Guinea-Bissau
Second Review Under the Three-Year Arrangement Under the Extended Credit Facility and Financing Assurances Review: Staff Report; Informational Annex; Press Release on the Review
Author:
International Monetary Fund
Search for other papers by International Monetary Fund in
Current site
Google Scholar Close
Publication Date:
26 May 2011
eISBN:
9781455274536
Language:
English
Keywords:
ISCR; CR; government; reform momentum; policy implementation; headline inflation; satisfactory performance; IMF staff estimate; government tax revenue; supplementary letter of intent; Debt relief; West Africa
Download PDF (817.6 KB)

The review highlights that the government of Guinea-Bissau maintained macroeconomic stability under challenging circumstances. The government implemented satisfactory policies under the IMF supported program even in severe conditions. The authorities have met all performance criteria and all structural reforms for the second review. Sound macroeconomic policies, strengthened institutions, and debt relief have stabilized the economy and supported confidence building. It is critical that the government maintain the reform momentum and continue to build on the satisfactory performance under the Extended Credit Facility (ECF).

Abstract

The review highlights that the government of Guinea-Bissau maintained macroeconomic stability under challenging circumstances. The government implemented satisfactory policies under the IMF supported program even in severe conditions. The authorities have met all performance criteria and all structural reforms for the second review. Sound macroeconomic policies, strengthened institutions, and debt relief have stabilized the economy and supported confidence building. It is critical that the government maintain the reform momentum and continue to build on the satisfactory performance under the Extended Credit Facility (ECF).

I. Satisfactory macroeconomic and Program Performance

1. Economic growth has been resilient, owing to a rebound in the price of cashew exports and improved liquidity in the banking system. Growth accelerated slightly to 3.5 percent in 2010, as strong terms-of-trade gains more than offset a weather-related decline in the cashew harvest (Figure 1, Table 1). Exports were supported by rising credit, as liquidity in domestic commercial banks improved, reflecting the government’s arrears clearance early last year (Table 2). Imports, however, were well contained and the external current account deficit, excluding official transfers, narrowed by about 4 percentage points of GDP (Table 3). Inflation picked up slightly at the end of the year on the back of rising import prices for food and fuel, but, at 1.1 percent, remained below the WAEMU convergence criterion.

Figure 1.
Figure 1.

Guinea-Bissau: Economic Developments, 2005–10

Citation: IMF Staff Country Reports 2011, 119; 10.5089/9781455274536.002.A001

Sources: Guinea-Bissau authorities and IMF staff estimates.
Table 1.

Guinea-Bissau: Selected Economic and Financial Indicators, 2008–14

article image
Sources: Guinea-Bissau authorities; and IMF staff estimates and projections.

As of May 2010 (IMF Country Report No. 10/117).

As of December 2010 (IMF Country Report No. 10/379).

Contribution to the growth of broad money in percent.

Values in 2010 and thereafter reflect assumed impact of HIPC and MDRI debt relief; and estimates for 2010 include Topping Up.

As of end-2010, includes 8.3 percent of GDP in domestic arrears, consisting of pre-1999 arrears (3.3 percent of GDP) and preliminary estimates of the 2000–07 arrears registered at the Treasury (5 percent of GDP). It does not include the preliminary estimates of 2000–07 arrears (13.4 percent of GDP) not registered at the Treasury.

Table 2.

Guinea-Bissau: Monetary Survey, 2008–14

article image
Sources: BCEAO; and IMF staff estimates and projections.

As of May 2010 (IMF Country Report No. 10/117).

Table 3.

Guinea-Bissau: Balance of Payments, 2008–14

article image
Sources: BCEAO; and IMF staff estimates and projections.

As of May 2010 (IMF Country Report No. 10/117).

As of December 2010 (IMF Country Report No. 10/379).

Includes food aid and technical assistance to projects.

Excludes the financing gap, which BCEAO includes in the capital account.

In 2010, arrears were assumed to be treated at HIPC completion point.

Assumed to be filled with IMF resources and additional donor support.

At program exchange rates.

2. Fiscal performance remained on track. Revenue collection was stronger than expected, reflecting sustained economic activity and tighter controls at customs and revenue administration. Expenditures were contained below program, reflecting lower outlays in goods and services and underexecution of the public investment program due to shortfalls in budget support (Figure 2, Table 4).

Figure 2.
Figure 2.

Guinea-Bissau: Macroeconomic Policies, 2005–10

Citation: IMF Staff Country Reports 2011, 119; 10.5089/9781455274536.002.A001

Sources: African Department database, BCEAO, Guinea-Bissau authorities, and IMF staff estimates.
Table 4.

Guinea-Bissau: Central Government Operations, 2008–14

(CFAF billions)

article image
Sources: Guinea-Bissau authorities; and IMF staff estimates and projections.

As of May 2010 (IMF Country Report No. 10/117).

As of December 2010 (IMF Country Report No. 10/379).

In 2010, includes the disbursement of one tranche of EU fishing compensation, compared to two tranches assumed under the program.

In 2009 includes CFAF 5.2 billion (€ 8 million) of V-Flex 2009 from the EU for payment of 2008 arrears.

Beginning in 2012, incorporates severance payments for excess employees identified under the action plan for public administration reform.

Beginning in 2013, assumes payment of scheduled domestic debt owed to the BCEAO and rescheduling of scheduled interest and amortization falling due in 2010 and principal falling due in 2011 and 2012 with terms similar to previous reschedullings.

In 2010, arrears are assumed to be treated as debt relief at HIPC completion point.

In 2010 covered with the EU V-Flex.

Assumed to be covered with IMF resources under the ECF arrangement until 2012.

Table 4.

Guinea-Bissau: Central Government Operations, 2008–14

(Percent of GDP)

article image
Sources: Guinea-Bissau authorities; and IMF staff estimates and projections.

As of May 2010 (IMF Country Report No. 10/117).

As of December 2010 (IMF Country Report No. 10/379).

In 2010, includes the disbursement of one tranche of EU fishing compensation, compared to two tranches assumed under the program.

In 2009 includes CFAF 5.2 billion (€ 8 million) of V-Flex 2009 from the EU for payment of 2008 arrears.

Beginning in 2012, incorporates severance payments for excess employees identified under the action plan for public administration reform.

Beginning in 2013, assumes payment of scheduled domestic debt owed to the BCEAO and rescheduling of scheduled interest and amortization falling due in 2010 and principal falling due in 2011 and 2012 with terms similar to previous reschedullings.

In 2010, arrears are assumed to be treated as debt relief at HIPC completion point.

