The International Monetary Fund (IMF) has pledged significant support to the Central Bank of the Republic of Guinea (BCRG) in establishing a Special Resolution Regime (SRR) to manage failing credit institutions—a key step in strengthening the country’s fragile financial architecture.
In its recently published technical assistance report titled Operationalization of the Statutory Special Resolution Regime, the IMF outlines its role in guiding the BCRG through the development of critical resolution tools, including partial asset sales and the formation of a bridge institution.
The initiative seeks to fill longstanding gaps in Guinea’s financial security framework, which currently lacks a structured and comprehensive approach to banking crisis management.
The IMF underscored that while the foundation has been laid, the success of the SRR hinges on increased human and technical capacity.
“A prerequisite for establishing an effective resolution function within the BCRG is increasing staffing and skills,” the report notes.
It calls on Guinean authorities to recruit and train experts in crisis management, bank resolution, and deposit insurance.
In response, the BCRG has drafted a new banking law that will formally embed the SRR into the national financial regulatory system.
This law aims to enhance a previously limited structure that only included banking supervision, early intervention mechanisms, and a deposit guarantee fund.
The creation of the SRR was one of the IMF’s key recommendations in its 2019 Financial Sector Stability Review (FSSR).
Among the proposed tools, the partial sale of assets is considered the preferred approach (“Plan A”), while the bridge institution would serve as a fallback (“Plan B”) in cases where market solutions are not viable.
To support resolution financing, the draft law includes provisions allowing the Ministry of Finance to provide exceptional temporary funding upon request from the Licensing and Resolution Committee (LRC).
This measure addresses the limited internal capacity of Guinean banks to absorb losses and recapitalize during crises.
The IMF also recommends functional separation between the roles of banking supervision and resolution within the BCRG to avoid conflicts of interest, urging the development of internal protocols for effective coordination.
Looking ahead, the IMF urges the BCRG to begin preparing institution-specific resolution plans and submit initial drafts to the LRC, including proposed tools and estimated financial requirements.
The release of the report comes at a critical moment for Guinea, as the BCRG grapples with a liquidity crunch that has begun to impact economic activity nationwide.
The introduction of the SRR is expected to play a crucial role in restoring market confidence and laying the groundwork for long-term financial stability.
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