Staff completes virtual mission for first review of staff-controlled program in Guinea-Bissau



Staff completes virtual mission for first review of staff-controlled program in Guinea-Bissau

Authorities and staff discussed policies and reforms underlying the SMP

WASHINGTON DC, United States of America, October 12, 2021 / APO Group / –

Progress on the Staff Monitored Program (SMP) reform program has been satisfactory despite difficult socio-economic conditions made worse by the COVID-19 pandemic; Ensuring revenue mobilization and expenditure containment, including in the wage bill, will help free up space for spending in critical social and growth-friendly areas, and strengthen debt sustainability; Strict control of budget execution, strong governance and transparency measures will help secure concessional financing and grants from international partners and encourage private investment.

A team of staff from the International Monetary Fund (IMF), led by Mr. José Gijon, held virtual meetings with the authorities, from September 28 to October 11, 2021, to conduct the first review of the personnel monitoring program (SMP). ) 9 months. . The review aims to assess efforts to establish a political track record for a possible Extended Credit Facility (ECF) arrangement in 2022.

At the end of the mission, Mr. Gijon made the following statement:

“The authorities and staff have discussed the policies and reforms that underpin the SMP. The structural benchmarks and most of the quantitative targets were met. Based on the overall performance of the implementation of the reform package, an agreement at the staff level was reached on the completion of this first review subject to the approval of IMF management.

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

“Despite the persistence of the COVID-19 pandemic, the economic recovery continued in 2021 and the medium-term outlook remains strong. Inflation is expected to remain moderate and below the regional threshold of 3% of the West African Economic and Monetary Union (UEMOA). The budget deficit is expected to be contained at 5.2% of GDP in 2021, in line with program targets.

“The IMF team and the authorities have agreed on policy measures for the 2022 budget to ensure the key objectives of the program. These measures should reduce the projected budget deficit to around 4 ½% of GDP in 2022 and gradually converge towards the WAEMU regional deficit standard of 3% of GDP by 2025.

“The IMF team and the authorities also agreed that for the program to be successful, political priorities should focus on macro-fiscal sustainability. This will help create space for spending in critical emergency and growth areas such as health, education and physical infrastructure.

“The team recommends that the budget execution in 2021 and the design of the 2022 budget avoid any accumulation of arrears and the use of expensive non-concessional borrowing, in the context of a level of public debt already above the defined limit. in the UEMOA Convergence Pact. This implies focusing on revenue mobilization and expenditure containment measures, including more efficient management in order to contain any increase in the wage bill and the decline in interest payments on the debt (representing 80 and 20, respectively). , 5% of tax revenue in 2020). Attracting external subsidies will be essential to cover the current expenses of the government.

“In this context, the authorities of Guinea-Bissau have decided to use most of the recent allocation of SDR 27.2 million to Guinea-Bissau (approximately US $ 38.4 million) to strengthen the sustainability debt by repaying non-concessional debt, in particular to BOAD, and allocating the remaining amount to support COVID-related expenses, including vaccination and improvement of health services.

“The success of the IMF’s program also hinges on meeting strong governance commitments aimed at improving transparency, accountability and efficiency in public finances. These measures aim to ensure that expenditure decisions that may affect the budget are exclusively authorized by the Ministry of Finance in accordance with the legislation in force. The objective of the other governance and transparency measures is that the budgetary allocations related to COVID-19 are spent in an appropriate manner and consistent with the commitments of the Rapid Credit Facility (FCR) disbursed in January 2021. This implies the achievement of ” an independent audit of crisis mitigation. expenses. The related report will be published with the regular expenditure reports, public contracts mentioning the successful companies and beneficial owners, as well as the ex post reports on the validation of the delivery of goods and services. The IMF supports the implementation of these measures by providing adequate capacity building.

“IMF staff will continue to support the authorities’ efforts to reach out to other international partners to mobilize concessional financing for the reform program.

“The IMF team met with HE President Sissoco Embaló, Deputy Prime Minister Sambú, Minister of Finance Fadiá, National Director of BCEAO Embaló, President of the Court of Auditors Baldé and High Commissioner for COVID -19 Robalo. The team also met officials from the Ministries of Finance, Economy, Public Administration, the National Directorate of the BCEAO, the National Institute of Statistics, the FIU and other officials. In addition, the team met representatives of development partners.

“The team thanks the authorities for their openness and constructive discussions and looks forward to continuing a very close cooperation in the coming period.”

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