The International Monetary Fund approved another $3.15 million (€2.88 million) this Wednesday for Guinea-Bissau, following a second positive evaluation of the African nation’s bailout program.
The decision of the IMF Executive Board allows for the immediate disbursement of another tranche under the Extended Credit Line Agreement, effective from January, with a maturity of 36 months and a total financing of US$36 million (€33 million).”
The new tranche increases the amount already delivered to Guinea-Bissau to US$9.46 million (€8.66 million) and is designed to “help meet the country’s budget financing needs and balance of payments in the context of the challenges posed by Russia’s war in Ukraine.” . , a significant increase in the cost of living, which particularly affects the most vulnerable populations, and the lingering effects of the pandemic,” the IMF said in a statement.
This international body reports that Guinea’s economy “grew 4.2% in 2022 and should recover moderately to 4.5% in 2023 while inflation should remain high.”
The IMF concluded that local authorities “are taking steps to address exogenous (external) shocks and remain committed to strong policies and reforms.”
The Executive Council also “approved the authorities’ request for tax exemptions for failing to meet performance criteria relating to tax revenue, the salary cap and the internal primary financial balance floor.”
It also completed the review of funding guarantees and agreed to change the access structure to make two payments on January 17, 2024 and April 17, 2024 instead of one payment on April 17, 2024.
The IMF notes that Guinea’s economic growth has been “negatively affected by low cashew exports and adverse external shocks that are putting pressure on the country’s socio-economic environment.”
Rising food and oil prices add pressure to annual inflation, which the Fund estimates should remain high at 7.0%.
The second evaluation report notes that “budget execution is facing pressure” as the overall budget deficit will remain at 5.9% of GDP in 2022.
“According to preliminary data, public debt increased to 80.3% of GDP in 2022 due to higher-than-expected global budget deficits, new government guarantees, mainly to utilities, and the recognition of cross-cutting delays due to suppliers with troubled loans (in debt) from an undercapitalized bank,” he says.
The IMF recommends that “revenue mobilization and spending containment remain key to avoid risks to debt sustainability and access to external financing.”
He also noted that in conversations with the mission team, “the new government that emerged from the victory of the coalition in the legislative elections on June 4, 2023, expressed its commitment to implementing the reform agenda.”
Associate Director and Acting President Kenji Okamura emphasized that “the performance of the program was satisfactory”: “Five out of eight quantitative performance criteria for March 2023 were met.”
The official specified that the Guinean government “has taken corrective measures to address outstanding targets, including strengthening spending controls, selling 5G licenses, and streamlining tax spending to meet end-2023 targets.”
He warned that “more efforts are also needed to increase economic diversification and ensure that banks’ vulnerabilities are effectively managed.
Author: Portuguese
Source: CM Jornal
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