Urgent- IMF approves emergency financial support of $71 million for Guinea

Urgent- IMF approves emergency financial support of $71 million for Guinea
Urgent- IMF approves emergency financial support of $71 million for Guinea

In a press release, the Executive Board of the International Monetary Fund (IMF) announced the approval on Monday, May 6, of a disbursement of 53.55 million SDRs (approximately $71 million) under the exogenous shocks component of the rapid credit facility to help Guinea meet its urgent balance of payments needs. linked to the fuel depot explosion.

Emergency spending, explains the institution, which will be reflected in the revised budget law for 2024, includes transfers to affected households; decontamination of the explosion site; the construction of housing, schools and health infrastructure; rehabilitation of damaged public buildings; and the start of construction work on a modern and safe fuel depot.

“Guinea’s growth is expected to slow to 4.1% in 2024 due to fuel shortages and rebound to 5.6% in 2025, supported by a resilient mining sector. Policies for 2024 aim to mitigate the impacts of the fuel explosion while minimizing gaps from medium-term growth and economic development goals. In the medium term, the mobilization of domestic revenues, particularly from the mining sector, the modernization of tax administration, the improvement of public finance management and the efficiency of investments, as well as the increase in expenditure on “education, health and social protection, while anchoring spending on available resources, will contribute to increasing productivity and reducing poverty,” notes the IMF. Adding that the Board also concluded the 2024 Article IV consultations with Guinea.

“Emergency financial assistance under the Rapid Credit Facility will help address urgent balance of payments needs associated with the blowout of a major fuel import and storage facility in late 2023 Urgent needs include those related to decontamination of the site, assistance to those affected. households and the reconstruction of buildings, infrastructure and a new fuel depot. A temporary easing of fiscal policy is warranted to respond to the explosion. In the medium term, domestic revenue mobilization, particularly from the mining sector, and improved public financial management would create space to increase spending on education, health and social protection, thereby helping to boost growth. productivity, reduce poverty and preserve debt sustainability. Reform of the electricity sector to address shortages remains essential,” explained Ms. Gita Gopinath, First Deputy Director General and Acting President. Deploring that “Guinea remains exposed to a moderate risk of debt overhang, with a certain margin to absorb shocks. However, domestic debt vulnerabilities have increased, due to the issuance of Treasury bonds to finance significant public investment spending. Prudent macroeconomic policies, including maximizing the concessional nature of new debt, avoiding repeated accumulation of domestic arrears, strengthening debt management capacity and improving public investment management, remain essential to preserve the medium-term debt sustainability.

Ousmane CAMARA

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