Guinea: Request for a Three-Year Arrangement Under the Extended Credit Facility—Informational Annex

Request For A Three-Year Arrangement Under The Extended Credit Facility-Press Release; Staff Report; and Statement by the Executive Director for Guinea

Abstract

Request For A Three-Year Arrangement Under The Extended Credit Facility-Press Release; Staff Report; and Statement by the Executive Director for Guinea

Relations with the Fund

(As of October 15, 2017)

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V. Latest Financial Arrangements:

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Formerly PRGF.

VI. Overdue Obligations and Projected Payments to Fund2/

(SDR Million; based on existing use of resources and present holdings of SDRs):

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When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.

VII. Implementation of HIPC Initiative:

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Assistance committed under the original framework is expressed in net present value (NPV) terms at the completion point, and assistance committed under the enhanced framework is expressed in NPV terms at the decision point. Hence these two amounts cannot be added.

Under the enhanced framework, an additional disbursement is made at the completion point corresponding to interest income earned on the amount committed at the decision point but not disbursed during the interim period.

VIII. Implementation of Multilateral Debt Relief Initiative (MDRI): Not Applicable

IX. Implementation of Catastrophe Containment and Relief (CCR):

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As of February 4, 2015, the Post-Catastrophe Debt Relief Trust has been transformed to the Catastrophe Containment and Relief (CCR) Trust.

Decision point – point at which the IMF and the World Bank determine whether a country qualifies for assistance under the HIPC Initiative and decide on the amount of assistance to be committed.

Interim assistance – amount disbursed to a country during the period between decision and completion points, up to 20 percent annually and 60 percent in total of the assistance committed at the decision point (or 25 percent and 75 percent, respectively, in exceptional circumstances).

Completion point – point at which a country receives the remaining balance of its assistance committed at the decision point, together with an additional disbursement of interest income as defined in footnote 2 above. The timing of the completion point is linked to the implementation of pre-agreed key structural reforms (i.e., floating completion point).

Exchange Rate Arrangement

Guinea’s exchange rate arrangement is classified as a managed float system with no predetermined path, after an interruption of the system during 2009–10; the de facto exchange rate arrangement has been reclassified to other managed from a stabilized arrangement, effective February 5, 2015. The Central Bank of the Republic of Guinea (BCRG) intervenes twice a week through a multi-price, two-way, foreign exchange auction with active commercial banks. The BCRG regularly publishes information regarding such auctions. It calculates the reference rate every evening by close of business using daily foreign exchange reports submitted by commercial banks. The reference rate is a weighted average of commercial banks’ purchase and sale rates and is mandatory for government transactions, including current transactions, on the day after it is calculated. Since February 2017, the spread between the reference exchange rate and the foreign exchange bureau rates has remained below 2 percent. However, the foreign exchange system gives rise to a multiple currency practice because the reference rate can potentially deviate by more than 2 percent from the commercial banks’ purchase and sales rates on a given day.

Technical Assistance 2011–17

Calendar Year 2011

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Source: IMF staff.

Calendar Year 2012

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Source: IMF staff.

Calendar Year 2013

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Source: IMF staff.

Calendar Year 2014

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Source: IMF Staff.

Calendar Year 2015

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Source: IMF Staff.

Calendar Year 2016

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Source: IMF Staff.

Calendar Year 2017

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Source: IMF Staff.

Joint World Bank-Fund Matrix

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Relations with the African Development Bank, 2011–15

(As of September 2017)

