On October 23, the Guinean Treasury requested 2,500 billion francs from its banks, but received 4,579 billion francs, exceeding its target by 183%. The press hailed this as a wave of confidence, but experts say that a high subscription rate only measures buyer appetite, not the solidity of the economic foundation. The real question lies elsewhere: what does this demand reveal about the Guinean economy and its stakeholders?
The bond issue has several advantages, including being denominated in Guinean francs, which eliminates the risk of depreciation. Additionally, the funds are immediately available, while a $425 million program negotiated with the IMF awaits approval from its Council. With an 11% coupon, the state borrows at a lower rate than the average lending rate of banks (13.2%). The context is also favorable, with 7% growth in the second quarter, a current account surplus, and increasing Simandou exports.
However, the question remains as to who financed the operation. Seven banks submitted bids, including Afriland First Bank, which accounted for nearly 30% of the total. For a Guinean institution, a state bond at 11% is a logical refuge, as the private sector is narrow and risky, while the Treasury pays. This is not necessarily a vote of confidence, but also a reflex of prudence. According to the IMF, banks' exposure to the public sector has increased from 15% of their assets in 2014 to nearly 30% at the end of 2023.
The source of liquidity that financed this emission is also a legitimate concern, as public data do not allow for a clear answer. If part of the liquidity comes from the central bank, the mobilized domestic savings would be less abundant than it seems. This is a question to be asked to the BCRG, not an accusation. The cost of easy money is also a concern, with the risk of eviction, as private sector credit did not exceed 10.4% of GDP in 2024.
The budgetary cost of the operation is also significant, with an estimated 500 billion francs in annual interest, according to calculations. The use of funds is also a concern, as the ministry cites the Simandou 2040 program, but the revised 2026 budget allocates around 5.5 trillion francs to maintain fuel at 12,000 francs per liter, while reducing public investment by 2,729 billion. Borrowing at a high rate to support consumption is not an investment.
The success of this bond issue is neither a triumph nor an alert, but a turning point, and the 2027 budget will determine which direction it will take. Three tests will allow for a judgment: a published debt ceiling, traceable funds towards investment lines, and a debt viability analysis and IMF approval before any new emission. Guinea holds the rare asset of a real growth spurt, and the verdict will fall in 2031, at the bond's maturity.
The outcome will be measured in constructed roads, financed SMEs, and a Treasury that has managed to borrow less than it could. The author of the article, Elhadj Aziz Bah, emphasizes that this tribune is part of the citizen debate on governance and development in Guinea, and invites pluralism of ideas, without insults, only arguments.
Key points
- The Guinean Treasury's bond oversubscription raises questions about banking risks and the solidity of the economic foundation.
- The source of liquidity that financed the emission is a legitimate concern, as public data do not allow for a clear answer.
- The 2027 budget will determine the direction of Guinea's economy, with three key tests to evaluate the management of debt and investment.
