Publication: Guinea : Development Policy Review
Date
2008-10
ISSN
Published
2008-10
Author(s)
World Bank
Abstract
Following a decade of relatively strong
growth, Guinea's economic performance weakened
beginning in 2000. During 1992-1999, growth averaged 4.4
percent a year as the Government implemented a program of
economic reforms aimed at liberalizing its economy and
improving the environment for private sector investment.
With a tightening of financial policies over the 1990s,
inflation reached single digits by the late 1990s and the
fiscal deficit averaged just over 3 percent of Gross
Domestic Product (GDP) in the second half of the 1990s.
However, since 2000 growth slowed to an average of 2.8
percent a year and inflation increased to 39 by 2006.
Guinea's worsening economic performance since 2000
reflects a weaker policy framework and exogenous shocks.
Macroeconomic policies were relaxed, as fiscal policy was
loosened and monetary policy became highly accommodative.
Government revenues from the mining sector dropped, despite
a recovery in the price of bauxite-Guinea's most
important export. Also, a heightened level of regional
insecurity and a resulting considerable influx of refugees
in Guinea put pressure on government expenditures. As a
result, the fiscal deficit rose to an average of 5 percent
of GDP in 2000-2004. An accommodative monetary policy led to
double digit inflation and a crowding out of credit to the
private sector. A concomitant slowdown in the implementation
of economic reforms, coupled with increased uncertainty in
the political climate and deteriorating quality of public
institutions, contributed to the slowdown in economic activity.
Citation
“World Bank. 2008. Guinea : Development Policy Review. © Washington, DC. http://openknowledge.worldbank.org/entities/publication/4d94de0e-fe4b-5212-b69e-a499f1448992 License: CC BY 3.0 IGO.”