1. The Bank’s Country Strategy Paper (CSP) 2012–16, approved by the Board on March 1, 2012, focuses on two pillars: (i) economic and financial governance; and (ii) infrastructure for development. Under the first pillar, the Bank will assist in building public financial management capacity, improving governance in the extractive sector and strengthening the central government’s budget. Under the second pillar, the Bank will contribute to reducing the power generation gap and further developing transport infrastructure. The mid-term review of the CSP, which was delayed due to the Ebola (EVD) crisis, was done in February 2016. This provided an opportunity for dialogue on the Bank’s support to Guinea through the implementation of the PRSP, taking into account the fight against Ebola, the socio-economic recovery process, and outcomes of the Abu Dhabi Conference for the period 2015 to 2017. The Bank and Guinea’s authorities agreed to extend the end of the CSP from 2016 to 2017 and to maintain the two pillars. The extension will: (i) allow the government and the Bank to implement the reforms and the operations which were delayed due to the EVD; and, (ii) allow the Bank to better prepare the next country strategy paper (2018–22) which will be aligned on the new national development plan 2016–20. They agreed also that the Bank will support the development of the agricultural sector and the value chain program Guinea intends to develop in the coming months, targeting sector reforms (including land reform), entrepreneurship and business management (including youth), and financing (credit and guarantees). The targeted support to the country’s development program will be delivered through the mobilization of all its financial and technical assistance instruments/vehicles.

2. In the governance sector, the Bank approved a budget support allocation of UA20 million in 2011 and support of UA 2.5 million through the Fragile State Facility (FSF). In addition, the Bank restructured some non-performing projects and reallocated UA 7.5 million to an economic governance project in 2011. This was to improve the country’s public finance management while supporting the reforms aimed at enhancing governance, especially in the extractive sector. The FSF support also covers public administration capacity building, particularly in statistics and strategic planning. At the end of 2013 the Bank approved an institutional support project of UA 11.4 million focused on improving governance in mining contract management and on enhancing public investment and project management. A budget support operation (UA 12 million) targeting the private sector environment and PPPs frameworks, governance (mining, PFM, and public investment management) was approved by the board in end-June 2014 and UA 6.39 million was disbursed end-December 2014. The Bank approved in 2016 a programmatic budget support operation (UA 10.5 million in 2016 and indicative UA 10 million in 2017/2018) targeting public financial management and the business climate. In addition, the Bank approved in 2016 a capacity building project aimed at scaling-up and enhancing the government capacity to manage Mining project (mining one stop shop, local content policy, communities, etc.). Early 2017 the Bank approved a small dedicated capacity building operation targeting Central Bank (BCRG) for UA 2 million. In 2018 the Bank intend to co-finance with Agence Francaise de Developpement (AFD) a capacity building support operation targeting public enterprises governance, budget, PPP unit, and project management. The Agricultural project the Bank intends to support in 2018 for at least UA 10 million at the beginning of the program will target the governance of the sector, entrepreneurship (including youth), and financing issues (credit and guarantees).

3. In the energy sub-sector, two projects were signed at the end of 2013 and began implementation in 2014. The first project is the second Conakry Electrical Networks Rehabilitation and Extension Project (PREREC.2) for UA 11 million. The second project is the Côte d’Ivoire-Liberia-Sierra Leone-Guinea power regional interconnection project for UA 40.2 million that will see the construction of 1,360 km of 225 kV transmission lines and 12 sub-stations. In 2015, the Bank approved the financing of the interconnection project of the Gambia River Basin Development Organization (OMVG) involving the construction of a dam and a 240 MW hydro-power plant at Kaleta already financed by the government with a loan from China. In 2017 the Bank will submit to the Board for approval Guinea-Mali power regional interconnection project for UA 35 million for the construction of transmission lines and sub-stations. Implementation of these projects will result in: (i) an increase in the average electricity access rate; (ii) a reduction in the kWh generating cost; (iii) a reduction in the number of power outages; (iv) the creation of temporary and permanent jobs; and (v) a reduction in greenhouse gas emissions.

4. In the transport sub-sector, the Board approved in December 2014 the road development and Transport Facilitation Programme within the MRU including the road Danané (Côte d’Ivoire) Frontier of Guinea and from the frontier to N’zoo-Lola (Guinea). This road is part of a regional project including these key roads: Zantiébougou-Kolondiéba-Kadiana-Frontier of Côte d’Ivoire (140 km) linking Bamako to Abidjan and San-Pédro through the axe Tengréla-Boundiali-Séguéla-Daloa; and Duekoué-Guiglo-Bloléquin-Toulepleu-Frontier of Liberia. These roads are part of the Transafrican Dakar-Abidjan-Lagos road. The Bank intends also to co-finance in 2017 and 2018 with the European Union and other partners a road program including the Coyah-Farmoriah-Pamelap road towards Sierra Leone, the Boké (Guinea)-Quebo (Guinea-Bissau) road, which is part of the ECOWAS Regional Transport Programme, and the feasibility studies for the Kankan-Mandiana-Odiene road. Because of their integrative role, construction of these roads is in line with the New Partnership for Africa’s Development (NEPAD) Short-Term Action Plan, whose core objective is to have interstate roads without any impediment to the free movement of goods and persons.

