WASHINGTON D.C., Aug 12 – The International Monetary Fund has reached a staff-level agreement with Guinea on a 41-month Extended Credit Facility worth SDR 310.59 million, equivalent to about $439 million, as the West African country prepares for a significant expansion in mining activity.
The agreement, which amounts to 145 percent of Guinea’s IMF quota, follows discussions between an IMF team led by Izabela Karpowicz and Guinean authorities in Conakry from June 16 to June 29. It remains subject to approval by IMF management and the IMF Executive Board, which is expected to consider the programme in September.
The proposed Extended Credit Facility comes as Simandou, one of the world’s largest untapped iron ore deposits, moves into production, potentially boosting Guinea’s economic growth and government revenues. The IMF said the programme would seek to ensure that the resulting resource wealth supports long-term development through investment in infrastructure and human capital, economic diversification and sound fiscal management.
“Guinea is at an important economic juncture as the Simandou iron ore project enters production and mining activity expands, creating significant opportunities to support higher growth and revenue mobilization,” said Izabela Karpowicz of the IMF.
She added, “The proposed program would help the authorities channel these opportunities into lasting development gains.”
The IMF said Guinea’s economy has remained resilient, with growth expected to strengthen as mining production increases. However, the Fund also pointed to persistent challenges, including rising inflation and fiscal and external buffers that remain below desired levels.
The programme would focus on four areas: mobilising revenue, particularly from mining, while maintaining debt sustainability; strengthening liquidity management and preparedness for shocks; rebuilding foreign-exchange reserves through greater exchange-rate flexibility; and improving governance and transparency.
The IMF and Guinean authorities also discussed a rules-based fiscal framework for managing mining revenues, including the possible establishment of a sovereign wealth fund. Other discussions covered measures to strengthen human capital, create employment outside mining and support economic diversification.
The fund identified commodity-price and financing shocks, spillovers from the war in the Middle East, prolonged cash shortages and slower reform implementation as risks to Guinea’s outlook. Faster-than-expected mining production and stronger non-mining activity could instead improve growth prospects.
The proposed programme is aligned with Guinea’s national development strategy and its Simandou 2040 vision, according to the IMF.
