Guinea: First Review of the Arrangement Under the Three-year Extended Credit Facility, Financing Assurances Review, and Request for Modification and for Waivers of Nonobservance of Performance Criteria—Informational Annex

First Review of the Arrangement Under the Three-Year Extended Credit Facility, Financing Assurances Review, and Request for Modification and for Waivers of Nonobservance of Performance Criteria-Press Release; Staff Report; and Statement by the Executive Director for Guinea

Abstract

First Review of the Arrangement Under the Three-Year Extended Credit Facility, Financing Assurances Review, and Request for Modification and for Waivers of Nonobservance of Performance Criteria-Press Release; Staff Report; and Statement by the Executive Director for Guinea

Relations with the Fund

(As of April 30, 2018)

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Latest Financial Arrangements:

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Formerly PRGF.

Overdue Obligations and Projected Payments to Fund1/

(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.

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.

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

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 de jure 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. The reference rate is calculated every morning on the basis of all foreign exchange transactions of the previous day and published no later than 9am on a daily basis. 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 2011–18

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.

Calendar Year 2018

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Source: IMF Staff.

Relations with the World Bank, 2014–17

(As of May 2018)

1. The World Bank Group’s Country Partnership Strategy (CPS) 2014–17, approved by the Board on September 13, 2013, focused on three pillars: (i) improving governance and service delivery; (ii) stimulating growth and economic diversification; and (iii) strengthening human capital. The World Bank Group’s (WBG) program in Guinea was relatively new at the time, following a reengagement that took place in 2011. Most of the portfolio was restructured and re-evaluated at the time of reengagement. The CPS was grounded in the Government’s strategy and included support for each pillar and contained a mix of ongoing and new operations. These included a mix of Advisory Services and Analytics (ASAs), Technical Assistance (TA), Development Policy Operations (DPOs), and Investment Project Financing (IPFs), as well as International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA) interventions. See Tables 1 and 2 below for a list of WBG activities in Guinea from 2014 to 2017.

Table 1.

Guinea: Country Partnership Strategy (CPS) 2014–17

($US million)

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Table 2.

Guinea: Analytical and Advisory Work for Guinea FY14–FY17

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2. During the period, the WBG program was reoriented to activities that focused more directly on the immediate impacts of the Ebola epidemic – but without losing sight of the country’s long-term strategic goals and objectives. The delivery of the program in Guinea remained on track, despite emerging challenges. The WBG’s interventions continued to contribute to the country’s long-term strategic objectives in mining, energy, agriculture, public financial management (PFM) and the human development sectors. The WBG’s portfolio grew quickly due to several emergency operations focused on dealing with Ebola, including the Emergency Macroeconomic and Fiscal Support DPO. However, there was no need to extend the CPS implementation period, with the focus remaining instead on the implementation of ongoing activities.

3. Pillar 1: Improving Governance. The WBG supported improvements in technical capacity and governance systems of key institutions responsible for managing the mineral sector through the Mineral Governance Project and the Guinea Mining Ancillary Infrastructure TA, as well as other TA to support activities related to Legal and Regulatory Institutional Reforms and the Extractive Industries Transparency Initiative (EITI). Support to re-stablishing and strengthening basic systems and practices to improve PFM, human resources management, and service delivery were conducted under the Economic Governance Technical Assistance and Capacity Building (EGTACB) IPF. World Bank TA also supported the roll-out of an HR system for the Guinean Civil Service. Citizen monitoring was introduced and supported through a Public-Sector Governance and Accountability State and Peace-Building Fund (SPF), which worked closely with civil society to gradually build public sector transparency.

