The International Monetary Fund (IMF) on Friday 19 June, approved the disbursement of $148 million to Guinea under the Rapid Credit Facility (RCF), to address urgent balance of payment and fiscal financing needs stemming from the COVID-19 pandemic in the country.
The loan which was approved by the Executive Board of IMF is the 70th request for emergency financial assistance approved by the organization for its member countries. The approval was announced in tweet by the IMF.
The Covid-19 pandemic has seriously affected the of the economy of Guinea, the West African country with a population of over 12 million people.
The pandemic has affected the country’s mining export and tax revenues. About 80% of Guinea foreign exchange is earned from Bauxite mining and alumina production.
This is first time IMF has approved loan for Guinea under its emergency financing. The total public debt-to-GDP of Guinea ratio stood at 37.6% in 2018.
IMF under it’s emergency financing, has approved total of $10.126 billion dollars for 29 Sub-Saharan African countries including Nigeria ($3.4 billion), Ghana ($1 billion), Ethiopia ($411 million), Uganda ($491.5 million), Senegal ($442.1 million), Rwanda ($ 220.46 million).
Guinea has recorded 4,904 confirmed cases of Covid-19 with 3,522 recoveries and 27 deaths according to the data from Africa Center for Disease Control and Prevention.
Guinea has a very high recovery rate of 71.8% and low date death rate of 0.5% compared to the global rates.
Guinea was hard hit by the Ebola Epidemic in West Africa from 2013 to 2016. Guinea was declared Ebola free in June 2016, it recorded 3,814 total cases, and 2,544 deaths. The good management of the Coronavirus pandemic may be due to the lessons learned 4-6 years ago from Ebola epidemic.
Fiscal policies implemented by Guinea to alleviate the impact of Covid-19 include A National Emergency Preparedness and Response Plan for a COVID-19 outbreak, which is estimated at $47 million (0.3 percent of GDP).
In addition, a COVID-19 economic response plan was announced on April 6, 2020. The Plan aims at strengthening infrastructure in the health sector, protecting the most vulnerable, and supporting the private sector, notably small and medium enterprises. The authorities estimate the cost of the Plan at about USD 328 million (2.3 percent of GDP).
Key measures include: the introduction of temporary exonerations on taxes, social contributions and payment of utilities for firms in the most affected sectors; the implementation of labor-intensive public works, provision of cash transfers, a waiver on the payment of utilities for the most vulnerable.
The authorities are contemplating additional support measures to some agricultural commodity chains such as cashew, pineapple and potatoes.
Following the Executive Board’s discussion on Guinea, Mr. Mitsuhiro Furusawa, Acting Chair and Deputy Managing Director, of the IMF in statement said “Guinea has been severely affected by the COVID-19 pandemic.
“Worsening global conditions and a rapidly spreading local outbreak have further weakened the short-term outlook. The pandemic and mitigation measures have given rise to urgent balance of payments and fiscal financing needs.
“The disbursement under the Rapid Credit Facility will provide timely support to address these needs and should help catalyze donors’ financial assistance.”