(Ecofin Agency) - Last January, the International Monetary Fund (IMF) approved a $38.4 million assistance program for Guinea-Bissau under the Extended Credit Facility (ECF). This new disbursement should bolster donor confidence and further catalyze essential concessional financing.

IMF’s executive board approved the immediate disbursement of about $3.2 million for Guinea-Bissau following the completion of the first review of the Extended Credit Facility (ECF) agreement, the Fund announced in an official statement released on May 10.

The ECF agreement spans 36 months with a total funding of approximately $38.4 million. Approved in January 2023, it should help the Guinea-Bissau government meet the country's financing needs and accelerate economic recovery.

With the recently-announced tranche, total funding effectively secured under the ECF now stands at around $6.4 million.

The Bretton Woods institution commended Guinea Bissau's performance during the initial phase of the program. They attribute the performance to the government’s determination to take firm action and carry out structural reforms, particularly in the areas of budget management and governance, though the country was dealing with the impacts of external shocks. 

"The performance of the program has been satisfactory, with all quantitative performance criteria having been met by the end of January 2023, with one exception, and all structural measures for the second review having been implemented by the end of March 2023," the IMF said.

The Fund did not fail to emphasize that the program's performance should enhance the confidence of the private sector and donors, thus catalyzing further essential concessional financing for the country.

"Going forward, it is critical to ensure the continuation of strong policies to maintain good program performance. This implies credible fiscal adjustment that ensures medium-term debt sustainability," IMF added.