Due to the global economic crisis and Guinea’s unstable political situation, a number of planned investments in the mining sector have been put on hold. The Guinea Alumina Corporation (formally Global Alumina) broke ground on the first of two large alumina refineries in the Boke prefecture in northwestern Guinea. The project is expected to eventually go forward, but construction efforts have slowed. Mining giants Rio Tinto and BHP Billiton have both announced multibillion dollar plans for iron ore extraction in the forest region of southern Guinea. However, the government’s review of mining contracts has brought the Rio Tinto project to a temporary halt. Russian mining firm Rusal has also confronted significant government harassment including the expropriation of their refining facility near Kindia. Other foreign investors continue to explore the possibility of setting up bauxite mines and alumina refineries in Maritime Guinea, though continual interference by the junta threatens to undermine any new investment.
In 2007, the International Monetary Fund (IMF) launched a three-year Poverty Reduction and Growth Facility (PRGF) to reduce poverty and secure debt relief for the country under the Heavily Indebted Poor Countries (HIPC) Initiative As of late 2008, Guinea was on track to achieve debt reduction under the HIPC initiative; however, the December 2008 coup d'etat and the military junta’s subsequent management of the country’s finances have cast doubt on the program. In October, the junta officially went into arrears to the World Bank.
Inflation rose from about 13% in 2007 to approximately 18.5% in 2008. By June 2009, the informal exchange market indicated a 25% decrease in GF value to the dollar, and it is expected to continue its downward trend over the coming months. As in the past, the Guinea Central Bank continues to experience shortages of foreign currency reserves. The government successfully controlled off-budget spending and conducted several audits of ministries and the Central Bank in 2007, but failed to continue this effort in 2008. As of November 2009, the Government of Guinea had no national budget in place and appears to lack sufficient funding. In November 2009, Guinea officially fell into arrears on its $3.22 billion in external debt payments.
Guinean public and private consumers generally prefer products made in the U.S., including services and technology; however, the high cost of U.S. products compared to imports from Asia inhibits the wide scale purchase of American goods. Most imports originate in China, France, Spain, or the Netherlands.
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