Guinea and the AfDB
Cooperation between the African Development Bank (AfDB) and Guinea dates back to 1974. As of October 2011, the Bank Group had financed 77 operations (58 projects, nine studies, seven institutional support operations and three non-project loans) valued at approximately US $818 million.
Bank-funded projects are primarily in the areas of infrastructure/energy, agriculture, the social sector and multi-sector.
GDP growth in Guinea was 1.9% in 2010. In the context of weak economic performance, weak mobilization of domestic resources and the suspension of foreign aid in the wake of the 2009-2010 political crisis, authorities turned to bank financing, the accumulation of domestic and external arrears of payment and the printing of money to finance current expenditure.
Despite these difficulties, the prospects for 2012 are good, with 5.1% growth, and a projected growth rate of 5.7% for 2013. According to the AfDB’s joint publication, the 2011 African Economic Outlook (AEO), the return of constitutional order, the restoration of confidence among development partners, and the strengthening of stability in the sub-region should accelerate the pace of private investment (an average of 14% between 2011 and 2012). The country should also benefit from the rise in world prices of aluminium and particularly gold. The mining sector recovery should have a positive impact on the construction and service sectors, as well as on tax revenue. These ripple effects could also be felt in the agricultural sector, infrastructure and public utilities (communications and energy). This recovery should be accompanied by the gradual containment of inflation, which could drop from 17% in 2011 to 5.6% in 2013. The rate of budgetary inflation should narrow from 5.9% in 2011 to 1.4% in 2014.
These prospects are further strengthened by: the spinoff from the transactional agreement with Australian mining company Rio Tinto, which has enabled the Treasury to garner US $700 million in exceptional earnings; the prospects of reaching the Heavily Indebted Poor Countries (HIPC) Initiative completion point by mid-2012, which should relieve the central government’s budget of a large part of its external debt; and the restoration of political stability in the sub-region, notably in Côte d’Ivoire and Liberia.