In 2010 covered with the EU V-Flex.

Assumed to be covered with IMF resources under the ECF arrangement until 2012.

3. Performance under the ECF-supported program has been satisfactory. All performance criteria and quantitative targets for end-December, including the indicative targets for social and priority spending, and all the structural benchmarks for the second review have been met (Tables 5 and 6). The authorities made the link from the treasury to customs administration operational; approved the action plan for public administration reform; and launched the unified payroll system at the ministries of finance and labor and public administration.

Table 5.

Guinea-Bissau: Quantitative Indicators for the ECF Program for 2010 Quarterly Targets 1

(Cumulative, CFAF millions)

article image

Cumulative from January 1. The definition of the aggregates and adjustors is provided in the Technical Memorandum of Understanding (TMU).

Adjusted target under the program.

Performance criteria (PC) are defined for June and December. March and September are indicative. All performance criteria (PC) are ceillings and PC 3, 4, and 5 apply continously.

Indicative target for social and priority spending was revised compared to program (IMF Country Report No. 10/379) from CFAF 16,246 to CFAF 8,647.

Table 6.

Guinea-Bissau: Structural Benchmarks Under the ECF Second Review

article image

Ministry of Finance

Ministry of Labor and Public Administration

II. The Economic Outlook Remains Favorable

4. The authorities’ medium-term macroeconomic objectives under the ECF-supported program remain unchanged (IMF Country Report No. 10/379 and Figure 3). The authorities reiterated their commitment to (i) raise real growth to 4½ percent by program end, (ii) maintain low annual inflation, and (iii) keep the budget deficit consistent with available financing.

Figure 3.
Figure 3.

Guinea-Bissau: Medium-Term Outlook, 2009–14

Citation: IMF Staff Country Reports 2011, 119; 10.5089/9781455274536.002.A001

Sources: Guinea-Bissau authorities and IMF staff estimates and projections.

5. The growth outlook for 2011 is favorable, but inflation and balance of payments pressures reflect higher import prices for food and fuel.

  • Economic growth is expected to accelerate moderately to 4.3 percent, driven by rising cashew production, higher cashew prices, and a steady rebuilding of infrastructure, especially roads, electricity, and water.

  • Inflationary and balance of payment pressures reflect rising import prices for food and fuel. The pass-through of imported prices to domestic prices in Bissau is high due to a high dependence on imports and limited supply response (Figure 4). Headline inflation is now projected at 4 percent, above the WAEMU convergence criterion. However, core inflation is expected to remain subdued, and headline inflation should return to the WAEMU target range in 2012, once the one-off effect of rising import prices subsides. Driven by higher import prices, the external current account deficit (excluding official transfers) is expected to widen slightly.

Figure 4.
Figure 4.

Guinea-Bissau: Impact of Food and Fuel Prices on Inflation

Citation: IMF Staff Country Reports 2011, 119; 10.5089/9781455274536.002.A001

Sources: Guinea-Bissau authorities and IMF staff estimates and projections.

6. The authorities agreed that adjustment to the food and fuel price shock would be preferable to accommodation. A full pass-through of price changes over time should encourage consumers and producers to adjust. Staff and the authorities shared the view that general price subsidies would not benefit the poor and, in the absence of well-targeted programs and the time it takes for these to be developed, the government would ensure that resources for social and other priority spending are fully allocated as planned under the program.

7. Budget support is projected to be larger than expected under the program. In addition to the budget support expected under the program (from the World Bank and the African Development Bank), the government received a new grant from Angola (1.3 percent of GDP) (see Box 1). The grant will allow the government to restore its public investment program and repay previous years’ arrears to the private sector (0.4 percent of GDP). Consultations with the EU under Article 96 of the Cotonou Agreement took place in Brussels on March 29. The EU announced it will condition its support to Guinea-Bissau on the implementation of undertakings by the authorities in several areas, including security sector reform and the appointment of military personnel. The program continues to assume no financial support from the EU this year.

III. Economic Policies

8. The discussions were marked by general agreement on the need to maintain fiscal discipline and sustain the post-HIPC reform momentum, with a focus on mobilizing more revenue, modernizing the public administration, and managing debt. Economic policies remain broadly unchanged as expressed in the authorities’ Supplementary Letter of Intent (Appendix I) and the attached Supplementary Memorandum of Economic and Financial Policies and the Technical Memorandum of Understanding, which update and supplement those of November 16, 2010.

A. Strengthening Public Finances

Fiscal Policy

9. The 2011 budget approved by Parliament is consistent with the medium-term objectives of the government. The budget includes important measures to strengthen fiscal revenue, including by reducing implicit import subsidies, raising the customs reference price for cashew exports, and increasing the tax rate on advance payment of profit tax (ACI) from 3 to 5 percent for the informal sector. On the spending side, the budget preserves social and other priority outlays and freezes wages while incorporating contractual workers in the health and education sector in the wage bill.

10. The fiscal program continues to be fully financed (Text table). Revenues are projected to increase as planned under the program, with the overperformance in 2010 (about ½ percentage points of GDP) carrying over to 2011. This offsets higher-than-budgeted spending due to a harmonization of wages across defense and security forces and upwardly revised wage estimates for health and education contractual workers. At the same time, the public investment program–which was affected in the past by lack of resources and delayed budget support disbursements–is being restored with the assistance from Angola. As a result, domestic financing of the budget remains unchanged. The financing gap is expected to be filled by the ECF arrangement.

Text Table.

Guinea-Bissau: Fiscal Developments 2010—11

article image
Sources: Guinea-Bissau authorities and IMF staff estimates and projections.

Mobilizing more revenues

11. The government is working to further broaden the tax base and improve capacity and efficiency in customs and revenue administration.

  • On tax administration, the government prepared an action plan, with technical assistance from AFRITAC West, to: (i) revise taxpayer segmentation based on turnover criteria, with thresholds for small and large taxpayers at CFAF10 and 40 million, respectively; (ii) cross-check ASYCUDA data with tax returns for the 300 largest importers in 2009–10; and (iii) audit importers underreporting tax liabilities, beginning with largest gaps.

  • On customs, the government will (i) finish customizing and testing the ASYCUDA ++ system with the parameters for Guinea-Bissau and train staff with the help of UNCTAD; and (ii) finish the comprehensive review of all custom exemptions and submit a report to the Council of Ministers by June.

