- Basic data
- Public finances and the state budget
- Banking system
- Tax System
Guinea’s real GDP grew by 6% in 2021 despite the impact of the corona crisis This remarkable performance, extraordinary across Africa, is linked to a strong increase in mining activity in 2020 (18.4%) compared to 2019 (8%). The driving force in this sector is the renewed Chinese demand for bauxite and aluminum, of which Guinea is the main supplier. Inflation has increased to 12.6% in 2021. Check ebizdir for economical facts of Guinea.
The primary sector contributes relatively modestly to GDP formation (18%), while this sector employs almost 70% of the working population. Thanks to the ideal climatic conditions, agriculture is very varied (rice, coffee, citrus, but also strawberries or grapes). The environment is preserved in Guinea due to low population density and limited industrialization, but the country is still threatened by deforestation and pollution (mining, sewage treatment, etc.).
The secondary sector (36% of GDP) is mainly dominated by mining activities, which together with bauxite, minor gold (around 15 tons per year) and diamonds represent 85% of the country’s total exports. Energy is also a strategic sector, both for current investment and for spin-offs: 4 dam projects are planned – the most important of which is Souapiti – should enable additional production of more than 500 MW (compared to 774 MW nationwide level today).
The tertiary sector (46% of GDP) is driven by trade, transport, telecommunications and financial activities.
|GDP growth (%)||5.6||5.4||6||5.7||5.1|
|Export of goods (billion USD)||4||5.6||9||8.6||8|
|Import of goods (billion USD)||3.5||3.3||4.5||4.8||4.2|
|Trade Balance (Billion USD)||0.5||5.2||4.5||3.8||3.8|
|Industrial production (% change)||ON||ON||ON||ON||ON|
|OECD export risk||07.VII||07.VII||07.VII||ON||ON|
Source: EIU, OECD, IMD
Public finance and state budget
|State budget balance (% of GDP)||-1.6|
|Public debt (% of GDP)||ON|
|Current account balance (billion USD)||2.6|
Overall, the Guinean economy has withstood the global pandemic. The central bank narrowed the gap between the official and unofficial exchange rates to limit inflationary pressures on foreign capital and consumer goods.
The state budget deficit improved to 1.6% of GDP thanks to rationalization of public expenditure, reduction of electricity subsidies, more appropriate taxation outside the extractive sector, broadening of the tax base, strict application of tax provisions and, above all, reduction of expenditure in order to mitigate the effects of the pandemic (against 3.1% in 2020).
Further mining development should increase exports and reduce the current account deficit, which is currently financed by foreign direct investment, from 2022. The level of international foreign exchange reserves is expected to improve to cover more than 4 months of imports in 2021 and 2022, compared to months in 2020.
Guinea’s debt is considered sustainable with a moderate risk of external debt default. In 2019, the total outstanding public debt represented 36.5% of GDP, of which about half was domestic, in 2020 it is estimated at 42.3%. This modest level of indebtedness should allow for new soft loans to finance priority spending and new investments in the country’s national strategy to combat COVID-19. In the future, the government should focus on a prudent external borrowing policy while increasing the efficiency and effectiveness of public investments.
Guinea’s banking system remains relatively weak, suffering from a lack of funds and limited infrastructure. In 2017, only 23% of Guineans owned a bank account, and only 159 ATMs were operating across the country.
The BCRG Central Bank directs monetary policy, manages foreign exchange reserves, conducts transactions with the International Monetary Fund and oversees Guinea’s financial system. In the context of the corona crisis, the central bank kept the same, relatively high, basic interest rate (12%) and minimum reserves (16%) in 2020.
There are 16 commercial banks operating in the country – Banque internationale pour le commerce et l’industrie de la Guinée (BICIGUI), Banque Islamique de Guinée, Banque populaire maroco-guinéenne, Ecobank, International Commercial Bank (ICB), Société Générale de Banque en Guinée ( SGBG) and Union internationale de banques en Guinée (UIBG).
The use of credit cards is not common even in the capital, it is recommended to withdraw money directly from the bank. Traveller’s checks are only available at some larger banks and hotels. Exchanging money on the street is illegal and risky (counterfeit banknotes, robberies). The choice of freely convertible currencies is problematic. For more information, you can consult the website of the central bank: https://www.bcrg-guinee.org
As part of the strategy to dematerialize tax operations and improve the quality of services to taxpayers, the Ministry of Budget of the Republic of Guinea has established a portal for remote declaration and electronic payment of taxes on the Internet here: https://etax.gov.gn
Overview of the main taxes:
– social insurance (18% employer, 5% employee)
– VAT (18%), – PO tax (35%)
– FO income tax (0% for income up to 100,000 GNF, 10-35% for income between 100,000 and 20 million GNF, 40% for income exceeding 20 million GNF)
– real estate tax (10-15%)
– from 1.1.2020 tax on alcohol (15%) and tobacco products (30%)
Major investors, mining companies, investors in priority sectors (food, mineral processing, tourism, construction) and investors outside the capital have a number of tax and customs concessions, including 3-8 year tax holidays.
From 1 January 2020, the import of new vehicles intended for public transport (over 10 people) and for the transport of goods (vans, semi-trailers, trucks) is exempt from VAT.