The International Monetary Fund has issued the following press release:
The Management of the IMF approved on Nov. 9 the completion of the first review of Guinea Bissau’s SMP. The SMP, which was approved on July 19, 2021 , supports the government’s home-grown program of reforms aimed at stabilizing the economy, improving competitiveness, and strengthening governance.
Guinea Bissau’s economic conditions are improving on the back of higher cashew nut exports. Growth has been revised upwards in 2020 and is projected to accelerate to 3¾ percent in 2021. The improvement in business confidence associated with a more stable political situation should contribute to sustain the recovery.
The authorities have made satisfactory progress on their reform program despite difficult socio-economic conditions compounded by the COVID-19 pandemic. In a context of very constrained resources, they have managed to achieve relatively high levels of vaccination compared to other Sub-Saharan African countries.
Fiscal deficit is expected to be contained to about 5¼ percent of GDP in 2021, which would be a substantial fiscal adjustment in line with program objectives. Stronger revenue mobilization and expenditure containment including in the wage bill are expected to continue creating fiscal space and crowding-in donor support to protect social spending in education, health, pandemic-related expenditures, and to initiate key infrastructure investments.
Timely implementation of governance and transparency reforms are key for the SMP success and for addressing long-standing socioeconomic challenges. This includes measures to strengthen expenditure control, tax and custom frameworks, fight against corruption and mitigation of State-Owned Enterprises’ risks. Amendment of the legal procurement framework and the asset declaration regime are also important measures embedded in the SMP.
The IMF bolsters the implementation of these steps through the provision of capacity development in coordination with international partners. It also supports the authorities’ efforts to mobilize external concessional financing.