MEFP ¶16

12. The government is reinforcing fiscal revenues this year and next by raising customs reference prices for identified imports, thus gradually eliminating import subsidies. By end March, the government eliminated the reference price of sugar for customs purposes and raised the reference price for diesel. In addition, it will: (i) gradually adjust the reference price for imported diesel toward market levels by end-June; (ii) adjust domestic fuel prices monthly, beginning in June, to allow for a full pass-through of international prices into domestic prices; and (iii) review the reference price of certain imports (rice, flour, diesel) by year-end, with the goal of raising them to market levels as part of the 2012 budget; and (iv) reduce or eliminate customs exemptions to be identified by the government’s current review. On an annual basis, these measures could yield about ½ to 1 percent of GDP.

MEFP ¶12

South-South Cooperation in Guinea-Bissau

Traditionally, the main development partners of Guinea-Bissau have been the European Union (EU), European bilateral donors, and multilateral organizations such as the World Bank, the African Development Bank, the United Nations, and the Economic Community of West African States (ECOWAS). During 2000–2009, among donors that report to the OECD Development Assistance Committee (DAC), the EU (US$294 million), Portugal (US$132 million), the World Bank (US$125 million), Italy (US$78 million), and Spain (US$55 million) provided the most development assistance to Guinea-Bissau. Not captured in these figures, however, is development assistance from key providers of South-South cooperation.

Providers of South-South cooperation in Guinea-Bissau have typically provided project financing, often for infrastructure, as well as technical assistance. Southern providers include Angola, Brazil, and China.

Angola provided a US$12-million (about 1.3 percent of GDP) grant in February 2011, which the authorities intend to use to finance roads and agriculture projects and to pay previous years’ arrears to the private sector. In October 2010, Angola announced that it would open a US$25-million line of credit to support entrepreneurs from both countries who want to invest in Guinea-Bissau. In 2008, Angola provided US$10 million in budget support. In addition to financial assistance, Angola has been actively involved in security reform.

Brazil has cooperated with Guinea-Bissau across several sectors. It has provided technical assistance to increase agricultural production; established training centers for the military, the police, teachers, and ex-combatants; and helped build capacity to combat HIV/AIDS. The United Nations Development Program (UNDP) estimates that Brazil’s bilateral assistance to Guinea-Bissau totaled US$6.2 million during 2006–2009.

China has realized several large projects in Bissau, including a 20,000-seat stadium, the National Assembly building (US$6 million), a new government office (US$12 million) that will house 12 ministries, and a hospital (US$8 million). China has also provided technical assistance to improve rice production.

B. Modernizing the Public Administration

13. To improve the efficiency of the civil service, the government approved in March an action plan for the reform of the public administration. The plan aims to reduce the civil service and upgrade the qualifications and working conditions for civil servants (see Box 2). While the reform is gradual and figures will be finalized only after the unification of the payroll system, the plan is to start bringing the ratio of employees in line with the norm in the WAEMU region.

MEFP ¶17

14. The government began using the unified payroll system in most ministries in March. Next steps will be to extend the payroll system to all ministries and start using the personnel management system (SIGRHAP), being implemented with the support of the EU, this fall. This would allow the government to better control, record, and manage the payroll.

MEFP ¶18

Action Plan for Public Administration Reform

Modernizing the public administration through civil service and security reforms has been at the center of the reform agenda in Guinea-Bissau for many years. The comprehensive biometric census completed by the government in June last year gave an accurate account of all employees working at the public administration and helped lay the groundwork for the government to prepare a medium-term action plan for reforming the public administration. The timetable for its implementation covers 2011–15. The plan was prepared by the Ministry of Labor and Public Administration with the assistance of the EU Public Administration Reform Program (PARAP).

In March, the government approved its plan for public administration reform.

  • Key objectives are: to reduce the size of the civil service, with a view to start bringing the ratio of employees from 10 to 6-7 workers per 1,000 inhabitants, in line with the norm in the WAEMU region; to upgrade the qualifications and working conditions for civil servants; and, to increase the efficiency and quality of public administration.

  • Measures identified under the plan include: (i) retiring all employees who exceed the mandatory age; (ii) reinserting the group of civil servants who are in an excess pool of workers (“redundant workers”) into the private sector; (iii) providing training for civil servants who will remain in the public administration and for employees reinserting into the private sector; and (iv) revising the salary scale.

15. The government is coordinating with partners to implement the defense and security sector reform. The government approved in March the road map for the reform, designed in coordination with ECOWAS and the Community of Portuguese Language Countries (CPLP). The reform is being supported by Angola, which has stepped up its involvement by providing training and improving living conditions and infrastructure for the police and military forces. Civilian-led aspects of the reform are being supported by the UN under its Priority Plan for Guinea-Bissau approved in February, with an allocation of US$16 million.

C. Reducing Poverty

16. The government is finalizing its new five-year poverty reduction strategy (PRS). To ensure implementation, the government will better coordinate with donors and development partners. Priorities are to identify economic projects in line with the PRS, fully implement the public investment program (PIP), and preserve spending on the priority areas identified by the government: health, education, agriculture, and infrastructure.

MEFP ¶14

D. Managing Debt and Financing Assurances

17. The results of the low-income country debt sustainability analysis (DSA) indicate that Guinea-Bissau faces a moderate risk of debt distress.1 This assumes the full delivery of HIPC assistance, additional bilateral assistance from the Paris Club beyond HIPC, topping up, and debt relief under the Multilateral Debt Relief Initiative. Although key debt indicators are expected to remain below their relevant policy-dependent thresholds (Table 7), stress tests reveal that Guinea-Bissau is vulnerable to shocks, particularly to exports.

Table 7.

Guinea-Bissau: External Debt Indicators1

article image
Source: IMF staff estimates.

Debt indicators refer to Guinea-Bissau’s public and publicly guaranteed external debt, assuming full delivery of HIPC, beyond-HIPC, topping up, and MDRI assistance.

Threshold over which countries with weak policy and institutional frameworks would have at least a 25 percent chance of having a prolonged debt distress episode in the coming year. With an average Country Policy and Institutional Assessment (CPIA) rating of 2.58 over 2007–09, Guinea-Bissau is classified as having a weak policy and institutional framework.

18. The government is taking steps to implement the HIPC completion point. Following the completion point, the government sent letters to all external creditors asking them to confirm their intention to provide HIPC and topping-up debt relief. Portugal, the largest non-Paris Club creditor, and Algeria have agreed in principle to forgive 100 percent of their claims. Negotiations with Angola are ongoing, and the authorities are evaluating restructuring proposals from Saudi Arabia and Kuwait. The Islamic Development Bank and Caixa Geral de Depósitos have both indicated their willingness to restructure their claims. The latter is Guinea Bissau’s lone commercial creditor; all the debt is in arrears and is eligible to be restructured under HIPC. A Paris Club meeting to conclude a new agreement implementing HIPC completion point has been scheduled for May.

