See also:
» 21.04.2010 - Guinea telecom industry "is flourishing"
» 03.03.2010 - Guinea’s humanitarian flights may be grounded
» 18.11.2009 - International commission on Guinea’s crackdown dispatched
» 20.07.2007 - Guinea on track to restore donor confidence
» 05.06.2006 - Unions in Guinea threaten indefinite strike
» 14.06.2005 - "Guinea risks becoming a new failed state"
» 04.10.2004 - Economic crisis continues in Guinea
» 29.06.2004 - Donors leave Guinea, economic decline expected

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Economy - Development

Still slow economic progress in Guinea

afrol News, 12 October - More than 40 years after it had attained independence, Guinea Conakry is still grappling with a number of weaknesses that retard the country's poverty reduction strategy, administration and good governance.

Guinea is believed to have scored some progress in its macro-economic stabilisation in early 2005, but its implementation capacity weakness, which is compounded by a fragile political situation, is believed to be taking its direct negative impact on the country’s economic performance.

The Guinean government has been urged to restore its macroeconomic stability and improve governance to promote sustainable growth and meet the poverty reduction (PRSP) objectives, set in agreement with the International Monetary Fund (IMF) Concerned about the increasing poverty level among Guineans, the World Bank decided to help Guinea to fight the menace. And since August 2006, the World Bank had approved 70 loans, credits and grants for the country totalling US$ 1 billion.

Ironically, there are no figures available on Guinea's poverty ration, which is why the Conakry government is urgently advised to strengthen the capacity of the permanent secretariat for PRSP and the national statistics office.

A report published by IMF cited weaknesses in macroeconomic policies for constraining the Guinean authorities' ability to address poverty reduction. Guinea's inadequate revenue mobilisation, including from the mining sector, severely limited the scope for more poverty-related spending. The IMF report also grilled government for failing to improve basic infrastructure services - notably the supply of electricity as well as increased on growth and poverty reduction.

The report however underlined the government's commitment to macro-economic stabilisation and poverty reduction, ie IMF prescribed economic reforms. "The main medium-term macroeconomic targets are to achieve an economic growth rate above 5 percent, single-digit inflation, and a sustainable external position," the IMF report said, stressing that revenue mobilisation and expenditure control efforts will help further reduce the overall government deficit.

Moreover, despite continued financial constraints in 2006, spending on priority sectors would still rise moderately as a share of total budgetary expenditure.

The country is also expecting to get financing from major donors as well as enjoy debt relief under the Heavily Indebted Poor Countries (HIPC) initiative, and the Multilateral Debt Relief Initiative (MDRI) was expected to provide adequate levels of financing to implement the authorities' macroeconomic programme - but for this, Guinea was said to depend on the approval and satisfactory implementation of an arrangement under the IMF's Poverty Reduction and Growth Facility (PRGF).

But the IMF report said the programme's implementation in Guinea is not risk-free, mainly because of its volatile political situation, poor governance, weak implementation capacity in some policy areas and regional instability.

Guinea was advised to improve conditions for agriculture, mining, and export diversification - the prime drivers of growth that help it to accelerate progress toward poverty reduction. Concerns were nevertheless being raised by lack of credit facilities, transport and storage in the country's fishing industry.

The IMF report finally urged Guinea to import its revenue performance, especially in the mining industry, to allow priority expenditures to increase. "Planned revenue reforms in the mining sector and elsewhere are expected to increase fiscal revenues from 10.4 percent of GDP in 2004 to an average of about 13 percent of GDP over the period 2006-2008, which is still below Guinea's potential and the average performance reached by countries in the region. Technical assistance from donors will be needed to strengthen the government's efforts," the report added.

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