(Ecofin Agency) - Since January, Guinea-Bissau has been benefiting from an IMF-supported economic program under the ECF. Following the satisfactory performance recorded during this program, the Fund and the country reached a staff-level agreement.

Guinea-Bissau and the International Monetary Fund (IMF) have reached a staff-level agreement in line with which the latter should provide the former $3.16 million under the second review of the Extended Credit Facility (ECF), the IMF announced on May 30, 2023.

The three-year program under the ECF with a total amount of $38.4 million was approved by the IMF Executive Board last January. The program aims to support Guinea-Bissau’s efforts to ensure debt sustainability as well as its economic recovery. It should also foster a fiscal space conducive to inclusive growth.

The IMF deems Bissau’s performances in the program’s first months satisfactory, especially on the structural reform side.

"Five out of eight end-March 2023 quantitative performance criteria (QPC) have been met…On the structural reforms side, all “structural benchmarks” for the second, and one for the third and fourth reviews have been met," Jose Gijon, IMF Mission Chief for Guinea Bissau wrote in a recent statement.

However, the West African economy is still affected by global inflationary pressures. “Estimated economic growth has moderated in 2022 to 4.2 percent. The surge in commodity prices associated with the war in Ukraine, especially in food and fuel, brought average inflation to 7.9 percent and contributed to the widening of the current account deficit," Mr. Gijon added. 

Given the context, IMF experts believe that increasing domestic revenues, controlling wage bills, and other current expenditures and transfers will be essential to keep the country's public finances and debt sustainable.

They also added that timely financial support from the international community in the form of grants and concessional loans remains crucial.

Charlène N'dimon (Intern)