Executive Board of the International Monetary Fund (IMF) yesterday approved the immediate disbursement of SDR 45.135 million (about US$63.6 million) to the Republic of Guinea to help enhance international reserves, and cover the budget and urgent balance of payments needs resulting from the fight against the Ebola crisis. This follows the completion of the fund’s fifth review of Guinea’s economic performance under the program supported by an Extended Credit Facility (ECF) arrangement. The West African country has now received a total disbursement of SDR 136.935 million (about US$192.9 million) under the ECF agreement.
The IMF said it also approved a request for an extension of the current ECF arrangement to end-December 2015; it had in 2012 approved the three-year ECF arrangement for Guinea on February 24, 2012, for SDR 128.52 million. Naoyuki Shinohara, IMF’s Deputy Managing Director, praised Guinea’s appropriate response to the humanitarian and economic crisis caused by the Ebola epidemic. He said that although the epidemic slowed growth in 2014, inflation continued to decline despite the modest exchange rate depreciation, while international reserves were maintained at a satisfactory level. “Despite these challenges, program performance under the Extended Credit Facility (ECF) arrangement was satisfactory. All end-June 2014 performance criteria and indicative targets, and most indicative targets for end-September were met. However, progress in structural reform has been slow, in large part because of Ebola-related constraints on capacity and delays in the delivery of technical assistance,” said Shinohara, who is also the chair of the Executive board, in an IMF press statement.
Uncertainties about the impact and duration of the Ebola epidemic dampen the near-term macroeconomic outlook, and real GDP is projected to contract in 2015. The 2015 budget, which appropriates resources to combat Ebola and maintain a strong public investment effort, envisages an expansion in the fiscal deficit. The January 2015 agreement on increases in civil service wages is within the limits of the 2015 budget, but will reduce budgetary flexibility over the medium term. The IMF says it is important to ensure that recruitment in the social sectors is implemented as planned. The board adds that going forward, the authorities should press ahead with their civil service reform to ensure that the wage bill remains affordable and creates space for priority expenditure.
The IMF also called for sustained assistance from the international community, through the provision of highly concessional loans and grants and technical assistance. It said the authorities have proven their commitment to ensure transparency in Ebola-related spending and complete their structural reform agenda under the program, to help underpin a revival in growth in the period ahead.
