| GUINEA |
Economy:
Guinea is a poor country that possesses major mineral, hydropower, and agricultural
resources. The country has almost half of the world's bauxite reserves and significant iron
ore, gold, and diamond reserves. However, Guinea has been unable to profit from this
potential, as rampant corruption, dilapidated electricity and other degraded infrastructure,
and political uncertainty have drained investor confidence. In the time since a 2008 coup
following the death of long-term President Lansana CONTE, international donors, including
the G-8, the IMF, and the World Bank, have significantly curtailed their development
programs. Throughout 2009, policies of the ruling military junta severely weakened the
economy. The junta leaders spent and printed money at an accelerated rate, driving
inflation and debt to perilously high levels. In early 2010, the junta collapsed and was
replaced by a Transition Government, which ceded power in December 2010 to the
country's first-ever democratically elected president, Alpha CONDE. International
assistance and investment are expected to return to Guinea, but the levels will depend
upon the ability of the new government to combat corruption and reform its banking
system. IMF and World Bank programs will be especially critical as Guinea attempts to gain
debt relief. Since the 2009 global economic downturn, the price and value of bauxite and
alumina exports has steadily risen. Export levels will likely continue to grow as investor
confidence returns. International investors have expressed keen interest in Guinea's vast
iron ore reserves, which could further propel the country's growth.
GDP (purchasing power parity):
$10.81 billion (2010 est.)
country comparison to the world: 150
$10.6 billion (2009 est.)
$10.63 billion (2008 est.)
note: data are in 2010 US dollars
GDP (official exchange rate):
$4.633 billion (2010 est.)
GDP - real growth rate:
1.9% (2010 est.)
country comparison to the world: 152
-0.3% (2009 est.)
4.9% (2008 est.)
GDP - per capita (PPP):
$1,000 (2010 est.)
country comparison to the world: 214
$1,100 (2009 est.)
$1,100 (2008 est.)
note: data are in 2010 US dollars
GDP - composition by sector:
agriculture: 25.8%
industry: 45.7%
services: 28.5% (2010 est.)
Exports - commodities:
bauxite, alumina, gold, diamonds, coffee, fish, agricultural products
Exports - partners:
India 19.68%, Spain 13.18%, Russia 7.24%, Germany 6.86%, Ireland 5.87%, US 5.71%,
Ukraine 5.6% (2009)
Imports - commodities:
petroleum products, metals, machinery, transport equipment, textiles, grain and other
foodstuffs
Imports - partners:
China 8.67%, Netherlands 6.67%, France 4.33%, UK 4.22% (2009)
Extracted from IMF Report - Guinea - Staff-Monitored Program (August 2011)
Executive summary
Guinea is emerging from a prolonged period of political crisis. After several years of
intermittent civil unrest and a two year military regime (2009–10), Mr. Alpha Condé won a
hotly contested presidential election (the first free elections since independence in 1958).
The population’s expectations for a rapid improvement in living conditions from the change
in the political environment are high.
Economic growth stagnated and serious economic imbalances developed during
2009–10. A loss of fiscal control and unchecked spending, especially for the military, led to
a rapid expansion of the budget deficit to over one percent of GDP per month. This was
financed by money creation and the accumulation of external arrears. Inflation increased
rapidly, the exchange rate depreciated sharply, and a sizeable liquidity overhang was
created.
The central bank’s lack of international reserves led to the accumulation of external debt
service arrears to all groups of creditors; arrears to the World Bank were cleared in
April 2011.
The new government has moved quickly and decisively to stabilize the economy.
Policies aim to achieve a major fiscal adjustment—11 percent of GDP—by restoring fiscal
control and reining in excessive spending. This will permit a sharp reduction in bank
financing and monetary growth to support a reduction in inflation and stabilization of the
exchange rate.
Reliance on external financing to fund the budget deficit is extensive. Budget support
from multilateral sources should cover the basic balance deficit in 2011 without recourse to
non-concessional borrowing. In addition, the authorities intend to request creditors to defer
debt service falling due and clearance of arrears until they can be addressed in the
context of the HIPC Initiative.
Monetary and foreign exchange policy measures seek to absorb the large pool of excess
liquidity and unify segmented foreign exchange markets. The reserve requirement and the
central bank interest rate have been raised and the official exchange rate has been
aligned with market rates.
