KEY ISSUES The Ebola outbreak has inflicted a heavy toll on Guinea’s economy notwithstanding the supportive macroeconomic policies the authorities put in place. Fiscal policy has expanded to reflect revenue shortfalls and higher Ebola-related spending, resulting in a markedly higher budget deficit. Monetary policy has also been supportive, as inflation continued to trend downwards and reserve coverage of imports has remained adequate. Performance under the ECF program has been satisfactory. All quantitative performance criteria have been met. With the authorities focused on combating the Ebola outbreak, however, structural reform has advanced at a slower pace than previously envisaged, delaying the implementation of a number of structural benchmarks. Macroeconomic policies in 2015 will remain supportive to help deal with the Ebola outbreak, which looks set to persist well into the year and induce a slight economic contraction. The 2015 budget foresees a widening of the deficit to provide space for Ebola-related spending, finance a significant salary increase for civil servants, and support the economy. Monetary policy will be relaxed to provide adequate liquidity to the private sector and facilitate bank financing of the government budget. A concerted international effort is needed to help the authorities fully implement their Ebola response plan. The 2015 structural reform agenda focuses on finalizing growth-friendly measures. Risks are tilted to the downside. A prolonged presence of the Ebola epidemic could further disrupt economic activity. The renewal of political tensions and political uncertainty in the run-up to the presidential elections in 2015 could discourage investors and affect growth. However, Guinea would benefit from the recent decline in oil prices Staff supports the completion of the 5th review under the ECF arrangement and financing assurances review and requests for: (i) an extension of the current arrangement to end-2015; (ii) an augmentation in access; and (iii) disbursement of 25 percent of quota as budget support under the 5th review. Completion of the review will result in disbursement of SDR 45.135 million (42.1 percent of quota).
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|Size: ||1.6 MB|
|Publisher: ||INTERNATIONAL MONETARY FUND|
|Date published: || 2015|
|ISBN: ||9781498345040 (DRM-EPUB)|
|Read Aloud: ||not allowed|