Statement by Ali Bourhane at the Board meeting of December 16, 1997

86544 International Bank for Reconstruction and Development International Development Association International Finance Corporation Multilateral Investment Guarantee Agency FOR OFFICIAL USE ONLY CONFIDENTIAL EDS97-466 December 15, 1997 Board Meeting of December 16, 1997 Statement by Ali Bourhane, Executive Director Guinea: Country Assistance Strategy On behalf of our Guinean authorities, we would like to commend the Management and the Staff of the Bank for their support to Guinea’s development efforts. We appreciate the close partnership with the Bank, and the meticulous preparation of this CAS. Extensive consultations were actually indeed carried out at the grass roots levels in the village communities and with all the segments of the society: government officials, private sector and civil society involving the participation of more than 3,380 Guineans. In addition to the participatory nature of the process, the Bank Staff was well advised to incorporate the useful lessons drawn for the 1994 CAS, mainly: i) leadership quality and commitment; ii) well targeted programs and decentralized implementation; iii) participatory and strong leadership by beneficiaries/stakeholders; v) clear performance indicators; and v) effective coordination among donors. That, contributed to a very relevant CAS. Guinea has indeed, since 1958, experienced a highly centralized political and economic system. During a quarter of a century, the overall indicators plummeted. Although Guinea is one of the most potentially rich countries in Africa, it still ranks among the very least developed countries as far as the economic and social indicators are concerned. Since the shifting of power in 1984, the new leaders took bold measures of economic liberalization and structural adjustment. Considerable progress was made in streamlining the civil service with a 40% drop to about 53,500 agents. One notable achievement was the divestiture of the Government majority shareholding in the largest Bank of the country (BICIGUI). Moreover, a large number of public enterprises were privatized, particularly in the water and telecommunication sectors. Potable water is now available for 60% of the population versus 15% in 1980. The prices were also liberalized as well as the exchange and trade system. The electronic version of the document is provided for convenience. (The official record is the version printed by the Corporate Secretariat). This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without the consent of the Executive Director concerned.  -2- Despite a favorable economic growth, the authorities recognized that the overall results were mixed, because of policy slippages. Although bold measures were taken in July 1996 on the coming on board of a new government, political unstability, as well as the war in Liberia and the disturbance in Sierra-Leone, seriously weakened the adjustment process. Moreover, the term of trade from bauxite, falling sharply by 33%, hampered significantly the stabilization process. The international aid disbursement also drop significantly, eventually preventing the country to make up for the lack of local resources. The Government is fully aware of the country’s uneven economic and financial performance. This awareness is clearly indicated in the Letter of the Development Policy and the Long Term Perspective Study: Guinea Vision 2010 of the Government. The economic and social development objectives of the Government’s program are clearly stated as: i) achieving a minimum GDP real growth of 5% per annum; ii) limiting inflation to 4% per annum; iii) reducing external current deficit to 6% of the GDP; and iv) continuing the flexible exchange rate policy. The Government strategy to achieve these objectives focuses on: rural development, especially the development of rural services ( infrastructure, credit); access to basic education; access to primary health care; development of local entrepreneurship (microenterprises and SMEs); and governance leading to a more service-oriented civil service. The Government is strongly commited to combating fraud in the customs services, reducing the fiscal exemptions and increasing the fiscal revenue. The Bank’s Country Assistance Strategy is consistent with the development objectives and strategy of Guinea. The CAS focuses on i) promoting a broad based and equitable growth led by private sector with a focus on the rural sector; ii) enhancing service delivery for poverty reduction; and iii) improving governance and institutional capacity. The CAS aims to achieve a growth rate of 5% per year during the 1997-2000 period and higher beyond. It is also looking for a qualitative shift within the agricultural sector with a technological change and a strengthening of the rural infrastructure driving to the diversification and expansion of agricultural exports. In the mining sector, the CAS underlines quite rightly the greater potential of gold and diamonds vis-à-vis the declining prospects of bauxite. As far as the small scale services and manufacturing are concerned, the CAS, for good reason, stresses the prospects of the informal/microentreprise sector to create employment and income for rural population. The resources allocation to the priority areas by the CAS is also consistent with Guinea’s country objectives. Furthermore, our authorities particularly appreciate the strong endorsement of Guinea capacity building exercise by the CAS. Guinea has carried out a national capacity building assessment and is working closely with the Bank to achieve the goals of the African Capacity Building Initiative. It is indeed a blessing that the Country Director himself has such a rich experience in capacity building issues. The electronic version of the document is provided for convenience. (The official record is the version printed by the Corporate Secretariat). This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without the consent of the Executive Director concerned.  -3- Hopefully the bank will continue a sound and fruitful ESW in Guinea (poverty, energy, infrastructure, capacity building), that will help accelerate the pace of reforms, with a view to improving the economic and social indicators in the country, and thus allowing the country (on the basis of good performance) to move to a high case lending scenario. As far as the Public Expenditure Management Adjustment Credit (PEMAC) is concerned, this project will achieve substantial poverty reduction, thanks to the adequacy of the resources allocation and the transparency on its enforcement. The control and monitoring process of the public expenditure are eventually seized around the waist. It will enhance the service delivery in education, health, road maintenance, and rural development. The project will make the budgetary disbursements reliable, the counter funds of the investment projects available and the annual budgetary processing meaningful. We would like to reiterate our authorities support for the Bank Country Assistance Strategy and to encourage our colleagues to do so (including their support for the the PEMAC). The electronic version of the document is provided for convenience. (The official record is the version printed by the Corporate Secretariat). This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without the consent of the Executive Director concerned.