MEFP ¶25

19. The government has prepared an action plan to strengthen debt management. It plans to hire and train new staff, produce quarterly electronic reports on public debt by June 2011, and use the debt management system (SYGADE) by December to record, monitor, and manage all public debt, with assistance from the United Nations Conference on Trade and Development (UNCTAD).

MEFP ¶21

20. The government has requested to renegotiate debt owed to the Central Bank of West African States (BCEAO). The debts to the BCEAO (about CFAF90 billion or 20 percent of GDP) consist of a required capital contribution to join the WAEMU and other obligations arising from previous rescheduling agreements.

MEFP ¶22

21. The government will continue with its medium-to-long-term domestic arrears clearance strategy. The government will continue to pay the pre-1999 audited and verified arrears (3.3 percent of GDP as of end-2010). A team MEFP 123 of independent auditors issued a preliminary audit report for the arrears of 2000–07, estimated at about 18.4 percent of GDP. The authorities are verifying the audit and plan to register at the Treasury and incorporate verified arrears into their medium-to-long-term arrears strategy by making annual payments consistent with available resources.

MEFP ¶23

IV. Program Monitoring and Risks

A. Program Monitoring

22. All performance criteria and structural benchmarks under the program for 2011 remain unchanged (Tables 8 and 9). The indicative targets for revenue, social and other priority spending, and domestic primary deficit were adjusted in line with revised fiscal projections for 2011 (Table 8). The third review is expected in December 2011 and the fourth review in May 2012 (Table 10).

Table 8.

Guinea-Bissau: Quantitative Indicators for the ECF Program for 2011

Quarterly Targets1

(Cumulative, CFAF millions)

article image

Cumulative from January 1. The definition of the aggregates and adjustors is provided in the Technical Memorandum of Understanding (TMU).

Performance criteria (PC) are defined for June and December. March and September are indicative. All PC are ceillings and PC 3, 4, and 5 apply continously.

The indicative targets 6, 7 and 9 were revsed compared to program (IMF Country Report No. 10/379) to reflect the higher revenue base from 2010 and the additional budget support.

Table 9.

Guinea-Bissau: Structural Benchmarks Under the ECF Third and Fourth Review

article image

Ministry of Finance

Ministry of Labor and Public Administration

Ministry of Economy

Table 10.

Guinea-Bissau: Reviews and Disbursements under the Three-Year ECF Arrangement, 2010–13

article image
Source: IMF estimates.

For the amount approved for disbursement at the time of Board approval of the arrangement, 37.5 percent of quota (SDR 5.325 million), was approved to immediately repurchase previously provided EPCA credit.

23. The definition of external debt in the Technical Memorandum of Understanding has been changed from a residency to a currency basis, in line with IMF efforts to harmonize the definition of external debt among countries in the WAEMU area.

B. Program Risks

24. Guinea-Bissau faces significant risks, but risks to the IMF’s resources are moderate. The main concerns are political instability, vulnerability to external shocks, and the possibility of inadequate donor support, including delays in donor disbursements. The country’s capacity to repay the IMF is reasonably sound (Table 11). Risks to IMF resources are mitigated to a significant degree by the BCEAO’s role as fiscal agent and its solid track record in making payments to the IMF, even without reimbursement by Guinea-Bissau.

Table 11.

Guinea-Bissau: Indicators of Capacity to Repay the Fund, 2008–18

article image
Sources: IMF staff estimates and projections.

Data are actual through end-March 2011 and are projected after that.

Effective on January 7, 2010 interest on ECF credit outstanding would be zero in 2010 and 2011. It is assumed the ECF interest rate would be at 0.25 percent from 2012 and onward. Charges include net SDR charges and SDR assessments.

A new ECF arrangement of 157.5 percent of quota (SDR 22.365 million) was approved in May 2010, of which 37.5 percent of quota (SDR 5.325 million) was used for early repurchase of outstanding EPCA credit.

Total debt service includes IMF repurchases and repayments.

Guinea-Bissau reached the HIPC completion point in December 2010 and received the remaining HIPC assistance on the stock basis.

V. Statistical Issues and Capacity Development

25. The authorities agreed on the need for better data dissemination and for capacity building to ensure effectiveness of fiscal reforms. The authorities will publish preliminary national account data for 2010, based on the SNA93, this year. They will continue to publish a WAEMU harmonized consumer price index. The IMF is providing technical support in public financial management, revenue administration, and national accounts statistics (see Box 3).

Technical Assistance Priorities

The following priorities have been identified by the authorities:

Revenue administration: The goal is to strengthen customs clearance and the internal tax collection unit. In 2010, a technical assistance mission from the Fiscal Affairs Department made recommendations in these areas, and the government has incorporated them in their economic program.

Tax policy: The short-term goals are to broaden the tax base, including by closing tax loopholes, and to consolidate and rationalize tax exemptions. A medium-term goal is to implement a VAT system.

Debt management: Following HIPC completion point, the goal is to strengthen the unit of public debt at the Ministry of Finance to record, manage, and produce quarterly reports on public debt.

Public expenditure and financial management: The aim is to enhance budget preparation and control in budget execution; to strengthen accounting, recording, and reporting procedures; and to reinforce internal and external controls.

Statistics: The authorities are working to strengthen national accounts statistics and to start preparing national accounts based on SNA98.

VI. Staff Appraisal

26. Staff welcomes the authorities’ satisfactory performance under the ECF-supported program. The government maintained macroeconomic stability despite challenging circumstances and a large shortfall in budget support last year.

27. The government has maintained the momentum of economic reforms. It has taken steps to mobilize more revenue and better manage public finances. It will be important for the government to follow through with its plans to modernize the public administration and revamp its personnel management system.

28. Staff supports the authorities’ decision to fully pass through global food and fuel price increases into domestic prices and to eliminate import subsidies. Bringing import prices for custom purposes closer to market levels will encourage consumers and producers to adjust over time and should help create much needed fiscal space for social and other priority spending.

29. Implementing HIPC debt relief and a prudent debt management strategy will be critical for securing debt sustainability. The priority is for the government to pursue debt restructuring agreements with all its external creditors. Developing a prudent debt management strategy and strengthening the debt unit with support from development partners are imperatives in the wake of the HIPC completion point.

