The Executive Board of the International Monetary Fund (IMF) has approved a disbursement of SDR 107.1 million (about US$148 million) to Guinea under the Rapid Credit Facility (RCF).
This, according to the board in a statement together with debt relief received on April 13 under the Catastrophe Containment and Relief Trust (CCRT), will help the country address urgent balance of payments and fiscal financing needs stemming from the negative impact of the COVID-19 pandemic and mitigation measures. IMF financing will also contribute to catalyzing donors’ financial support.
Guinea is being severely affected by the COVID‑19 pandemic. Worsening global conditions and a rapidly spreading local outbreak have deteriorated Guinea’s short-term growth prospects and hindered mining exports and tax revenues.
The disbursement under the RCF will provide needed financing for the implementation of the authorities’ response plan to address the COVID-19 health emergency and mitigate its severe impact. Key measures will focus on scaling-up health spending, protecting the most vulnerable from the impact of the crisis, and supporting the private sector. The authorities are taking steps to ensure transparency and accountability in the use of resources to address the COVID-19 crisis.
Following the Executive Board’s discussion on Guinea, Mr. Mitsuhiro Furusawa, Acting Chair and Deputy Managing Director, issued the following statement: “Guinea has been severely affected by the COVID-19 pandemic. Worsening global conditions and a rapidly spreading local outbreak have further weakened the short-term outlook. The pandemic and mitigation measures have given rise to urgent balance of payments and fiscal financing needs. The disbursement under the Rapid Credit Facility will provide timely support to address these needs and should help catalyze donors’ financial assistance.
“The authorities have adopted a comprehensive plan to respond to the emergency and mitigate the impact of the crisis. Key measures focus on scaling-up health spending, protecting the most vulnerable and supporting the private sector. Non-priority spending will be contained to free resources for the emergency response. The authorities are also implementing measures to ensure the appropriate use and monitoring of emergency resources.
“Using external buffers while allowing greater exchange rate flexibility will contribute to responding to the shock while preserving an adequate level of reserves. The central bank will continue to limit its interventions in the foreign exchange market and implement a rule-based intervention strategy. Monetary policy will be oriented towards preserving liquidity in the banking sector while containing inflation. To this end, limiting central bank budget financing will be important.
“Beyond addressing immediate needs stemming from the crisis, preserving medium-term fiscal and debt sustainability is key. For this, the authorities will target a lower-than-previously-planned primary fiscal deficit path once the crisis subsides. Ensuring debt transparency and moving forward with reforms to strengthen debt management will also be critical.’’