Front Matter Page
IMF Country Report No. 16/261
GUINEA
2016 ARTICLE IV CONSULTATION—PRESS RELEASE; STAFF REPORT; AND STATEMENT BY THE EXECUTIVE DIRECTOR FOR GUINEA
July 2016
In the context of the 2016 Article IV Consultation, the following documents have been released and are included in this package:
A Press Release summarizing the views of the Executive Board as expressed during its July 22, 2016 consideration of the staff report that concluded the Article IV consultation with Guinea.
The Staff Report prepared by a staff team of the IMF for the Executive Board’s consideration on July 22, 2016 following discussions that ended on May 5, 2016, with the officials of Guinea on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on July 6, 2016.
An Informational Annex prepared by the IMF staff.
A Statement by the Executive Director for Guinea.
The IMF’s transparency policy allows for the deletion of market-sensitive information and premature disclosure of the authorities’ policy intentions in published staff reports and other documents.
Copies of this report are available to the public from
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© 2016 International Monetary Fund
Front Matter Page
GUINEA
STAFF REPORT FOR THE 2016 ARTICLE IV CONSULTATION
July 6, 2016
Key Issues
Context: The economy is recovering from the effects of the Ebola epidemic but is facing severe headwinds from the decline in commodity prices. The authorities’ economic strategy for 2016–22 rests on large investments in electricity, transport, and agriculture, and aims at unlocking shared and broad-based growth. GDP per capita is expected to grow by 1½ percent on average per year during the next five years, after remaining broadly stagnant over the last five years.
Challenge: The authorities will need to deliver socioeconomic gains while safeguarding fiscal sustainability, strengthening the central bank’s reserves and reducing inflation. This will require prioritizing projects, mobilizing adequate financing, and better governance.
Policy recommendations:
Effect the 2016 fiscal consolidation consistent with the available financing envelope.
Anchor the medium-term fiscal deficit to available concessional financing. Tap the property tax base and enforce the automatic fuel pricing mechanism. Rationalize subsidies to reduce them by 1 percentage point of GDP and cap the wage bill to 6 percent of GDP.
Prioritize investment projects and concessional financing, and enforce the public finance management organic law and the procurement code.
Implement the Safeguards Assessment’s recommendations to strengthen the independence of the central bank. Finalize the foreign exchange market reform to support exchange rate flexibility.
Finalize the ECF arrangement’s structural reform agenda and develop a new set of reforms in the area of inclusive finance, agriculture, electricity, and justice to strengthen Guinea’s external competitiveness and resilience to shocks.
Approved By
Abebe Aemro Selassie and Masato Miyazaki
An IMF team consisting of Mr. Wane (Head), Mr. Bouis, Mrs. Charry and Ms. Perinet (all AFR), Mr. Petit (FAD) and Sulemane (Resident Representative) held discussions with authorities in Conakry, Guinea during April 22–May 5, 2016. The team met with the Minister for Economy and Finance Ms. Kaba, the Governor of the Central Bank of Guinea Mr. Nabé, other senior officials, members of Parliament, the business and donor communities, and the media. Mr. Yambaye, Executive Director for Guinea, and his senior advisors, Messrs. Bah and Alle, participated in the discussions.
Contents
CONTEXT AND RECENT DEVELOPMENTS
A. A Missed Opportunity
B. Recent Economic Developments
C. Program Implementation and Risks
MEDIUM-TERM OUTLOOK
POLICY DISCUSSIONS: ADDRESSING DEVELOPMENT NEEDS IN A CONTEXT OF LIMITED FINANCIAL RESOURCES
A. Near-term Priorities: Rebuilding Policy Buffers
B. Medium-term Priorities: A Policy Framework to Support the Scaling-up of Infrastructure Services and Diversify the Economy
C. Other Issues
STAFF APPRAISAL
BOXES
1. Explaining Guinea’s Growth Underperformance
2. Guinea: When a Crisis is an Opportunity?
3. The Post-Ebola Recovery Plan, 2015–17
4. The Souapiti Hydroelectric Dam Project
5. Tapping a Large Tax Potential – A Blueprint for Tax Reform
6. Advancing the Public Financial Management Reform Agenda
7. Estimates of Reserve Adequacy
8. Advances in Promoting Financial Inclusion
FIGURES
1. Guinea and Comparators: Human Development and Infrastructure Indicators
2. Recent Economic Developments
3 Fiscal Indicators
4. Competitiveness Indicators
5. 2012 Article IV Projections and Outturn
6. Monetary and Financial Sector Developments
7. External Sector Developments
TABLES
1. Key Economic and Financial Indicators, 2013–21
2a. Fiscal Operations of the Central Government, 2013–20 (Billions of Guinean Francs)
2b. Fiscal Operations of the Central Government, 2013–20 (Percent of GDP)
3a. Central Bank and Deposit Money Banks Accounts, 2013–20
3b. Monetary Survey, 2013–20
4. Balance of Payments, 2013–20
5. External Financing Requirements and Sources, 2013–20
6. Financial Soundness Indicators, 2010–15
7. Performance Criteria and Indicative Targets, ECF Arrangement 2015–16
8. Structural Benchmarks under the ECF-Supported Program, 2016
9. Risk Assessment Matrix (RAM)
ANNEXES
I. Status of the 2012 Article IV Main Recommendations
II. External Stability Assessment
APPENDIX
I. Draft Press Release
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GUINEA
STAFF REPORT FOR THE 2016 ARTICLE IV CONSULTATION—INFORMATIONAL ANNEX
July 6, 2016
Prepared By
African Department (In Consultation with Other Departments)
Contents
RELATIONS WITH THE FUND
JOINT WORLD BANK-FUND MATRIX
RELATIONS WITH THE AFRICAN DEVELOPMENT BANK, 2011–16
MILLENNIUM DEVELOPMENT GOALS
STATISTICAL ISSUES
Front Matter Page
Press Release No. 16/359
FOR IMMEDIATE RELEASE
July 22, 2016
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