IMF Executive Board Completes Sixth and Seventh Reviews Under ECF Arrangement for Guinea, Extends Arrangement, and Approves a US$25.6 Million Disbursement
The Executive Board of the International Monetary Fund (IMF) today completed the sixth and seventh reviews of Guinea's economic performance under the program supported by an Extended Credit Facility (ECF) arrangement. The Board's decision enables the immediate disbursement of SDR 18.36 million (about US$25.6 million), bringing total disbursements under the arrangement to SDR 155.295 million (about US$216.7 million). The Board also approved a request for an extension of the current ECF arrangement to end-October 2016 to allow time to assess the implementation of the program at end-June 2016 as well as a rephasing of the remaining disbursement under the arrangement.
In completing the review, the Board approved the authorities' request for waivers for the nonobservance of the performance criterion at end-2014 on the net international reserves of the Central Bank of the Republic of Guinea (BCRG) and for the performance criteria at end-2015 on the basis fiscal balance of the government, the net domestic assets and the net international reserves of the BCRG, the net domestic bank financing of the government. The Executive Board also approved the request for waivers for the non-observance of performance criteria on the contracting or guaranteeing by the government or the BCRG of new medium and long- term non-concessional external debt and on the introduction or modification of multiple currency practices.
The Executive Board approved the ECF arrangement for Guinea on February 24, 2012, for SDR 128.52 million (seePress Release No. 12/57).
Following the Board's discussion on Guinea, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, stated:
“Guinea was declared free of the Ebola epidemic in end-2015, reflecting the sustained efforts of the government and Guinea's civil society. The epidemic has claimed thousands of lives, brought economic activity to a standstill, reversed socioeconomic gains, and aggravated poverty.
“After solid performance in 2014, program implementation under the Extended Credit Facility (ECF) weakened in 2015, mostly because of the impact of the Ebola disease, and a large public investment program supported by central bank guarantees. Structural reforms also stalled, partly because of difficulties in securing technical assistance. Growth is expected to rebound in 2016 to 4 percent, thanks to pent-up demand coupled with robust agricultural growth. However, given the severity of the shocks that have hit Guinea during 2014-15 and depressed commodities prices, the recovery will be gradual.
“The authorities have taken strong adjustment measures to put their Fund-supported program back on track. Going forward, continued efforts are needed to restore macroeconomic stability and support the recovery, including structural reforms to improve the business environment, particularly in the mining and electricity sectors, and strengthen the delivery of public service.
“The broad-based fiscal adjustment envisioned in the 2016 budget is appropriate, given the need to maintain fiscal sustainability and strengthen the central bank's international reserves. The recent reform of the exchange rate determination mechanism will allow the exchange rate to fully play its shock absorber role and safeguard reserves. The restructuring of some of the central bank guarantees will free budgetary space for social programs, including in the health sector.
“Inaccurate data on public sector non-concessional external debt had resulted in a noncomplying disbursement. In view of the remedial actions taken by the authorities, including planned measures to strengthen debt management, Directors decided to waive the nonobservance of the performance criterion that gave rise to the noncomplying disbursement.”