IMF Executive Board Completes First Review Under the Extended Credit Facility and Approves US$24.3Million Disbursement for Guinea

Stocks and Financial Services Press Releases Tuesday June 26, 2018 09:28
IMF--26 Jun--International Monetary Fund

On June 25, 2018, the Executive Board of the International Monetary Fund (IMF) completed the first review of Guinea's economic performance under the program supported by an Extended Credit Facility (ECF). Completion of this review enables the immediate disbursement of SDR 17.213 million (about US$24.3 million), bringing total disbursements under the arrangement to SDR 34.423 million (about US$48.6 million). The Board also approved the authorities' request for modification and waivers of non-observance of performance criteria.

Guinea's three-year ECF arrangement was approved by the Executive Board of the IMF on December 11, 2017 (see Press Release No. 17/484) for SDR 120.488 million (about US$170.1 million at the time of the arrangement's approval, or 56.25 percent of Guinea's quota). The ECF arrangement aims at strengthening resilience, scaling-up public investment in infrastructure while preserving stability, strengthening social safety nets, and promoting private sector development.

Following the Executive Board's discussion on Guinea, Mr. Mitsuhiro Furusawa, Acting Chair and Deputy Managing Director, 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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