30. Staff recommends the completion of the second review under the ECF arrangement and the financing assurances review, and supports the authorities’ request for the third disbursement under the three-year ECF arrangement. The authorities’ satisfactory performance under challenging circumstances, their efforts to move ahead with economic reforms, and their commitment to successful implementation of the program, as expressed in their Letter of Intent (Appendix I), warrant support from the IMF.

1

IMF Country Report No. 10/380.

Appendix I. Supplementary Letter of Intent

Bissau, April 29, 2011

Mr. Dominique Strauss-Kahn

Managing Director

International Monetary Fund

Washington, D.C. 20431

U.S.A.

Dear Mr. Strauss-Kahn,

1. This letter of intent and the attached memorandum of economic and financial policies (MEFP) update and supplement our correspondence of November 16, 2010, and describe performance under the government’s economic program since then.

2. The government’s economic program, supported by a three-year Extended Credit Facility (ECF), is on track. All performance criteria through end-December 2010 have been observed, and structural benchmarks for the second review were met. All quantitative targets for end-December were also met, including the one on social and priority spending (see Tables 1 and 2 of the MEFP).

3. The attached MEFP reflects the government’s commitment to the goals of achieving fiscal and external sustainability, reviving economic growth, reducing poverty, and making progress toward the Millennium Development Goals (MDGs). The government believes that the steps taken and economic policies it intends to pursue in the remainder of 2011 are adequate to achieve the targets and objectives under the program (performance criteria and structural benchmarks for the third and fourth review are included in Tables 3 and 4 of the MEFP). However, if necessary, the government will adopt additional measures to achieve these objectives. It will consult with the Fund before adopting such measures or if there are changes in the policies contained in the MEFP, in accordance with the Fund’s policies on such consultations.

4. In view of the performance under the ECF-supported program and the government commitment to economic reforms as specified in the MEFP attached, the Government of Guinea-Bissau requests completion of the second review and the third disbursement under the ECF arrangement of SDR 2.414 million.

5. In line with our commitment to transparency, we request the IMF to publish this letter of intent, the attached MEFP, the Technical Memorandum of Understanding, and the staff report relating to this request.

Sincerely yours,

/S/

José Mario Vaz

Minister of Finance

Attachment I. Supplementary Memorandum of Economic and Financial Policies for 2011

I. Introduction

1. This memorandum updates the MEFP of November 16, 2010, and summarizes the progress achieved since then. The program objectives are unchanged: achieving fiscal and external sustainability, reviving economic growth, and making progress toward poverty alleviation and the Millennium Development Goals (MDGs).

2. Program implementation has taken place against the background of rising import prices for food and fuel prices. The government considers that adjustment is preferable to accommodation in light of the permanent nature of the price shock and the need to secure a full pass-through of price changes over time to encourage consumers and producers to adjust.

II. Recent Developments and Performance Under the Program

A. Economic Developments in 2010

3. Macroeconomic performance improved, owing to a rebound in the price of cashew exports and improved liquidity in the banking system. Strong terms-of-trade gains more than offset a weather-related decline in the cashew harvest. Overall, growth accelerated slightly to 3.5 percent in 2010, up from 3.0 percent in 2009. Driven by rising import prices for food and fuel, headline inflation accelerated from -1.6 percent in 2009 to 1.1 percent in 2010, still below the WAEMU convergence criterion. The external current account deficit, excluding official transfers, narrowed by about 4 percentage points of GDP.

4. The government adjusted to a shortfall in budget support of 3.2 percent of GDP (or CFAF13.4 billion). Fiscal adjustment was achieved through higher revenue (0.5 percentage points of GDP) and lower spending (2.1 percentage points of GDP), while the government drew down part of its deposits at the BCEAO (0.6 percent of GDP). Higher than programmed revenue reflected tighter controls at customs and revenue administration and more than offset lower disbursements in fishing compensation. The government contained spending through lower outlays on goods and services and underexecution of the public investment program.

B. Performance Under the ECF Program

5. Despite the shortfall in budget support, fiscal performance has been satisfactory. All performance criteria and indicative targets at end-December 2010 were met (Table 1).

Table 1.

Guinea-Bissau: Quantitative Indicators for the ECF Program for 2010 Quarterly Targets1

(Cumulative, CFAF millions)

article image

Cumulative from January 1. The definition of the aggregates and adjustors is provided in the Technical Memorandum of Understanding (TMU).

Adjusted target under the program.

Performance criteria (PC) are defined for June and December. March and September are indicative. All performance criteria (PC) are ceillings and PC 3, 4, and 5 apply continously.

Indicative target for social and priority spending was revised compared to program (IMF Country Report No. 10/379) from CFAF 16,246 to CFAF 8,647.

6. All structural benchmarks for the second review have been met. The government made the link from the treasury to customs administration operational; submitted to the council of ministers the action plan for public administration reform; and began to use the unified payroll system at the ministries of finance and labor and public administration (Table 2). Progress on other structural measures is detailed in Table 4.

Table 2.

Guinea-Bissau: Structural Benchmarks Under the ECF Second Review

article image

Ministry of Finance

Ministry of Labor and Public Administration

Table 3.

Guinea-Bissau: Quantitative Indicators for the ECF Program for 2011 Quarterly Targets1

(Cumulative, CFAF millions)

article image

Cumulative from January 1. The definition of the aggregates and adjustors is provided in the Technical Memorandum of Understanding (TMU).

Performance criteria (PC) are defined for June and December. March and September are indicative. All PC are ceillings and PC 3, 4, and 5 apply continously.

The indicative targets 6, 7 and 9 were revised compared to program (IMF Country Report No. 10/379) to reflect the higher revenue base from 2010 and the additional budget support.

Table 4.

Guinea-Bissau: Structural Benchmarks Under the ECF

January 1, 2011–December 31, 2011

article image

Ministry of Finance

Ministry of Labor and Public Administration

Ministry of Economy

III. Macroeconomic Outlook and Economic Policies for 2011

A. Macroeconomic Outlook

7. The growth outlook is broadly unchanged. Economic growth is expected to accelerate moderately to 4.3 percent in 2011, driven by rising cashew production, higher cashew prices, and a steady rebuilding of infrastructure, especially roads, electricity, and water. Risks to the outlook would seem to be fairly balanced: downside risks arise from higher-than-expected import prices for food and fuel while there is an upside from higher-than-projected cashew prices in line with recent cashew trading elsewhere.

8. Inflation prospects worsened, reflecting rising import prices of food and fuel. Headline inflation is now projected at 4 percent, above the WAEMU convergence criterion. However, core inflation is expected to remain subdued, and headline inflation should come back within the WAEMU convergence criterion range in 2012, once the one-off effect of rising import prices subsides.

