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IMF Management Completes First Review of the Staff-Monitored Program with Guinea Bissau

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Authorities have made satisfactory progress in their reform program despite difficult socio-economic conditions exacerbated by the COVID-19 pandemic.

WASHINGTON DC, United States of America, December 1, 2021 / APO Group / –

IMF management approved the first revision of the Guinea Bissau Staff Monitored Program (SMP), which supports the government’s reform program to support macroeconomic stability and debt sustainability, strengthen social policies and improve governance. public; The authorities have made satisfactory progress towards establishing a strong track record of policy and reform implementation, a key requirement for a transition to a possible Extended Credit Facility (ECF) arrangement; It will be important to maintain a good performance under the SMP over the coming months, and for international partners to provide Guinea Bissau with sufficient support during its transition.

On November 9, 2021, IMF Management approved the completion of the first review of the Guinea Bissau SMP. The SMP, which was approved on July 19, 2021, supports the local government reform program aimed at stabilizing the economy, improving competitiveness and strengthening governance.

Economic conditions in Guinea Bissau are improving thanks to increased exports of cashew nuts. Growth has been revised up in 2020 and is forecast to accelerate to 3¾ percent in 2021. Improving business confidence associated with a more stable political situation should help sustain the recovery.

Authorities have made satisfactory progress on their reform program despite difficult socio-economic conditions exacerbated by the COVID-19 pandemic. In a context of very limited resources, they have managed to achieve relatively high levels of vaccination compared to other countries in sub-Saharan Africa.

The fiscal deficit is expected to be contained at around 5¼ percent of GDP in 2021, which would be a substantial fiscal adjustment in line with the program’s objectives. Increased revenue mobilization and cost containment, including the wage bill, is expected to continue to create fiscal space and massive donor support to protect social spending on education, health, pandemic-related expenditures, and initiate key investments in infrastructure.

Timely implementation of governance and transparency reforms are key to the success of the SMP and to addressing long-standing socio-economic challenges. This includes measures to strengthen spending control, tax and customs frameworks, the fight against corruption, and mitigating the risks of state-owned companies. Modifying the legal framework for contracting and the asset declaration regime are also important measures integrated into the SMP.

The IMF reinforces 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.

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