GN-DPL 1

closed

The Reengagement and Reform Support Grant Program for Guinea aims to support authorities' efforts to consolidate recent democratic gains, and engage decisively on a reform program that would enhance macro-economic stability and mark a clean break with the past on executive accountability and transparency. While the grant would primarily translate into facilitating arrears clearance to International Development Association (IDA) to allow resumption of Bank's disbursement in support of the transitional poverty reduction strategy, particular attention is given to policy actions aimed at: (i) improving public financial management; (ii) strengthening public sector efficiency and accountability focusing on core personnel management systems and; (iii) fostering transparency in the mining sector. The proposed operation is fully aligned with the Bank's Interim Strategy Note (ISN) for Guinea for the period 2011-12, and with the World Bank's Africa action plan. Given the quick response needed to an emergency situation, the operation does not fully address certain design considerations, per OP 8.60. Deficiencies in economic data due to the deterioration of statistical systems and the impact of the political instability make it difficult to present a reliable analysis of the recent economic developments in Guinea as well medium-term prospects. However, it is clear that since 2008, economic performance in Guinea has deteriorated significantly. Cumulatively, Gross Domestic Product (GDP) per capita declined by 4.6 percent between 2008 and 2010. While agriculture continued to grow modestly, the mining sector historically a major driver of growth contracted in real terms by 6 percent between 2008 and 2010 in spite of rising world prices. The regulatory business environment worsened with the cancellations of contracts in the mining sector, changes of license terms and conditions in the telecommunications sector, and more generally, uncertain political situation in the context of deteriorated security.