IMF Reaches Staff-Level Agreement on an Extended Credit Facility Arrangement with Guinea-Bissau

November 21, 2022

End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.
  • IMF staff and the Guinea Bissau authorities have reached a staff-level agreement to support Guinea Bissau economic policies with a thirty-six-month Extended Credit Facility (ECF) of SDR 28.4 million (US$ 36.3 million).
  • The objectives of Guinea-Bissau’s new Fund supported program are securing debt sustainability while supporting the economic recovery and creating fiscal space to support sustainable and inclusive growth.
  • Strong and transparent fiscal management remains essential to buttress macroeconomic and debt sustainability. The structural reform agenda will focus on improving public governance, financial deepening and stability.

Bissau: A team from the International Monetary Fund (IMF) led by Jose Gijon, Mission Chief for Guinea Bissau, held virtual meetings during November 8–11, 2022, and meetings in Bissau during November 15–21, 2022, to discuss a thirty-six-month program under the Extended Credit Facility (ECF) arrangement. A staff-level agreement was reached. This agreement is subject to IMF management approval and IMF Executive Board consideration. The discussions covered the impact of the war in Ukraine on recent economic and fiscal developments; the near and medium-term outlook for Guinea-Bissau; and implementation of policies and reforms to support public governance and more inclusive growth.

At the conclusion of the mission, Mr. Gijon issued the following statement:

“IMF staff reached agreement with the Bissau Guinean authorities on a medium-term program that could be supported by IMF resources of about SDR 28.4 million (about US$ 36.3 million) under the ECF.

“Guinea Bissau’s economy is gradually recovering from the negative effects of the COVID-19 pandemic but spillovers from the war in Ukraine are stalling the recovery. Growth is projected to moderate to about 3½ percent in 2022. Average inflation is projected to be above 7 percent given the potential impact of rising oil and food prices, which will adversely affect the most vulnerable. In spite of improved revenue mobilization in 2021, expenditure overrun in 2022, specifically in wage spending, have constrained the expected pace of fiscal consolidation. The projected annual overall fiscal deficit is 5 percent of GDP for this year. Public debt remains at high risk of distress at more than 80 percent of GDP.

“The authorities’ medium-term strategy is centered on securing debt sustainability while supporting the economic recovery and creating fiscal space to support sustainable and inclusive growth, drawing from the authorities’ key priorities and considering the country’s significant vulnerabilities.

“Sustainable fiscal management is needed to create fiscal space for much-needed investment in social development (health, education) and infrastructure, while maintaining fiscal and debt sustainability. This implies raising more domestic revenue through credible and comprehensive revenue strategy and improving spending quality and efficiency. This strategy calls for enhanced coordination across and within Ministries and public agencies and mitigating large fiscal risks stemming from state-owned enterprises.

“The authorities’ medium-term program also aims at advancing their structural reform agenda, including enhancing the conditions for more economic diversification, job creation, and financial inclusion. The ECF is expected to help catalyze stronger financial support from development partners, stimulate private sector investment, and increase the growth potential of the economy. A consistent strategy for addressing governance vulnerabilities will be key to strengthen economic policy and business confidence. Critical governance reforms will be the establishment of a Treasury Single Account, an amended legal procurement framework to ensure full transparency on awarded public contracts, and enforcement of the amended asset declaration regime once approved by Parliament.

“The team thanks the authorities for their openness, and constructive discussions and looks forward to continuous close cooperation through the Extended Credit Facility (ECF) arrangement over the next three years.

“The IMF team met with H.E. President Sissoco Embaló, Prime Minister Nabiam, President Cassama and Members of the Permanent Commission of the National Popular Assembly, Vice-Prime Minister Sambú, Finance Minister Té, Minister of Economy Casimiro, Minister of Public administration, Labor, Employment and Social Security Djaló, Minister of Fisheries Mendes Viegas, BCEAO National Director Cassama, President of the Court of Auditors Baldé. The team met with officials from the Ministries of Finance, Economy, the National Directorate of the BCEAO, the National Institute of Statistics, the Financial Intelligence Unit, the procurement authorities and other officials. The team also met with trade-unions, civil society organizations, representatives from private and public sector enterprises, and key bilateral and international partners. Staff visited the Port of Bissau and Kwame N’Krumah High school.”

Key links:

Guinea-Bissau and the IMF

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