4. Pillar 2: Stimulating Growth and Economic Diversification. Implementation of the Electricity Sector Efficiency Improvement Project and the Power Sector Recovery Project supported progress in improving technical and commercial performance of the national electric utility EDG, while the Gambia River Basin Development Organization (OMVG) Interconnector Project supported electricity trade between Gambia, Guinea, Guinea-Bissau and Senegal. Implementation of the Guinea Agriculture Sector Support Project focused on strengthening the capacity of sector institutions to implement Guinea’s Food Security and Agriculture Plan. The Third Village Communities Support Program helped strengthen local government financial systems, service delivery, and crisis readiness at the local level. Guinea also benefited from the West Africa Agriculture Productivity Project (WAAPP). The West Africa Regional Communications Infrastructure Project (WARCIP) supported an increase in geographical reach of broadband networks and the reduction in costs of communication services in Guinea. In addition, MIGA maintained its single guarantee in the telecommunications sector. The MSME (Micro, Small, Medium Enterprises) Support Project focused on strengthening Guinea’s investment climate and financial sector and developing MSMEs in various value chains through assistance to: building capacity at the Private Investment Promotion Agency (APIP), improving access to financing through a new Credit Information System, and developing a new payment system at the BCRG. The Guinea Business Regulation Project helped to create an enabling (and more transparent) regulatory environment to make it easier and less costly for businesses (particularly SMEs) to formally start, operate and grow. The project assisted the Government with revising its investment code, developing a local content policy, and generating a consolidated tax code. In addition, the IFC supported the adoption of a comprehensive PPP law. The West and Central Africa Air Transport Project helped increased regional integration and improve regulation of transport. Finally, the West Africa Regional Fisheries Program supported improvements in governance and management of targeted fisheries and improved handling of landed fish at selected sites and access to international markets for Guinea’s fisheries.

5. In addition, the IFC’s Mining Advisory Programs promoted local supplier development solutions around IFC mining projects by providing technical assistance to the mining sector and capacity building to SMEs to maximize their participation in mining supply chains. In particular, with the Simandou mining project, the local supplier program built the capacity of more than 400 local suppliers, trained approximately 900 SMEs and over 3,000 participants through IFC Business Edge and other activities. It has also supported the Simandou Employee Volunteer Departure Plan and trained more than 700 local employees.

6. Pillar 3: Supporting Human Development. The third pillar focused on improving delivery of social services, promoting youth employment, and building resilience among the most vulnerable. WBG support focused on health and education service delivery, improving skills for job creation, and establishing a functional social safety net system reaching those living below the poverty line. Following the Ebola epidemic, building resilience and strengthening budget management for Ebola-related spending were added to the pillar’s objectives. Several operations supported the utilization of maternal, child health, and nutrition services at the primary care level in target regions, including the Guinea Community Service Delivery Strengthening Project and the Health Sector Strengthening Project. After the Ebola outbreak, the Ebola Emergency Response Project and Additional Financing, the Emergency Macroeconomic and Fiscal Support DPO mentioned above, and the Ebola Recovery and Reconstruction Trust Fund were added. Several interventions (ASAs and IPFs) supported improving access and learning in basic education for underserved populations and strengthening capacity in evidence-based management at the Ministry of National Education and Literacy (MEPUA). A Human Development Public Expenditure Review (PER) and two policy notes were also completed. The Stepping Up Skills IPF focused on improving employability and employment outcomes of Guinean youth in targeted skills programs. Finally, the Productive Social Safety Net Project and the SPF described above supported the establishment of a functional social safety net system reaching those below the poverty line.

7. World Bank Group and Fund staff collaboration: The WBG and Fund actively collaborated in the sharing of information on the ECF-supported program, the macroeconomic situation, the budget, progress in structural reform, planned missions, and mission reports.

Joint World Bank-Fund Matrix

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Relations with the African Development Bank, 2011–17

(As of May 2018)

1. The Bank’s Country Strategy Paper (CSP) 2012–16, approved by the Board on March 1, 2012 and extended to 2017, focuses on two pillars: (i) economic and financial governance; and (ii) infrastructure for development. Under the first pillar, the Bank assisted 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 contributed 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 and the mobilization of resources for the national economic et social development plan (PNDES 2016–20) implementation. 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: (i) allowed the government and the Bank to implement the reforms and the operations which were delayed due to the EVD; and, (ii) allowed 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. The new Bank’s strategy (2018–2022) for Guinea is under preparation. The AfDB mission of March 2018 has agreed with the country’s authorities that the AfDB intervention strategy in Guinea should focus on the following two pillars: Improving access to energy (Pillar 1); and Support for the development of agricultural and industrial value chains (Pillar 2).

