Washington, DC: The Executive Board of the International Monetary Fund (IMF) concluded the Article IV session [1] with Guinea. Growth is predicted to achieve 4.7 p.c in 2022 and 5.6 p.c in 2023, pushed by way of persevered power in the mining sector, even though the non-mining sector is grappling with the affect of global value shocks.

The Executive Board additionally authorized nowadays a disbursement of SDR 53.55 million (US$71 million) beneath the Food Shock Window of the Rapid Credit Facility to lend a hand Guinea cope with pressing stability of cost wishes associated with the worldwide meals disaster. Food lack of confidence in Guinea has higher considerably owing to the global meals and fertilizer costs surprise. The UN 2022 Global Report on Food Crises considers Guinea to have a significant meals disaster, with a big proportion of the inhabitants suffering from acute meals lack of confidence and worsening malnutrition. The inhabitants could also be suffering from a precarious post-pandemic restoration of the non-mining sector.

Following the Executive Board’s dialogue, Ms. Gita Gopinath, First Deputy Managing Director and appearing Chair, issued the next commentary:

“Guinea’s chronic food insecurity was significantly exacerbated in 2022 as a result of the international food and fertilizer price shock, threatening the fragile post-pandemic recovery of the non-mining sector. Together with the increase in fuel prices, external performance in 2022 is expected to have deteriorated, resulting in weaker-than-desirable foreign reserve coverage. Inflation remains high, partly driven by food prices. Emergency financial assistance under the RCF’s new Food Shock Window would help address urgent balance-of-payments needs and mitigate the impact of the food shock. The authorities’ plan to use the resources to support the most vulnerable, in coordination with the World Food Program, and to provide fertilizers to improve the next harvest, is welcome. Ensuring the transparent and effective use of the resources will be essential.”

“Mobilizing domestic revenue, including from the mining sector, and improving the quality of expenditure, via a reduction in regressive subsidies and better public investment management, will help create additional space to invest in infrastructure, education, and social protection, enhancing Guinea’s growth potential while preserving debt sustainability.”

“Guinea remains at moderate risk of debt distress, with some space to absorb shocks but limited space for new borrowing. Maximizing the concessionality of new debt, tapping domestic financing sources, strengthening debt management capacity, and enhancing public investment management will be crucial in preserving medium-term debt sustainability. “

“Maintaining a tight monetary policy and ensuring that central bank lending to the government remains within the statutory limit are critical to contain inflation. The development of a new consumer price index covering the entire country is welcome; it will be important for the central bank to introduce it gradually, according to best practice.”

“Economic diversification will be essential to sustain growth over time and make it more resilient and inclusive. A sound implementation of the Simandou iron ore project should be a key priority, while addressing weaknesses in governance will also be important. In this regard, moving ahead in the implementation of the 2021 safeguards assessment recommendations and improving governance and the anti-corruption system as well as the AML/CFT regime are welcome steps.”

Guinea: Selected Economic Indicators, 2020-23

(Percent of GDP, until another way indicated)

2020

2021

2022

2023

Est.

Projection

Output and Inflation

Real GDP Growth (annual proportion alternate)

4.9

4.3

4.7

5.6

Mining (annual proportion alternate)

28.3

6.6

11.8

11.1

Industrial mining (annual proportion alternate)

1.6

-0.6

10.9

11.9

Non-mining (annual proportion alternate)

0.3

3.7

2.9

4.1

Inflation Average (annual proportion alternate)

10.6

12.6

12.2

11.4

Central govt budget

Total earnings and grants

13.9

13.6

13.1

13.0

Expenditures and web lending

17.0

15.3

14.4

15.3

Current Expenditures

13.5

13.0

10.6

10.7

Capital Expenditures

3.5

2.3

3.7

4.5

Overall stability together with grants

-3.1

-1.7

-1.3

-2.3

Basic fiscal stability

-1.5

-0.7

0.1

-0.1

External sector

Current account stability (together with legitimate transfers)

-16.1

-2.1

-7.4

-6.8

Current account stability (except for legitimate transfers)