The authorities’ immediate priorities for structural reform are the mining sector and
public utilities. A new mining code is being prepared and reform plans for the utility sector
are being updated.
The government attaches high priority to attaining the completion point under the
HIPC Initiative as soon as possible and intends to request an ECF-supported program
later in the year. A strong track record of performance under the staff-monitored program
would provide the basis for discussions on such a program.
Background and recent developments
Guinea is emerging from a prolonged period of political crisis. After several years
of intermittent civil unrest and a two year military regime (2009–10), Mr. Alpha Condé won
the first free elections since independence in 1958 against the backdrop of a tense
security situation. His inauguration as President on December 21, 2010 completed the first
phase of the process toward restoring constitutional order, which will be concluded by
parliamentary elections expected by November 2011. The population’s expectations for a
rapid improvement in living conditions from the change in the political environment are
high. However, the new government will have to first tackle serious macroeconomic
imbalances, while starting work on deeply-entrenched sources of past political instability,
especially through security sector reform, and on strengthening governance and technical
capacity.
The new government inherited a very difficult economic situation (Figure 1).
GDP growth averaged less than 1 percent per year during 2009–10, reflecting the impact
of the international economic crisis on Guinea’s mineral exports (accounting for over 90
percent of all exports) and the deteriorating political situation. However, the main source of
serious imbalances was the fiscal sector. The military government abandoned fiscal control
in mid-2009, and attempts by the interim government, nominated in January 2010, to
restore control were short lived. Government expenditure doubled, driven by a tripling of
military expenditure to almost 10 percent of GDP. In an agreement with trade unions,
public sector wages were increased by 50 percent in 2010; the agreement also included a
sharp upward adjustment in fuel prices. Public procurement procedures were largely
circumvented and the government concluded new (multiannual) contracts for goods and
services and investment projects totaling 40 percent of GDP during this period (Box 1).
Consequently, compared with an overall budget deficit of slightly over 1 percent of GDP for
2008, by 2010 the deficit exceeded 1 percent of GDP per month.
The government’s financing needs were mainly met by domestic bank financing.
Net credit to the government tripled during 2009–10. In particular, advances by the central
bank (Banque Centrale de la République de Guinée (BCRG)) to the government increased
in terms of GDP from 0.2 percent in 2008 to 6 percent in 2009 and to 11 percent in 2010.
Consequently, broad money more than doubled.
The excessive growth in broad money contributed to a rapid depreciation of the
Guinea franc (GNF) and a surge in inflation. Guinea’s low level of international reserves
allowed little scope to support the exchange rate. When pressure from the monetary
expansion mounted in the second half of 2009, the market exchange rate depreciated,
losing more than 35 percent of its value against the U.S. dollar over 2009–10; at the same
time, the BCRG stopped adjusting the official rate, which previously had been set as the
weighted average of the rates applied by the commercial banks. The depreciation of the
market rate drove up the cost of imported food and fuel, together accounting for roughly
40 percent of non-mining imports. As a result, inflation rose from an annual rate of 8
percent at end-2009 to 21 percent by end-2010.
Click here to view full report
Banking
Guinea‟s banking system is loosely based on the rules and regulations governing the
French banking system. Guinea‟s commercial banking sector was legalized by reforms
in 1985 and 1986. Guinea‟s formal financial sector consists of the Central Bank and
several commercial banks. The financial sector is largely controlled by foreign-owned
banks. The system has a narrow base, is very fragile, and is unable to meet the
development needs of the private sector; hence, there is a thriving black market for
foreign currencies. Since banks are conservative and risk averse, there is not a
significant amount of capital available to finance large investments. Commercial banks
favor short-term lending at high interest rates (25% and up), as there is high potential for
default. International banking institutions have reported harassment by the military in the
form of robbery and attempted extortion.