B. Fiscal Policy

9. The government remains committed to strengthening public finances. Fiscal policy will focus on containing the domestic primary deficit in line with available financing; sustaining efforts to mobilize more revenue; and keeping tight spending controls.

10. The government has secured budget support beyond what has been budgeted for in 2011 and plans to restore public investment under the program. In early March, the government received a new grant from the Angolan government of US$12 million (about CFAF6 billion or 1.3 percent of GDP) to finance capital spending. The government decided to allocate the new grant received from Angola to finance investments in road and agriculture projects. The government held consultation with the EU under the agreement of Cotonou on March 29, and the EU announced it will condition its resumption of support to Guinea-Bissau on the undertakings by the government in the coming months in several areas, including security sector reform and appointments of military personnel. At the same time, the budget support operations assumed in the program from the World Bank (CFAF3.6 billion) and the African Development Bank (CFAF3.9 billion) are moving forward, with disbursements expected in the second half of the year.

11. The government will secure a full pass-through of import price changes over time to encourage consumers and producers to adjust. In early-March, the government reduced duties on fuel products with a view to mitigate the impact on the cost of living, but reversed the measure in end-March, after considering the expected permanent nature of the oil price shock and the need to adjust rather than accommodate the shock.

12. The government will introduce a strong package of measures to reinforce fiscal revenues this year and prepare the ground to sustain gains in revenue mobilization next year. In addition to restoring the reference price of diesel for customs purpose back to levels that prevailed in early March (CFA 301.68), the government will:

  1. adjust the reference price for imported sugar up to market levels by end-April;

  2. adjust the reference price for imported diesel from CFAF301.68 to CFAF373.68 by end-June;

  3. refrain from reducing reference prices for customs purposes;

  4. ensure that the commission for regular adjustment of domestic fuel prices holds monthly meetings to enforce that domestic prices reflect changes in international prices;

  5. review the reference prices of rice, flour, diesel, and cashew until the end of the year, with a view to raise them closer to market levels, as part of the 2012 budget; and

  6. reduce or eliminate customs exemptions identified by the current government’s review (see below).

C. Structural Reforms

13. The government will renew efforts to consolidate gains and sustain its reform agenda as detailed in the MEFP of November 2010 (Tables 3 and 4).

14. The new five-year poverty reduction strategy (PRS) will be submitted to the Council of Ministers by June. The government’s medium-term economic reform program supported under the ECF arrangement is in line with the new PRSP. To implement the strategy, the government will coordinate with donors and development partners. Priorities are to identify economic projects in line with the PRS, ensure adequate coordination with donors in support of that strategy, and implement the PIP.

15. In what follows we provide an update of progress on economic reforms and the way forward.

(i) Strengthening Revenue Collection

16. The government is on track with modernizing and improving customs and tax administration:

  1. On customs, the government will (i) finish customizing and testing the ASYCUDA ++ system with the parameters for Guinea-Bissau and train staff with the help of UNCTAD; and (ii) finish the comprehensive review of all custom exemptions to further broaden the customs revenue base.

  2. On tax administration, the government prepared an action plan (with TA from WEST AFRITAC building on the FAD mission of last September) to: (i) revise taxpayer segmentation based on turnover criteria, with thresholds for small and large taxpayers at CFAF10 and 40 million, respectively; (ii) cross-check ASYCUDA data with tax returns for 300 largest importers in 2009–10; and (iii) audit importers underreporting tax liabilities, beginning with largest gaps. A newly set up team at Department of Internal Taxes (DGCI) will lead efforts in this area, with a view to introduce a VAT system by 2013.

(ii) Modernizing the Public Administration and Creating Space for Priority Spending

17. In March, the Council of Minister approved the medium-term action plan for the reform of the public administration, to make it more modern and efficient. While the reform is gradual and figures will be finalized only after the unification of the payroll system, the plan is to reduce the size of the civil service from over 16,000 in 2010 to about 14,000 by 2015, with a view to start bringing the ratio from 10 to 6-7 employees per 1000 inhabitants in line with the norm in the WAEMU region.

18. The government has made progress implementing stricter payroll controls and a comprehensive database. The government began using the unified payroll system in the ministries of finance and public function in March, and will start using the system in all ministries by August. The government has started implementing the personnel management (SIGRHAP), which is expected to be operational by end-August.

19. The government is working with partners to implement defense and security sector reform (SSR). Following a decision by the European Union (EU) not to deploy a new mission to monitor the implementation phase of the SSR, the government strengthened coordination with the United Nations Integrated Peace-Building Office in Guinea-Bissau (UNIOGBIS) and regional and bilateral partners, including ECOWAS and the Community of Portuguese Language Countries (CPLP), to prepare a plan to ensure adequate financing of the reform, especially of the pension fund. The UN announced in February its Priority Plan for Guinea-Bissau with an allocation of US$16 million for civilian-led aspects of the security sector reform. In March, the Council of Ministers approved the ECOWAS-CPLP road map for the SSR.

(iii) Removing Impediments to Private Sector Development

20. The government will intensify efforts to prepare an action plan that removes impediments to private sector development and improves the ease of doing business in Guinea-Bissau. The government will also cooperate with the World Bank to prepare a plan to manage the country’s natural resources by December.

(iv) Reinforcing Debt Management and Arrears Clearance

21. In the wake of the HIPC completion point in December, the government will seek to reinforce its debt management. With the assistance of UNCTAD, the Public Debt Office plans to hire and train new staff, start producing quarterly electronic reports on public debt by June 2011, and start using SYGADE by December to record, monitor, and manage all public debt. UNCTAD has begun providing training for government staff on SYGADE.

22. The government has requested a deferral of payment and better terms on debts owed to the Central Bank of West African States (BCEAO). The renegotiation of the debt owed to the BCEAO (about CFAF90 billion or 20 percent of GDP) has been suspended until a new BCEAO governor is appointed. The debt with the BCEAO stems from several sources: a required capital contribution to join the WAEMU; debt from the BCEAO’s repayment, on behalf of the government, of previous IMF credit to Guinea-Bissau; and the on-lending of the SDR allocation.

23. The government will continue with its medium-to-long term arrears clearance strategy of making annual payments consistent with available resources. A team of independent auditors issued a preliminary audit report for 2000-07 arrears. The government is verifying the audit with a view to incorporate verified arrears into its arrears strategy.

