IMF approves US$24.3 million for Guinea

Sierra Leone Telegraph: 26 June 2018:

The Guinean government’s handling of the economy has been endorsed by the IMF after its Board met with authorities in Conakry for a review of its Completion of the first review of the country’s economic performance, in achieving milestones set by the IMF in support of its Extended Credit Facility (ECF).

At the end of the review yesterday, 25th June, the IMF Board approved a total of US$24.3 million which will be released immediately, to help the Guinean government foster high and broad-based economic growth and reduce poverty, while preserving stability.

This brings the total disbursements under the loan agreement so far to about US$48.6 million. The IMF Board also approved the authorities’ request for modification and waivers of non-observance of performance criteria.

Guinea’s three-year ECF arrangement was initially approved by the Executive Board of the IMF on December 11, 2017, for a total sum of about US$170.1 million at the time of the arrangement’s approval, or 56.25 percent of Guinea’s quota.

This loan agreement is aiming to strengthen resilience, scale-up public investment in infrastructure, while preserving stability, strengthening social safety nets, and promoting private sector development.

At the end of yesterday’s IMF review, the Acting Chair and Deputy Managing Director of the IMF Board – Mr. Mitsuhiro Furusawa, issued the following statement:

“Guinea continues to demonstrate strong growth momentum and the medium-term outlook is favorable. Owing to fiscal slippages, performance under the ECF-supported arrangement against end-December targets was mixed while program-supported reforms advanced.

“The authorities implemented corrective measures and program performance strengthened. Strong commitment to implementation of program measures is critical to ensure program success and macroeconomic stability.

“Achieving stronger fiscal targets is necessary to preserve debt sustainability, maintain moderate inflation, and support bank’s credit to the economy. To this end, the authorities aim at mobilizing additional revenues, capturing mining revenues, containing non-priority spending and reducing untargeted energy subsidies while scaling-up growth-supporting public investment and strengthening social safety nets.

“Maximizing reliance on concessional borrowing while limiting non-concessional borrowing for infrastructure development will help preserve debt sustainability. Strengthening public finance and investment management is important to foster transparency and efficiency.

“Building external buffers is important to strengthen Guinea’s resilience to shocks. To this end, the authorities will adopt an active strategy for accumulating foreign exchange reserves.

“Strengthening competition in the foreign exchange market and moving to a rule-based central bank’s intervention strategy will support greater exchange rate flexibility.

“Monetary policy should gear towards preserving moderate inflation. Furthermore, limiting government budgetary borrowing from the central bank will help contain inflationary pressures. A more active liquidity management will enhance the monetary policy framework and support banks’ provision of credit to the private sector. Advancing reforms to maintain financial stability will strengthen macroeconomic resilience and support growth.

“Pressing ahead with structural reforms is pivotal to foster private sector development and broad-based growth. Thus, implementing the action pan to improve the business climate, strengthening governance and fostering financial inclusion is key.”

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