Guinea. Economic analysis

Creditor Relations. Relations with multilateral creditors are improving. The IMF has already agreed to an US$81.3m Poverty Reduction and Growth Facility for the Guinean government as a precursor to Guinea reaching a decision point for debt relief under the HIPC initiative. The PRGF award is a major show of support for the efforts of the Guinean government to attain macro-economic stability. The majority of all Guinea's development projects (over 85%) has been funded by donors as the country has become increasingly dependent on international donor assistance. Infrastructure has, in recent years, been a major focus for World Bank and French aid. The IMF provides a liquidity cushion for imports, giving Guinea an average of two to three months of import cover.
External Debt Position. In 2000, external debt was equal to 319.3% of annual export earnings. As the IMF's HIPC programme begins to take effect, Guinea's debt service ration can be expected to steadily decline.
HIPC Initiative. The IMF approved a Poverty Reduction and Growth Facility (PRGF) programme for Guinea in May 2001, worth US$81.3m. Providing the government is able to keep to the targets of the PRGF, debt relief under the HIPC initiative will follow. A seven-year debt relief package has already been drawn up - worth US$545m in net present value, or 32% of Guinea's total outstanding debt. Funds will be released on decision point, though some relief was granted early in recognition of Guinea's efforts in taking measures to stabilise the macro-economy.
Agriculture. Guinea has a lush climate. Indeed, the capital Conakry is intensely humid, receiving 130cm of rain in July alone, the height of the rainy season. Cash-crop yields have the potential to be high and self-sufficient in food, with some degree of investment in the sector.
Bauxite. Accounting for over 90% of all earnings, Bauxite is the main export and the country's main foreign exchange earner. Guinea is the world's largest bauxite producer after Australia with 30% of the world's known bauxite reserves. In 1969, the World Bank funded the Boke bauxite project - at the time an ambitious project for the World Bank. Much of the national rail network (649 miles of track) is solely used in the extraction and export of bauxite.
Untapped Potential. Guinea has deposits of gold and diamonds, as well as the potential to generate foreign exchange through cash crops. Yet much of the country's natural resources remain untapped. The legacy of previous governments' maladministration of the economy has proved highly damaging. Regional unrest in neighbouring Sierra Leone and Liberia has also spilled over into Guinea and an ongoing border conflict has been a burden on restricted government resources.
Privatisation. The IMF is currently pushing for a rapid programme of privatisation to be put into place in the hope of attracting foreign investment to this donor-dependent economy.
GDP by Sector Supply. The majority of the population (over 75%) is dependent upon agriculture for income, though bauxite provides the key income for the national economy. As a result, agriculture accounts for approximately 25% of GDP, industry 35% and the services sector 40%.
External Trade Patterns. Key export partners, in order of priority in 1997, are: Russia, US, Benelux, Ukraine, Ireland and Spain, while imports are sourced from: France, Cote d'Ivoire, US, Benelux and Hong Kong.

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