D. Financial Sector and Monetary Policies

24. Monetary policy will continue to be pursued within the WAEMU framework. This arrangement has enabled Guinea-Bissau to contain inflation and maintain a stable exchange rate. As the rise in import prices for fuel and food wears off, domestic inflation is expected to return within the WAEMU target by 2012.

E. Post-HIPC Completion Point Work

25. The government is taking steps to implement the HIPC completion point. It has asked all creditors to confirm their intention to provide HIPC and topping up debt relief. The government received topping up assurances from Portugal, thus reaching the 80 percent commitment threshold necessary for the World Bank to proceed with topping up and MDRI assistance. Negotiations with the Paris Club are now expected to take place in May.

F. Capacity Building and Technical Assistance

26. The government has identified technical assistance priorities in revenue administration, tax policy, and debt management.

  • Revenue administration: In 2010, a FAD technical assistance (TA) mission performed an assessment and made recommendations for the government to strengthen revenue administration. The government will implement these recommendations with technical assistance from the regional AFRITAC and will seek further technical assistance from FAD.

  • Tax policy: The government plans to introduce a value-added tax (VAT) by 2013, in line with other WAEMU countries. Initial steps and technical assistance are needed to support the design, preparation, and implementation of the VAT.

  • Debt management: Although its external debt outlook has improved significantly since debt relief, debt management has emerged as an urgent new priority. The government will seek technical assistance to strengthen public debt management, including the public debt unit at the Ministry of Finance, so that it can record and manage all public debt and produce quarterly reports on public debt.

G. Program Monitoring

27. The second year of the program covers the 12 months from January 1, 2011, to December 31, 2011. The program will be monitored using quarterly quantitative indicators and structural benchmarks, as well as semiannual reviews and the quantitative performance criteria presented in Table 3. Tables 4 and 5 contain a list of structural measures identified by the government, including the structural benchmarks for the third and fourth review. The definitions of quantitative performance criteria and benchmarks are in the attached TMU. The government expects the third review to take place in December 2011 and the fourth review is expected to take place in May 2012.

Table 5.

Guinea-Bissau: Structural Measures for 2011

article image
article image

Attachment II. Technical Memorandum of Understanding

Bissau

April 29, 2011

1. This memorandum updates the Technical Memorandum of Understanding of November 16, 2010 and describes the definitions of the quantitative and structural performance criteria, indicative targets, and structural benchmarks to monitor the program supported by an arrangement under the Extended Credit Facility (ECF). It also specifies the agreed periodicity and deadlines for transmission of data to IMF staff for program monitoring.

Quantitative Indicators and Adjustors

A. Quantitative Indicators

2. The quantitative indicators are as follows:

  1. Cumulative floors on government tax revenue

  2. Cumulative ceilings on the domestic primary fiscal deficit (on a commitment basis)

  3. Cumulative ceiling on the amount of nonregularized expenditures (DNTs).

  4. Cumulative floor on social and other priority spending

  5. Cumulative ceilings on the change in net domestic financing of the budget

  6. Cumulative ceiling on new domestic arrears of the government, including wage arrears

  7. Cumulative ceilings on new nonconcessional external debt contracted or guaranteed by the government

  8. Cumulative ceiling on new external short term debt

  9. Cumulative ceiling on new external payment arrears.

Quantitative indicators are set for end-March, end-June, end-September, and end-December. Quantitative performance criteria are proposed for end-June and end-December 2011 for indicators (e) through (i). Indicators for new nonconcessional external debt, new external short-term debt, and new external payment arrears are continuous.

Definitions and computation

3. Government. Unless otherwise indicated, “Government” means the central administration of the Republic of Guinea-Bissau and does not include any local administration, the central bank, or any other public or government-owned entity with autonomous legal personality not included in the government flow-of-funds table (TOFE).

4. The targeted floor on government tax revenues includes direct and indirect taxes, as well as recovery of tax arrears and additional revenue efforts (Table 1).

Table 1.

Quarterly Floors for Government Tax Revenues, 2011

(Cumulative, CFAF millions)

article image

5. The domestic primary fiscal deficit on a commitment basis is calculated as the difference between government revenue and domestic primary expenditure on a commitment basis (Table 2). Government revenue includes all tax and nontax receipts and excludes external grants. Domestic primary expenditure consists of current expenditure plus domestically financed capital expenditure, excluding all interest payments. Government commitments include all expenditure for which commitment vouchers have been approved by the Ministry of Finance; automatic expenditure (such as wages and salaries, pensions, utilities, and other expenditure for which payment is centralized); and expenditure by means of offsetting operations.

Table 2.

Quarterly Domestic Primary Balance, New Domestic Arrears, and Nonregularized Expenditures, 2011

(Cumulative, CFAF millions)

article image

6. New domestic arrears of the government are defined as accounts payable (rest-a-payer) accumulated during the year, still outstanding one month after the quarter for wages and salaries (including pensions), and three months after for goods and services and transfers, at end-March, end-June, end-September, and end-December 2011.

7. Nonregularized expenditures are defined as any treasury outlay not classified in the expenditure tables presented by the National Budget Directorate.

8. Net domestic financing consists of bank and nonbank financing (Table 3). Bank financing consists of net changes in the balances of the treasury accounts at the BCEAO (excluding net disbursement from the IMF) and commercial banks (excluding balances in those accounts that are not available for budget financing, such as accounts held under double signature arrangements with donors) and in the outstanding amounts of loans, including T-bills, from the BCEAO and commercial banks, local and regional. Nonbank financing encompasses privatization receipts and any other financial debt held outside the banking system other than new domestic arrears.

Table 3.

Domestic Financing by Quarter, 2011

(Cumulative, CFAF millions)

article image
Contracting or Guaranteeing of New Nonconcessional External Debt by the Government.