Guinea is a poor country that possesses major mineral, hydropower, and agricultural
resources. The country has almost half of the world's bauxite reserves and significant iron
ore, gold, and diamond reserves. However, Guinea has been unable to profit from this
potential, as rampant corruption, dilapidated electricity and other degraded infrastructure,
and political uncertainty have drained investor confidence. In the time since a 2008 coup
following the death of long-term President Lansana CONTE, international donors, including
the G-8, the IMF, and the World Bank, have significantly curtailed their development
programs. Throughout 2009, policies of the ruling military junta severely weakened the
economy. The junta leaders spent and printed money at an accelerated rate, driving
inflation and debt to perilously high levels. In early 2010, the junta collapsed and was
replaced by a Transition Government, which ceded power in December 2010 to the
country's first-ever democratically elected president, Alpha CONDE. International
assistance and investment are expected to return to Guinea, but the levels will depend
upon the ability of the new government to combat corruption and reform its banking
system. IMF and World Bank programs will be especially critical as Guinea attempts to gain
debt relief. Since the 2009 global economic downturn, the price and value of bauxite and
alumina exports has steadily risen. Export levels will likely continue to grow as investor
confidence returns. International investors have expressed keen interest in Guinea's vast
iron ore reserves, which could further propel the country's growth.
GDP (purchasing power parity):
$10.81 billion (2010 est.)
country comparison to the world: 150
$10.6 billion (2009 est.)
$10.63 billion (2008 est.)
note: data are in 2010 US dollars
GDP (official exchange rate):
$4.633 billion (2010 est.)
GDP - real growth rate:
1.9% (2010 est.)
country comparison to the world: 152
-0.3% (2009 est.)
4.9% (2008 est.)
GDP - per capita (PPP):
$1,000 (2010 est.)
country comparison to the world: 214
$1,100 (2009 est.)
$1,100 (2008 est.)
note: data are in 2010 US dollars
GDP - composition by sector:
agriculture: 25.8%
industry: 45.7%
services: 28.5% (2010 est.)
Exports - commodities:
bauxite, alumina, gold, diamonds, coffee, fish, agricultural products
Exports - partners:
India 19.68%, Spain 13.18%, Russia 7.24%, Germany 6.86%, Ireland 5.87%, US 5.71%,
Ukraine 5.6% (2009)
Imports - commodities:
petroleum products, metals, machinery, transport equipment, textiles, grain and other
foodstuffs
Imports - partners:
China 8.67%, Netherlands 6.67%, France 4.33%, UK 4.22% (2009)
Extracted from IMF Report - Guinea - Staff-Monitored Program (August 2011)
Executive summary
Guinea is emerging from a prolonged period of political crisis. After several years of
intermittent civil unrest and a two year military regime (2009–10), Mr. Alpha Condé won a
hotly contested presidential election (the first free elections since independence in 1958).
The population’s expectations for a rapid improvement in living conditions from the change
in the political environment are high.
Economic growth stagnated and serious economic imbalances developed during
2009–10. A loss of fiscal control and unchecked spending, especially for the military, led to
a rapid expansion of the budget deficit to over one percent of GDP per month. This was
financed by money creation and the accumulation of external arrears. Inflation increased
rapidly, the exchange rate depreciated sharply, and a sizeable liquidity overhang was
created.
The central bank’s lack of international reserves led to the accumulation of external debt
service arrears to all groups of creditors; arrears to the World Bank were cleared in
April 2011.
The new government has moved quickly and decisively to stabilize the economy.
Policies aim to achieve a major fiscal adjustment—11 percent of GDP—by restoring fiscal
control and reining in excessive spending. This will permit a sharp reduction in bank
financing and monetary growth to support a reduction in inflation and stabilization of the
exchange rate.
Reliance on external financing to fund the budget deficit is extensive. Budget support
from multilateral sources should cover the basic balance deficit in 2011 without recourse to
non-concessional borrowing. In addition, the authorities intend to request creditors to defer
debt service falling due and clearance of arrears until they can be addressed in the
context of the HIPC Initiative.
Monetary and foreign exchange policy measures seek to absorb the large pool of excess
liquidity and unify segmented foreign exchange markets. The reserve requirement and the
central bank interest rate have been raised and the official exchange rate has been
aligned with market rates.
The authorities’ immediate priorities for structural reform are the mining sector and
public utilities. A new mining code is being prepared and reform plans for the utility sector
are being updated.
The government attaches high priority to attaining the completion point under the
HIPC Initiative as soon as possible and intends to request an ECF-supported program
later in the year. A strong track record of performance under the staff-monitored program
would provide the basis for discussions on such a program.
