AfDB Group Approves Debt Relief for Guinea
The Executive Directors of the African Bank Group approved debt relief for Guinea under the Heavily Indebted Poor Countries (HIPCs) Initiative and the Multilateral Debt Relief Initiative (MDRI). The provision of debt relief assistance by the Bank Group is aimed at reducing the country’s external debt burden to sustainable levels and enhancing its capacity to direct more resources to development programs.
The decision was made following the country’s satisfactory implementation of nine out of 10 triggers and requirements to reach the HIPC completion point, which also qualifies Guinea for debt relief from the MDRI. The IMF and World Bank Boards had approved the completion points on September 25 and 26, 2012, making Guinea the 28th Regional Member Country of the African Development Bank Group to benefit from irrevocable debt relief.
The Bank Group will relieve Guinea of its debt obligations amounting to US $94.4 million in end-December 1999 NPV terms, equivalent to US $175.1 million, in nominal terms. By reaching the HIPC completion point, Guinea has also qualified for additional debt relief under the MDRI from African Development Fund amounting to UA 274.7 million (US $414.3 million), in nominal terms.
In spite of the institutional and economic instability which prevailed in the country during the last two decades, Guinea has made progress in implementing critical macroeconomic and structural reforms, including good progress in stabilizing its economy and implementing sound policies for political, socio-economic and financial stability, growth and poverty reduction, as evidenced by the recent IMF review of the country’s Extended Credit Facility in 2012.
Moreover, the national reconciliation process has begun with a view to consolidating peace and security. The organization of the legislative elections will also consolidate the fragile political transition underway.
The full implementation of the HIPC initiative will have a positive impact on the country’s debt sustainability and improve its creditworthiness. With better prospects for the country’s foreign debt, the budgetary resources freed up from the savings on debt service payments could be used to finance development and poverty reduction programs. Overall, the Bank Group operations in Guinea have been directed toward financing economic-related infrastructure, budget support and rural livelihoods.