2. In the governance sector, six operations were approved between 2012 and 2017. Two operations have been closed and four are in progress. The closed projects are: i) the Economic and Financial Reform Support Program (PAREF 2) approved in June 2014 for UA 12 million and closed in 2015 and ii) PAREF 3 approved in July 2016 for an amount of UA 10.52 million and closed in 2017. The four operations still running are: i) Capacity building in economic management and mining (PAPEGM) financed UC 11,38 million and is expected to be closed in September 2018, ii) the Administrative Capacity Building Support Project (PARCA-GPI) approved in 2016 for an amount of UA 6 million, which is planned to close in June 2020, (iii) the Financial Sector Modernization Support Project ( PAMSFI) approved in March 2017 for UA 2.4 million is expected to close in June 2020 and iv) the PPF of the Guinean agriculture transformation support project, youth agricultural entrepreneurship component (PPF PATAG-EAJ) approved in 2016 for UA 0.99 million. This PPF is being prepared and will lead to the creation of a UA9 million project, which is expected to be approved in October 2018. The results of the implementation of the six 1st pillar operations on governance are quite significant. The implementation of two budget support has allowed, among others, the adoption of the Customs Code, the organization of the conference of donors in 2014, the creation of the Court of Auditors, conducting audits of the accounts the State and the training of managers in public financial management. The Bank’s targeted and institutional support has mainly contributed to the adoption of mining and petroleum codes, the revision of mining contracts and Guinea’s compliance with the Extractive Industries Transparency Initiative (EITI). 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 9 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, four projects were approved between 2012 and 2017 and are under implementation. 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 energy infrastructure built at the end of 2017 by the project consists of: (i) the construction and equipment power stations (ii) the construction of low, medium and high voltage lines (iii) the installation of public lighting and iv) the increase of power connection subscribers, v) the reduction of power loss rate and the improvement of the financial and commercial performance of the Electricity Company of Guinea (EDG).The second project is the Côte d’Ivoire-Liberia- Sierra Leone-Guinea power regional interconnection project for UA 39.2 million that will see the construction of 1,360 km of 225 kV transmission lines and 12 sub-stations. Two other projects were approved between 2015 and 2017. First, the Bank approved in 2015 the financing for UC 46,25 million 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. Second, in December 2017 the Bank approved Guinea-Mali power regional interconnection project for UA 30 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, two public operations were approved between 2012 and 2017. First, 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. Second, the Bank approved in 2017the Coyah-Farmoriah-Pamelap road towards Sierra Leone for UA million 38,28. The Bank intends also to co-finance in 2018 with other partners, the Boké (Guinea)-Quebo (Guinea-Bissau) road, which is part of the ECOWAS Regional Transport Program. 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. In 2017, the Bank supported specific private sector operation with high and transformative impact. AfDB approved a loan of about USD 100 million for financing part of the Boke Mine, Rail and Port Project. AfDB 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 strategy and (ii) local taxation, iii) balance of payment statistics and iv) Water and sanitation governance. The Bank 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 TSF allocations, the Bank mobilized 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 2012–16/17 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 has been prepared in that area. Other instruments also available are the Partial Risk Guarantee Instrument, the Global Environment Fund, the African Legal Support Facility 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. Five operations against Ebola Virus Disease (EVD) were funded by the Bank between 2014 and 2016 for a total amount of UA 43 million. The following four projects have had beneficial effects for the population. These include: (i) the EVD response program, approved in October 2014, (ii) the emergency assistance approved in August 2014, (iii) the technical assistance operation approved in October 2014, and (iv) the capacity building project for West African Health Facilities (SWAPHS) approved in 2014. These operations enabled Guinea and the affected neighboring countries (Sierra Leone and Liberia) to eradicate the EVD epidemic in June 2016 and strengthen the resilience of health structures and populations against the threats of similar epidemics. Note also that the Post-EBOLA Social Investment and Rehabilitation Fund Project (PERSIF) was approved in October 2015 for UA 9.8 million. Its objective is the construction of water supply and sanitary infrastructures and self-production of sanitation materials.

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: Operations of the Country Strategy Paper (DSP) (2012–2016/17)

(Millions UC)

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Sustainable Development Goals

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The poverty line is defined as those that are living on less than $0.98 per day (8815 Guinean Franc). The UNDP pull this data from the World Bank database. The WB database uses national statistics based on household surveys to determine the number that live below a certain threshold of income.

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

Statistical Issues

(As of May 2018)

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Table of Common Indicators Required for Surveillance

(As of May 21, 2018)

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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).

Guinea: First Review of the Arrangement Under the Three-Year Extended Credit Facility, Financing Assurances Review, and Request for Modification and for Waivers of Nonobservance of Performance Criteria-Press Release; Staff Report; and Statement by the Executive Director for Guinea
Author: International Monetary Fund. African Dept.