- The International Monetary Fund (IMF) is noting steady progress in the Guinean government's efforts to reform the country's nearly collapsed economy. Prime Minister Lansana Kouyaté seems closer to present a comprehensive poverty fighting policy to the Fund, which should restore donor confidence in Guinea.
An IMF mission led by Jean Le Dem has visited Guinea during the last two weeks, meeting with Prime Minister Kouyaté and prominent government and business leaders in Conakry. Here, the Fund's analysts were presented with new statistics on the Guinean economy and with the ongoing government works to reform the country's run-down economy.
Mr Le Dem, upon leaving Conakry, made it clear that the IMF was impressed by the new Guinean government's dedication to reform the economy. "Since taking office in early April, the new government has announced far reaching changes, mostly in the areas of transparency, management of public resources, and governance," Mr Le Dem noted. "The mission noted that a set of bold measures has already been taken to restore financial control and to stabilise the macroeconomic situation."
Guinea's new authorities have adopted a six-month recovery program and a budget law for the remainder of 2007. A new Poverty Reduction Strategy Paper covering 2007-10 that will include a home-grown policy framework to reverse the country's rising poverty trend is also being finalised, the IMF mission was shown.
With the new anti-poverty strategy being defined in Conakry, the IMF holds that Guinea may be on track to reach a new Poverty Reduction and Growth Facility (PRGF) arrangement with the Fund. A PRGF arrangement would be a key agreement for Guinea, as this would open the doors to other donors and debt cancellation.
The PRGF arrangement is often seen as the IMF's "approval" of national economic policies saying that foreign aid will have a positive effect to reduce poverty. The lack of such an agreement is widely seen as a sign that debt reduction and donor aid may easily get lost in a spiral of bad governance and corruption - which has been the image of Guinea during the last decade.
According to the IMF mission, Guinean authorities have already "initiated discussions" with the Fund on a three-year programme that could be supported by a new PRGF arrangement. "In the coming months, the authorities and Fund staff expect to finalise discussions on the details of the proposed PRGF arrangement, including in the context of the preparation of the 2008 budget," Mr Le Dem noted.
While Prime Minister Kouyaté was praised for the fast progress in reforming the economy, the process is still in its beginnings and many challenges remain. According to the IMF analysts, the main challenge at present "is consolidate economic stabilisation by continuing fiscal and monetary policies consistent with bringing inflation down to single digits and building a strong external position."
Critical reform issues that needed to be addressed immediately included strengthening government revenue collection and expenditure management, improving the central bank's ability to conduct independent monetary policy, and "implementing measures already adopted in the areas of transparency and governance."
"Policy discussions focused on stabilisation policies and structural reforms that can unleash the strong potential of Guinea's economy, including in the mining sector, and reduce poverty," Mr Le Dem said.
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