IMF Staff Concludes Visit to Guinea

IMF Staff Concludes Visit to Guinea

June 9, 2022

Post-mission press releases contain statements by teams of IMF staff reporting their preliminary findings after the country visit. The views expressed in this statement are those of the IMF staff and do not necessarily reflect the views of the IMF Executive Board. The findings of the above mission will not be subject to discussion by the Board of Directors.

• Economic activity is expected to remain robust in 2022 thanks to mining operations. The recovery of the non-extractive sector should be more gradual due to rising inflation caused by the war in Ukraine and domestic uncertainty.
• The appreciation of the exchange rate and the reimbursement by the government of advances from the Central Bank should partly offset additional inflationary pressures.
• Mitigating the impact of the food and fuel price spikes on the most vulnerable populations through the implementation of targeted and temporary measures should be a key priority.

Washington.:
A team of International Monetary Fund (IMF) staff led by Ms. Clara Mira organized a hybrid visit from 1 to 7 June 2022 to discuss the latest economic developments and their prospects. At the end of the visit, Ms. Mira made the following statement:

“Guinea’s economy remains resilient in a challenging environment. The mining sector continues to show resilience with the rapid growth of gold and bauxite production. Despite the easing of Covid-related disruptions and the partial repayment of domestic public debt, growth in the non-extractive sector is expected to be slower than originally forecast due to the deteriorating external environment due to the war in Ukraine and the uncertainty associated with the domestic political situation.

“Prices rose 11% year-on-year in April 2022, reflecting the impact of pre-existing pressure and the war in Ukraine. The appreciation of the Guinean franc, the government’s repayment of Central Bank advances earlier in the year, and the failure to properly use Central Bank financing are helping to offset some of the pressure caused by higher international commodity prices.

“To further mitigate the impact of rising food prices, the authorities have signed a memorandum of understanding with the Chamber of Commerce, reducing customs duties on essential goods such as rice and sugar and imposing price caps.

“Prices for petroleum products at gas stations have increased by 20 percent since June 1, 2022. Fuel price. Less than 2% of this subsidy will directly benefit the poorest 20% of the population.

“Mitigating the impact of price increases through targeted support measures targeting the most vulnerable, including, for example, cash transfers or school canteen programs, remains a key priority, especially in the context of growing food insecurity.

“Revenue collection in the first months of the year has been broadly positive (excluding fuel-related revenue due to increased subsidies), reflecting improved compliance and digitization efforts in the non-core mining sector. On the spending side, the authorities rationalized current spending and focused on the execution of the domestically financed investment budget. The authorities have also started paying off part of the domestic debt accumulated in 2021. However, electricity subsidies remain high. In April 2022, the authorities issued their very first five-year Treasury Bond (OdT) bonds. The bonds will help extend the maturity of government debt, which should reduce short-term refinancing risk and deepen domestic financial markets.

“Staff and authorities discussed the need to strengthen domestic revenue mobilization, especially in the mining sector; seek repayment of debt and prevent the accumulation of a new one; and mitigate the impact of the food and fuel price spike on the most vulnerable through targeted temporary measures. On monetary policy, discussions included the need to continue to limit central bank financing of the budget and to actively manage liquidity in the event of increased pressure on domestic prices.

“The authorities reaffirmed their commitment to use SDR allocation resources prudently and transparently by investing in productive infrastructure and social sectors.

“The mission met with the President for the Transition, His Excellency Mr. Mamady Dumbuya, Secretary General of the Office of the President Amara Kamara, Governor of the Central Bank Karamo Kaba, Secretary General of the Ministry of Economy, Finance and Planning Abdoulaye Touré, Secretary General of the Ministry of Budget Gando Barry, Secretaries General of the Ministries of Agriculture economy, infrastructure and mines, CEOs of the Directorate of the National Agency for Economic and Social Integration (ANIES), SOGUIPAMI, senior officials, as well as representatives of the private sector, civil society and the community of development partners.

“The IMF mission team expresses its gratitude to the Guinean authorities for their hospitality, as well as for constructive and fruitful discussions during the visit. »