Guinea: Fifth Review Under the Three-Year Arrangement Under the Extended Credit Facility, Financing Assurances Review, and Requests for an Augmentation of Access and Extension of the Current Arrangement-Staff Report; Press Release; and Statement by the Ex

KEY ISSUESThe Ebola outbreak has inflicted a heavy toll on Guinea's economy notwithstandingthe supportive macroeconomic policies the authorities put in place. Fiscal policy hasexpanded to reflect revenue shortfalls and higher Ebola-related spending, resulting in amarkedly higher budget deficit. Monetary policy has also been supportive, as inflationcontinued to trend downwards and reserve coverage of imports has remained adequate.Performance under the ECF program has been satisfactory. All quantitativeperformance criteria have been met. With the authorities focused on combating the Ebolaoutbreak, however, structural reform has advanced at a slower pace than previouslyenvisaged, delaying the implementation of a number of structural benchmarks.Macroeconomic policies in 2015 will remain supportive to help deal with the Ebolaoutbreak, which looks set to persist well into the year and induce a slight economiccontraction. The 2015 budget foresees a widening of the deficit to provide space forEbola-related spending, finance a significant salary increase for civil servants, and supportthe economy. Monetary policy will be relaxed to provide adequate liquidity to the privatesector and facilitate bank financing of the government budget. A concerted internationaleffort is needed to help the authorities fully implement their Ebola response plan. The2015 structural reform agenda focuses on finalizing growth-friendly measures.Risks are tilted to the downside. A prolonged presence of the Ebola epidemic couldfurther disrupt economic activity. The renewal of political tensions and politicaluncertainty in the run-up to the presidential elections in 2015 could discourage investorsand affect growth. However, Guinea would benefit from the recent decline in oil pricesStaff supports the completion of the 5th review under the ECF arrangement andfinancing assurances review and requests for: (i) an extension of the currentarrangement to end-2015; (ii) an augmentation in access; and (iii) disbursement of25 percent of quota as budget support under the 5th review. Completion of the reviewwill result in disbursement of SDR 45.135 million (42.1 percent of quota).