9. Definition of debt. For the purposes of the relevant performance criteria, the definition of debt is set out in Executive Board Decision No.6230-(79/140), Point 9, as revised on August 31, 2009 (Decision No. 14416-(09/91)).

a. the term “debt” will be understood to mean a current, i.e., not contingent, liability, created under a contractual arrangement through the provision of value in the form of assets (including currency) or services, and which requires the obligor to make one or more payments in the form of assets (including currency) or services, at some future point(s) in time; these payments will discharge the principal and/or interest liabilities incurred under the contract. Debts can take a number of forms, the primary ones being as follows:

  1. loans, i.e., advances of money to the obligor by the lender made on the basis of an undertaking that the obligor will repay the funds in the future (including deposits, bonds, debentures, commercial loans and buyers’ credits) and temporary exchanges of assets that are equivalent to fully collateralized loans under which the obligor is required to repay the funds, and usually pay interest, by repurchasing the collateral from the buyer in the future (such as repurchase agreements and official swap arrangements);

  2. suppliers’ credits, i.e., contracts where the supplier permits the obligor to defer payments until sometime after the date on which the goods are delivered or services are provided; and

  3. leases, i.e., arrangements under which property is provided which the lessee has the right to use for one or more specified period(s) of time that are usually shorter than the total expected service life of the property, while the lessor retains the title to the property. For the purpose of the guideline, the debt is the present value (at the inception of the lease) of all lease payments expected to be made during the period of the agreement excluding those payments that cover the operation, repair or maintenance of the property.

b. Under the definition of debt above, arrears, penalties, and judicially awarded damages arising from the failure to make payment under a contractual obligation that constitutes debt are debt. Failure to make payment on an obligation that is not considered debt under this definition (e.g., payment on delivery) will not give rise to debt.

10. Debt guarantees. For the purposes of the relevant performance criteria, the guarantee of a debt arises from any explicit legal obligation of the government to service a debt in the event of nonpayment by the debtor (involving payments in cash or in kind).

11. Debt concessionality. For the purposes of the relevant performance criteria, a debt is considered concessional if it includes a grant element of at least 50 percent;1 the grant element is the difference between the present value (PV) of debt and its nominal value, expressed as a percentage of the nominal value of the debt. The PV of debt at the time of its contracting is calculated by discounting the future stream of payments of debt service due on this debt.2 The discount rates used for this purpose are the currency specific commercial interest reference rates (CIRRs), published by OECD.3 For debt with a maturity of at least 15 years, the ten-year-average CIRR is used to calculate the PV of debt and, hence, its grant element. For debt with a maturity of less than 15 years, the six-month average CIRR is used. The margins for differing repayment periods (0.75 percent for repayment periods of less than 15 years, 1 percent for 15 to 19 years, 1.15 percent for 20 to 29 years, and 1.25 percent for 30 years or more) are added to the ten-year and six-month CIRR averages.

12. External debt. For the purposes of the relevant performance criteria, external debt is defined as debt borrowed or serviced in a currency other than the CFA franc. This definition also applies to debt among WAEMU countries.

13. Debt-related performance criteria. The relevant performance criteria apply to the contracting and guaranteeing of new nonconcessional external debt by the government. The criteria apply to debt and commitments contracted or guaranteed for which value has not yet been received. The criteria also apply to private debt for which official guarantees have been extended and which, therefore, constitute a contingent liability of the government. The performance criteria are measured on a cumulative basis from the time of approval of the ECF by the Executive Board. PCs will be monitored on a continuous basis. No adjuster will be applied to these criteria.

14. Ceiling on short-term external debt newly contracted or guaranteed by the government. Short-term external debt is external debt with the contractual term of less than one year. Debt-relief operations and treasury bills issued in CFA francs on the WAEMU regional market are excluded from this performance criterion. In the context of the program, the government and public enterprises will not contract, or guarantee, short-term external debt. This performance criterion is monitored on a continuous basis.

15. Ceiling on new external payment arrears. External payment arrears are defined as external payments due but not paid on the due date. In cases where a creditor has granted a grace period after the contractual due date, arrears are incurred following the expiration of the grace period. Under the program, the government undertakes not to accumulate arrears on its external debt, except those arising from government debt that is being renegotiated with creditors, including non-Paris Club bilateral creditors. This performance criterion is monitored on a continuous basis.

16. Reporting requirements. The government will report any new external borrowing and its terms to Fund staff as soon as external debt is contracted or guaranteed by the government, but no later than within two weeks of such external debt being contracted or guaranteed.

17. Social and other priority spending is defined as total current expenditures in the education, health, and agricultural sector, and domestically financed capital spending (Table 4).

Table 4.

Social and Priority Spending1 by Quarter, 2011

(Cumulative, CFAF millions)

article image

Current and domestically financed capital spending.

B. Adjustors

18. The following adjustors will be in effect:

a. The ceiling on the domestic primary deficit (on a commitment basis) will be increased in case of lower than programmed disbursement of fishing compensation, by the amount of the shortfall up to a maximum of CFAF3 billion. The program assumes the following amounts of fishing compensation (cumulative from January 1, 2011): zero by end-March; zero by end-June; by end-September CFAF5 billion; and by end-December CFAF5 billion.4

b. The ceiling on domestic financing will be increased for any shortfall in external budget support, and fishing compensation, by the amount of the shortfall up to a maximum of CFAF3.5 billion. The program assumes the following amounts of external budget support, and fishing compensation (cumulative from January 1, 2011): zero by end-March; zero by end-June; by end-September CFAF8.9 billion; and by end-December CFAF12.5 billion.

c. The ceiling on domestic financing for March, June, and September will be increased for payment of previous years arrears in excess of programmed amounts up to a maximum of CFAF1.85 billion. The program assumes the following arrears payments from previous years (cumulative from January 1, 2011): zero by end-March; zero by end-June CFAF; zero by end-September; and by end-December CFAF1.85 billion.
1

The following reference on the IMF website creates a link to a tool that allows for the calculation of the grant element of a broad range of financing packages: http://www.imf.org/external/np/pdr/conc/calculator.

2

The calculation of concessionality will take into account all aspects of the debt agreement, including maturity, grace period, payment schedule, upfront commissions, and management fees.

3

For debts in foreign currencies for which the OECD does not calculate a CIRR, calculation of the grant element should be based on the composite CIRR (weighted average) of the currencies in the SDR basket.

4

For this TMU, the CFAF/euro exchange rate is 655.956 and the CFAF/US$ exchange rate is 524.

Same Series

Other IMF Content

Other Publishers

  • Collapse
  • Expand
Cover IMF Staff Country Reports
Guinea-Bissau: Second Review Under the Three-Year Arrangement Under the Extended Credit Facility and Financing Assurances Review: Staff Report; Informational Annex; Press Release on the Review
Author:
International Monetary Fund
Volume/Issue:
Volume 2011: Issue 119
Publisher:
International Monetary Fund
ISBN:
9781455274536
ISSN:
1934-7685
Pages:
64
DOI:
https://doi.org/10.5089/9781455274536.002
Figure 1.

Guinea-Bissau: Economic Developments, 2005–10
Figure 2.

Guinea-Bissau: Macroeconomic Policies, 2005–10
Figure 3.

Guinea-Bissau: Medium-Term Outlook, 2009–14
Figure 4.

Guinea-Bissau: Impact of Food and Fuel Prices on Inflation