5. Support to private sector operations. During the 2014–17 period, and after, the Bank will support specific private sector operations with high and transformative impact. At the request of the government, AfDB intends to provide a loan of about USD 100 million for financing part of the Global Alumina Bauxite project. AfDB will also support capacity building and provide technical assistance in order to allow the government to fulfil its commitment pertaining to the implementation of the mining and other private sector projects.

6. Non-lending operations: To deepen the analysis and understanding of the country’s main challenges and fuel strategic reflexion, the Bank supported the government finalize in 2016, in collaboration with UNDP, an economic and sector works (ESWs) on (i) private sector profile and (ii) local taxation. The Bank will keep enhancing its dialogue and provide specific technical assistance on PPP (PPP law and PPP Unit) and on mining sector governance. The Bank will also continue to support implementation of the country development plan-PNDES, and the link between macroeconomic/budget framework sector policies and the public investment plan. The Bank will continue its support through the FSF programme to the National Statistics Development Strategy (NSDS).

7. Trust Funds: In addition to the ADF and FSF allocations, the Bank could mobilize supplementary resources from the ADB private sector window (including enclave operations in the mining sector infrastructure), and the Trust Fund resources to finance complementary operations in the sectors covered in the 2012–16 Country Strategy Paper (CSP) and that are important for the country’s development. For example, through the Rural Water Supply and Sanitation Initiative, a strategy could be prepared in that area. Other instruments also available are the Partial Risk Guarantee Instrument, the Global Environment Fund, and the Africa Carbon Facility and Green Fund.

8. Response to the Ebola crisis. The AfDB has adopted a regional approach to address the Ebola crisis. In April 2014, the Bank provided an emergency support of USD 2 million UA equivalent to USD 3 million grant to support Mano River Union (MRU) countries affected namely Guinea, Liberia and Sierra Leone. In July 2014, the AfDB approved a UA 40 million equivalent to USD 60 million grant for countries fighting against Ebola. In October 2014, the AfDB approved UA 100 million sector budget support in order to support the three most affected countries. AfDB approved also in October 2014 a UA 7.7 million Technical Assistance Capacity Building Programme to support the national and foreign health worker programs. The total Bank’s support for Guinea amounts to UA 35 million (US$52 million) and aims to help the government enhance the immediate response but also structure a medium to long term plan. The AfDB is supporting the government’s 2015–17 post-Ebola recovery plan by accelerating the execution of planned projects and mobilizing additional resources for new operations/projects.

9. African Development Bank and Fund staff collaboration: sharing of information on the ECF-supported program, the macroeconomic situation, the budget, progress in structural reform, planned missions, and mission reports.

Table 1.

Guinea: ADF 13 (2011–17) and FSF Operations Programming

(UA million)

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Sustainable Development Goals1

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Source: United Nations Sustainable Development Goals. https://unstats.un.org/sdgs/indicators/databaseNote: For additional information on the 2030 goals outlined, refer to the Revised list of global Sustainable Development Goal indicators located here: https://unstats.un.org/sdgs/indicators/Official%20Revised%20List%20of%20global%20SDG%20indicators.pdf

Guinean authorities and IMF Staff calculations

Statistical Issues

(As of October 2017)

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Table of Common Indicators Required for Surveillance

(As of November 7, 2017)

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Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, and domestic bank and non-bank financing.

The general government consists of the central government (budgetary and extra-budgetary funds, and social security funds) and state and local governments. Guinea does not yet compile data at the General Government due to capacity constraints.

Including currency and maturity composition.

Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A), Not Available (NA).