Guinea is targeting growth of 5 percent next year, faster than an International Monetary Fund forecast, as it uses funds saved from debt relief for social spending, Finance Minister Kerfalla Yansane said.
The world’s biggest exporter of bauxite, used in aluminum-making, got $2.1 billion in debt relief from the IMF and the World Bank this week after it reached the so-called completion point of the Heavily Indebted Poor Countries Initiative, the lenders said. The IMF forecasts growth of 4.7 percent this year and 4.8 percent in 2013, according to its website.
“Our ambition is to have double-digit growth from 2015-16,” Yansane said in an interview in Conakry, the capital, on Sept. 26. The country will save at least $150 million each year on debt-servicing costs, which will be invested in water and energy as well as agriculture development and health care, he said.
Guinea has been attempting to boost growth and ease inflation in its $5.1 billion economy after the November 2010 election of Alpha Conde as president, which ended two years of military rule that saw the country sever ties with international lenders.
Rio Tinto Group is developing the Simandou iron-ore project and has a stake along with Alcoa Inc. in a bauxite company in Guinea. AngloGold Ashanti Ltd. mines gold in the country and Vale SA is also developing an iron-ore site.
The country may seek future borrowing “so as to make investments which have an impact on the economy and growth,” he said. The IMF has given Guinea $56.6 million so far, including a tranche of $28 million on Sept. 26, under an extended-credit facility that was approved in February.
Guinea started the World Bank and IMF’s HIPC program in 2000, Yansane said. The country had a total external debt of $3.2 billion before the write-off this week, he said.
“We are going to be able to negotiate with the other creditors,” Yansane said.
Inflation, which was 34.7 percent in 2006 according to the World Bank, is forecast to ease to 10 percent next year, he said. The rate in August was 14.5 percent, according to the country’s statistics agency.
“If we can get a single-digit inflation rate it can be a good thing, but our objective is to halve it in next two years,” Yansane said.