IMF Reaches Staff Level Agreement on the First Review Under the ECF for Guinea

Stocks and Financial Services Press Releases Thursday May 3, 2018 09:07
IMF--3 May--International Monetary Fund

The Guinean economy is growing at a fast pace, driven by a buoyant mining sector.Preserving macroeconomic stability and generating higher and more broad-based growth is needed to improve the living standards of the population and reduce poverty.Strengthening Guinea's fiscal position is pivotal to maintain stability and medium-term debt sustainability.Following discussions between the Guinean authorities and IMF staff in Conakry from April 3-15, 2018 and during the 2018 Spring Meetings in Washington, a staff-level agreement was reached on the first review of the program of economic policies and reforms supported by a three-year Extended Credit Facility (ECF) arrangement. Subject to IMF management approval, the staff-level agreement is expected to be submitted to the IMF Executive Board for its consideration in June 2018.

At the conclusion of the discussions, Giorgia Albertin, IMF Mission Chief for Guinea, made the following statement:

"The Guinean authorities and the IMF staff have reached a staff-level agreement on the first review of the program of economic policies and reforms supported by a three-year ECF arrangement which aims at fostering higher and broad-based growth and reduce poverty while preserving macroeconomic stability."

"The Guinean economy is growing at a fast pace, driven by a buoyant mining sector. Real growth was above 8 percent in 2017 and it is expected at about 6 percent in 2018. Headline inflation picked up to 8.9 percent in 2017."

"Surging mining exports narrowed external imbalances in 2017. The pick-up in foreign-direct investments in mining sector continued. Foreign exchange reserves strengthened."
"Guinea's fiscal imbalances deteriorated in 2017, recording a basic fiscal deficit of 1.1 percent of GDP. Larger-than-budgeted public investments and revenues shortfalls weakened the fiscal performance."
"Preserving macroeconomic stability and generating more inclusive and broad-based growth is needed to reduce poverty and improving living standards of the population."

"Improving Guinea's fiscal position is needed to preserve stability and medium-term sustainability. Further accumulating foreign exchange reserves will reinforce external buffers. Maintaining a prudent monetary policy will be key to maintain moderate inflation"

"Mobilizing additional tax revenues, containing non-priority expenditures, gradually phasing out untargeted electricity subsidies while strengthening social safety nets is needed to reduce Guinea's fiscal imbalances"

"Scaling-up public investments in infrastructure needs to be balanced with preserving stability and medium-term debt sustainability. A prudent borrowing strategy and strengthening public finance and investment management will be key."

"Improving business climate and governance, and financial inclusion are pivotal to foster the development of the private sector and achieving more broad-based growth."

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