Guinea’s Bauxite Prices: A Prudent Fiscal Policy and Strengthening PFM Procedures

Despite a challenging economic environment, Guinea’s bauxite prices have remained resilient, driven by strong mining performance and prudent fiscal policy.

Strong Mining Performance

According to the International Monetary Fund (IMF), Guinea’s growth is expected to reach 4.7 percent in 2022, supported by an increase in bauxite and gold production. The mining sector has been a bright spot, with artisanal gold exports reaching 83 tons in 2021, more than 10 times their average export levels during the decade prior to the pandemic.

Prudent Fiscal Policy

However, Guinea’s non-mining sector has been buffeted by continued high inflation, food insecurity, and socio-political uncertainty. To mitigate these challenges, the government has implemented prudent fiscal policies, including strengthening public financial management (PFM) procedures.

Strengthening PFM Procedures

The IMF has praised Guinea’s efforts, saying that “the country’s fiscal policy has been prudent, and work is ongoing to continue strengthening PFM procedures.” This has helped to stabilize the economy and support growth.

Addressing Transfer Pricing Issues

In addition, the government has taken steps to address transfer pricing issues in the bauxite sector. The National Statistics Office is conducting a study of the sector, which could lead to an upside revision of exports.

Impact of War in Ukraine

The war in Ukraine has not had a material impact on Guinea’s mining production and exports, although one company temporarily halted bauxite exports due to the closure of a refinery in Ukraine. However, these exports were subsequently rerouted to an alternative refinery.

Despite these challenges, Guinea remains committed to promoting gender equality and improving social indicators. According to the World Bank Human Capital Index, Guinean children are expected to attend only 6.99 years of school on average, and there is a high probability of survival to age 5.

IMF Concerns

The IMF has expressed concern about the impact of the war in Ukraine on Guinea’s economy, particularly on women who may be disproportionately affected by food insecurity and socio-political uncertainty.

Conclusion

Overall, Guinea’s bauxite prices have remained resilient, driven by strong mining performance and prudent fiscal policy. The country is committed to continuing to strengthen its public financial management procedures and addressing transfer pricing issues in the sector.