Guinea - Economic development
After independence, French-held financial, commercial, industrial, and distributive organizations were expropriated, and the national economy was divided into three sectors: a state sector, a mixed sector, and a sector for guaranteed private investment. By the mid-1970s, the private sector had become insignificant, and government policy increasingly leaned toward greater government control of the mixed enterprises and the state-sector companies. The 1987–91 recovery program called for $670 million in spending through 1989, with 42% for infrastructure and 24% for rural development. A major aim was to diversify the economy and reduce the heavy reliance on bauxite.
By 1990, the government had privatized the majority of its 180 public enterprises and closed over 300 state farms. From 1990 to 2000, the pace of structural reform slowed and debts increased as the economy failed to diversify. The Islamic Development Bank (IDB) granted two new loans to Guinea in 1997, and the Paris Club rescheduled a large portion of Guinea's bilateral debt, forgiving 50% of debt to France, and Russia forgave 70% of bilateral debt.
The government in recent years has taken steps to stimulate investment, encourage private-sector commercial activity, reduce the role of the state in the economy, and improve administrative and judicial frameworks. The government has also increased spending on education, health, infrastructure, banking, and justice sectors, and cut the government bureaucracy. Corruption and nepotism hamper economic development.
In 2000, Guinea was granted $800 million in debt relief under the International Monetary Fund (IMF)/World Bank Heavily Indebted Poor Countries (HIPC) initiative. In 2001, Guinea negotiated a three-year $81.3 million Poverty Reduction and Growth Facility (PRGF) Arrangement with the IMF, geared to support the country's efforts to stabilize the economy, promote growth, improve social services, and reduce poverty.