Background and recent developments
Guinea is emerging from a prolonged period of political crisis. After several years
of intermittent civil unrest and a two year military regime (2009–10), Mr. Alpha Condé won
the first free elections since independence in 1958 against the backdrop of a tense
security situation. His inauguration as President on December 21, 2010 completed the first
phase of the process toward restoring constitutional order, which will be concluded by
parliamentary elections expected by November 2011. The population’s expectations for a
rapid improvement in living conditions from the change in the political environment are
high. However, the new government will have to first tackle serious macroeconomic
imbalances, while starting work on deeply-entrenched sources of past political instability,
especially through security sector reform, and on strengthening governance and technical
capacity.
The new government inherited a very difficult economic situation (Figure 1).
GDP growth averaged less than 1 percent per year during 2009–10, reflecting the impact
of the international economic crisis on Guinea’s mineral exports (accounting for over 90
percent of all exports) and the deteriorating political situation. However, the main source of
serious imbalances was the fiscal sector. The military government abandoned fiscal control
in mid-2009, and attempts by the interim government, nominated in January 2010, to
restore control were short lived. Government expenditure doubled, driven by a tripling of
military expenditure to almost 10 percent of GDP. In an agreement with trade unions,
public sector wages were increased by 50 percent in 2010; the agreement also included a
sharp upward adjustment in fuel prices. Public procurement procedures were largely
circumvented and the government concluded new (multiannual) contracts for goods and
services and investment projects totaling 40 percent of GDP during this period (Box 1).
Consequently, compared with an overall budget deficit of slightly over 1 percent of GDP for
2008, by 2010 the deficit exceeded 1 percent of GDP per month.
The government’s financing needs were mainly met by domestic bank financing.
Net credit to the government tripled during 2009–10. In particular, advances by the central
bank (Banque Centrale de la République de Guinée (BCRG)) to the government increased
in terms of GDP from 0.2 percent in 2008 to 6 percent in 2009 and to 11 percent in 2010.
Consequently, broad money more than doubled.
The excessive growth in broad money contributed to a rapid depreciation of the
Guinea franc (GNF) and a surge in inflation. Guinea’s low level of international reserves
allowed little scope to support the exchange rate. When pressure from the monetary
expansion mounted in the second half of 2009, the market exchange rate depreciated,
losing more than 35 percent of its value against the U.S. dollar over 2009–10; at the same
time, the BCRG stopped adjusting the official rate, which previously had been set as the
weighted average of the rates applied by the commercial banks. The depreciation of the
market rate drove up the cost of imported food and fuel, together accounting for roughly
40 percent of non-mining imports. As a result, inflation rose from an annual rate of 8
percent at end-2009 to 21 percent by end-2010.
Click here to view full report
Banking
Guinea‟s banking system is loosely based on the rules and regulations governing the
French banking system. Guinea‟s commercial banking sector was legalized by reforms
in 1985 and 1986. Guinea‟s formal financial sector consists of the Central Bank and
several commercial banks. The financial sector is largely controlled by foreign-owned
banks. The system has a narrow base, is very fragile, and is unable to meet the
development needs of the private sector; hence, there is a thriving black market for
foreign currencies. Since banks are conservative and risk averse, there is not a
significant amount of capital available to finance large investments. Commercial banks
favor short-term lending at high interest rates (25% and up), as there is high potential for
default. International banking institutions have reported harassment by the military in the
form of robbery and attempted extortion.
Background:
Guinea has had a history of authoritarian rule
since gaining its independence from France in
1958. Lansana CONTE came to power in 1984
when the military seized the government after
the death of the first president, Sekou TOURE.
Guinea did not hold democratic elections until
1993 when Gen. CONTE (head of the military
government) was elected president of the
civilian government. He was reelected in 1998
and again in 2003, though all the polls were
marred by irregularities. History repeated itself
in December 2008 when following President
CONTE's death, Capt. Moussa Dadis CAMARA
led a military coup, seizing power and
suspending the constitution. His unwillingness
to yield to domestic and international pressure
to step down led to heightened political tensions
that culminated in September 2009 when
presidential guards opened fire on an
opposition rally killing more than 150 people,
and in early December 2009 when CAMARA
was wounded in an assassination attempt and
evacuated to Morocco and subsequently to
Burkina Faso. A transitional government led by
General Sekouba KONATE held democratic
elections in 2010 and Alpha CONDE was
elected president in the country's first free and
fair elections since independence.
