(Ecofin Agency) - The International Monetary Fund (IMF) announced in a Jan 25 statement it will support Guinea-Bissau’s response against the Covid-19 pandemic with $20.4 million. The financing is approved under the Rapid Credit Facility (RCF) put in place to assist countries during the health crisis.
The money will help the government meet its urgent balance of payments and fiscal needs; support the growing health spending, social protection and investment needed to revive the country’s economy.
With more than 2,532 cases of Covid-19 reported so far (45 deaths and 2,421 recoveries), Guinea-Bissau fears a second wave of infections. Last year, growth shrunk in the country to about -2.9%, the IMF said.
Moreover, lower external demand for cashew, one of Guinea-Bissau’s flagship exports, added to the restriction measures initiated to control the spread of the pandemic, led to a deterioration of the country’s external position and its fiscal status.
Another blow to the economy is the public debt, which makes it difficult for the country to diversify its financing sources. “Given Guinea-Bissau’s limited fiscal space and debt vulnerabilities, emergency assistance should be mostly in the form of grants and highly concessional loans. As the pandemic eases, the authorities are committed to putting in place a fiscal consolidation program to ensure debt sustainability while addressing the country’s vast developmental needs,” the IMF said.
To get out of that crisis and improve economic resilience to future external shocks, IMF encourages authorities to strengthen health investment. “The effects of these shocks are expected to persist in 2021, reflecting the need to sustain imports for essential consumption and investment to strengthen health sector capacities and infrastructure, which was further weakened by severe floods in September,” the Fund explained.
Let’s note that the authorities are committed to “pursuing their reform agenda and their engagement with the IMF through a staff-monitored program to build a sound track record toward a possible Extended Credit Facility arrangement.”
Moutiou Adjibi Nourou