growth of 4½ to 5 percent in 2008. However, inflation has picked up recently mainly on account of petroleum and food import prices. Despite these shocks, Guinea's external position has started to improve, reflecting the pursuit of strict fiscal and monetary policy since April 2007 and the strong international assistance that the country has received.

"There has been good performance to date in meeting the PRGF program targets. The mission emphasized that the envisaged supplementary budget law should not put at risk the end-2008 fiscal targets and urged continued execution of the budget without recourse to central bank financing. For the 2009 budget, current spending should be contained in order to make room for poverty-related expenditure.

"On the structural front, important progress has been made on strengthening economic governance, including publication of the audited accounts of the central bank and launching an action plan to improve public finance management. The mission encouraged the authorities to strengthen further the execution of public spending and natural resource management, implement automatic monthly adjustment in petroleum prices, and submit to Parliament a central bank law that strengthens its independence.

"The completion of the present program review, satisfactory implementation of the Poverty Reduction Strategy Paper, and progress in publication of audits of large procurement contracts would help Guinea reach the completion point under the Heavily Indebted Poor Countries Initiative.

"Discussions are expected to continue during the IMF/World Bank Annual meetings in Washington later this month."