IMF approves US170 million funding for Guinea to tackle poverty

Sierra Leone Telegraph: 12 December 2017:

The Executive Board of the International Monetary Fund (IMF) approved a three-year funding package, under the Extended Credit Facility (ECF) for Guinea for an amount equivalent to SDR 120.488 million (about US$170 million, or 56.25 percent of Guinea’s quota).

The funding will support Guinea’s 2016–20 National Social and Economic Development Plan, which aims at fostering higher and broad-based growth, diversifying the economy, and reducing poverty.

The Executive Board’s decision today enables an immediate disbursement of SDR 17.2 million (about US$24.3 million). The remaining amounts will be phased over the duration of the arrangement, subject to semi-annual reviews.

According to the IMF, the funding will support the authorities’ economic policies and reforms to achieve high and more broad-based growth and reducing poverty, while preserving macroeconomic stability.

It will strengthen the resilience of the Guinean economy, scale-up public investments in infrastructure to foster high and more broad-based growth, while preserving medium-term debt sustainability, strengthening social safety nets to reduce poverty and foster inclusion, and promoting the development of the private sector.

Following the Executive Board discussion on Guinea, Deputy Managing Director Mr. Mitsuhiro Furusawa, and Acting Chair issued the following statement:

“The Guinean economy has rebounded from the adverse impact of the Ebola epidemic and growth momentum is expected to be sustained. Going forward, the priorities are to preserve macroeconomic stability, reduce vulnerabilities, facilitate structural transformation and diversification, tackle widespread poverty, improve living standards, and promote good governance.

“The three-year Extended Credit Facility (ECF) arrangement will support the authorities’ 2016–20 National Social and Economic Development Plan to foster higher and more inclusive growth while preserving macroeconomic stability.

“Thus, the program will aim at improving Guinea’s macroeconomic resilience, scaling-up growth-supporting public investments in infrastructure while preserving debt sustainability, bolstering social safety nets, and promoting private sector development. (Photo: Guinean president Conde).

“The authorities aim at strengthening the fiscal position to preserve macroeconomic stability. Creating fiscal space and prudent external borrowing will support scaling up public investment in infrastructure while preserving debt sustainability.

“To this end, the program will mobilize additional tax revenues, gradually phase out electricity subsidies, strengthen social safety nets, and enhance public finance and investment management. Furthermore, maximizing reliance on concessional borrowing and limiting the recourse to non-concessional borrowing will support debt sustainability

“In addition, accumulating international reserves will build external buffers and strengthen resilience. A prudent monetary policy will preserve moderate inflation while providing appropriate liquidity in the banking sector to ensure healthy credit provision to the private sector. Measures to improve financial stability and strengthen the autonomy of the central bank will enhance macroeconomic resilience and support growth.

“Advancing structural reforms will also be pivotal in supporting the development of the private sector. Notably, strengthening the business climate and governance, as well as fostering financial inclusion will be key in achieving higher and more broad-based growth.”