Government type:
republic
Capital:
name: Conakry
time difference: UTC 0 (5 hours ahead of
Washington, DC during Standard
Time)Independence:
2 October 1958 (from France)
National holiday:
Independence Day, 2 October (1958)
Constitution:
23 December 1990 (Loi Fundamentale)
Legal system:
based on French civil law system, customary
law, and decree; accepts compulsory ICJ
jurisdiction with reservations
Suffrage:
18 years of age; universal
Government:
Chief of state: President Alpha CONDE (since
21 December 2010)
head of government: Prime Minister Mohamed
Said FOFANA (since 24 December 2010)
cabinet: Council of Ministers appointed by the
president
elections: president elected by popular vote for
a seven-year term (no term limits); candidate
must receive a majority of the votes cast to be
elected president; election last held on 27 June
2010 with a runoff election held on 7 November
2010
election results: Alpha CONDE elected
president in a runoff election; percent of vote
Alpha CONDE 52.5%, Cellou Dalein DIALLO
47.5%
For names of current Ministers, click here.
Disputes - international:
Conflicts among rebel groups, warlords, and
youth gangs in neighboring states have spilled
over into Guinea resulting in domestic
instability; Sierra Leone considers Guinea's
definition of the flood plain limits to define the
left bank boundary of the Makona and Moa
rivers excessive and protests Guinea's
continued occupation of these lands, including
the hamlet of Yenga, occupied since 1998
All the information on this page sourced from
the CIA World Factbook, the US Commercial
Service and relevant FATF M.E.R.
Guinea has had a history of authoritarian rule
since gaining its independence from France in
1958. Lansana CONTE came to power in 1984
when the military seized the government after
the death of the first president, Sekou TOURE.
Guinea did not hold democratic elections until
1993 when Gen. CONTE (head of the military
government) was elected president of the
civilian government. He was reelected in 1998
and again in 2003, though all the polls were
marred by irregularities. History repeated itself
in December 2008 when following President
CONTE's death, Capt. Moussa Dadis CAMARA
led a military coup, seizing power and
suspending the constitution. His unwillingness
to yield to domestic and international pressure
to step down led to heightened political tensions
that culminated in September 2009 when
presidential guards opened fire on an
opposition rally killing more than 150 people,
and in early December 2009 when CAMARA
was wounded in an assassination attempt and
evacuated to Morocco and subsequently to
Burkina Faso. A transitional government led by
General Sekouba KONATE held democratic
elections in 2010 and Alpha CONDE was
elected president in the country's first free and
fair elections since independence.
Government type:
republic
Capital:
name: Conakry
time difference: UTC 0 (5 hours ahead of
Washington, DC during Standard
Time)Independence:
2 October 1958 (from France)
National holiday:
Independence Day, 2 October (1958)
Constitution:
23 December 1990 (Loi Fundamentale)
Legal system:
based on French civil law system, customary
law, and decree; accepts compulsory ICJ
jurisdiction with reservations
Suffrage:
18 years of age; universal
Government:
Chief of state: President Alpha CONDE (since
21 December 2010)
head of government: Prime Minister Mohamed
Said FOFANA (since 24 December 2010)
cabinet: Council of Ministers appointed by the
president
elections: president elected by popular vote for
a seven-year term (no term limits); candidate
must receive a majority of the votes cast to be
elected president; election last held on 27 June
2010 with a runoff election held on 7 November
2010
election results: Alpha CONDE elected
president in a runoff election; percent of vote
Alpha CONDE 52.5%, Cellou Dalein DIALLO
47.5%
For names of current Ministers, click here.
Disputes - international:
Conflicts among rebel groups, warlords, and
youth gangs in neighboring states have spilled
over into Guinea resulting in domestic
instability; Sierra Leone considers Guinea's
definition of the flood plain limits to define the
left bank boundary of the Makona and Moa
rivers excessive and protests Guinea's
continued occupation of these lands, including
the hamlet of Yenga, occupied since 1998
All the information on this page sourced from
the CIA World Factbook, the US Commercial
Service and relevant FATF M.E.R.
| KnowYourCountry |
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| Last Updated: 2 April 2012 |