Abstract
EXECUTIVE SUMMARY Context: A series of coups d’état since independence have resulted in chronic political instability and deterred economic and social progress. Guinea-Bissau has re-initiated progress since the assumption of office of the current inclusive government in mid-2014. The economy is now recovering after a decline in 2012 and marginal growth in 2013. Inflation remains low, and socio-political stability seems achievable. The coup d’état of April 2012 stalled implementation of the three-year Extended Credit Facility (ECF)- supported program approved by the Board in May 2010, and the arrangement lapsed subsequently. The Fund’s support under the Rapid Credit Facility (RCF) disbursement of 2014 and the authorities’ commitment to reforms have re-ignited donor confidence. Article IV Discussions. Policy discussions focused on measures to overcome fragility; fiscal consolidation and public financial management reforms; restoring financial stability; borrowing policies and long-term debt sustainability; private sector development and structural reforms to enhance inclusive growth prospects. The Proposed Program. The authorities’ development program, anchored on the Strategic Plan for 2014–18, aims to consolidate the fiscal position through better expenditure management and enhanced revenue mobilization, deepen institutional reform, mitigate vulnerabilities, and develop the private sector to support growth and employment. The program focuses on improving the policy framework by addressing governance and security issues, strengthening budgetary transparency as well as public investment and debt management, and improving compilation of statistics. Structural benchmarks focus on these issues while QPCs include a floor on revenues collection and a ceiling on net credit to government (the anchor of the program). Request for an Extended Credit Facility Arrangement. To support their medium-term economic reform program, the authorities request a three-year arrangement under the ECF in an amount equivalent to SDR 17.04 million (120 percent of quota). Risks to the program include the still fragile political situation, which could delay implementation of reforms, adverse terms of trade developments, and weakening donor confidence, and the heightened risk of incursion of the Ebola virus from neighboring countries.
Background
1. Overall, Guinea-Bissau’s public external debt position has improved somewhat, prompted by concessional financing, but careful debt management is crucial for sustainability. The debt burden has been declining in recent years due to net repayments to multilateral and bilateral creditors (Text Table 1). All debt owed to Paris Club creditors (except Russia and Brazil4) has been canceled or rescheduled as specified in the Paris Club Agreed Minutes for Guinea Bissau’s debt treatment, following HIPC and MDRI assistance. About half of the remaining public external debt is owed to multilateral creditors and the other half to non-Paris Club creditors. The government is current on all scheduled debt service to these creditors, except for technical arrears. Technical arrears are either debt under negotiation for rescheduling or debt for which verbal agreement for debt rescheduling or cancellation has been reached (see also footnote 1 of Text Table 1). The authorities are making best efforts to conclude rescheduling agreements with these bilateral creditors and have a credible plan and projected financing in place to eliminate the arrears with multilateral creditors. They are also making good faith efforts to reach a collaborative agreement to resolve their arrears to the Franco-Portuguese bank.
Guinea-Bissau: Nominal External Debt Stock, 2012–14
Includes debt of US$48.2 million to Taiwan Province of China, US$32.8 million to Angola, US$3.7 million to Libya, US$3 million to Pakistan, and US$0.3 to the United Arab Emirates. These debts were contracted before the HIPC cut-off date of 1986.
Guinea-Bissau: Nominal External Debt Stock, 2012–14
| 2012 | 2013 | 2014 | 2014 | |||
|---|---|---|---|---|---|---|
| Percent of GDP | Percent of total debt | |||||
| Total | 27.1 | 26.2 | 24.3 | 100.0 | ||
| Multilateral creditors | 13.5 | 13.0 | 12.1 | 49.9 | ||
| of which | ||||||
| IMF | 1.1 | 1.1 | 1.4 | 5.8 | ||
| IDA | 5.6 | 5.4 | 5.8 | 24.0 | ||
| AfDB | 1.9 | 1.8 | 0.2 | 0.9 | ||
| Others | 4.9 | 4.7 | 4.7 | 19.2 | ||
| Bilateral creditors | 13.6 | 13.2 | 12.2 | 50.0 | ||
| Paris Club | 0.0 | 0.0 | 0.0 | 0.0 | ||
| Non-Paris Club | 13.6 | 13.2 | 12.2 | 50.0 | ||
| of which: Technical arrears 1/ | 8.9 | 8.6 | 7.9 | 32.6 | ||
| Commercial (Technical arrears) | 0.03 | 0.03 | 0.03 | 0.1 | ||
Includes debt of US$48.2 million to Taiwan Province of China, US$32.8 million to Angola, US$3.7 million to Libya, US$3 million to Pakistan, and US$0.3 to the United Arab Emirates. These debts were contracted before the HIPC cut-off date of 1986.
Guinea-Bissau: Nominal External Debt Stock, 2012–14
| 2012 | 2013 | 2014 | 2014 | |||
|---|---|---|---|---|---|---|
| Percent of GDP | Percent of total debt | |||||
| Total | 27.1 | 26.2 | 24.3 | 100.0 | ||
| Multilateral creditors | 13.5 | 13.0 | 12.1 | 49.9 | ||
| of which | ||||||
| IMF | 1.1 | 1.1 | 1.4 | 5.8 | ||
| IDA | 5.6 | 5.4 | 5.8 | 24.0 | ||
| AfDB | 1.9 | 1.8 | 0.2 | 0.9 | ||
| Others | 4.9 | 4.7 | 4.7 | 19.2 | ||
| Bilateral creditors | 13.6 | 13.2 | 12.2 | 50.0 | ||
| Paris Club | 0.0 | 0.0 | 0.0 | 0.0 | ||
| Non-Paris Club | 13.6 | 13.2 | 12.2 | 50.0 | ||
| of which: Technical arrears 1/ | 8.9 | 8.6 | 7.9 | 32.6 | ||
| Commercial (Technical arrears) | 0.03 | 0.03 | 0.03 | 0.1 | ||
Includes debt of US$48.2 million to Taiwan Province of China, US$32.8 million to Angola, US$3.7 million to Libya, US$3 million to Pakistan, and US$0.3 to the United Arab Emirates. These debts were contracted before the HIPC cut-off date of 1986.
2. Public domestic debt has increased in recent years but is expected to decline in the medium term. Guinea-Bissau issued a CFAF 10 billion Treasury bond in 2013 and another CFAF 15 billion in 2014, increasing the domestic debt to GDP ratio to 34.7 percent in 2014. The reclassification in 2014 of debt owed to the West African Development Bank (BOAD) to domestic debt added some 1 percent of GDP to domestic debt.5 It is expected to decline gradually in the medium term, averaging 30.1 percent of GDP during 2015–20, reflecting the authorities’ commitment to switch away from expensive domestic debt to more concessional external debt contracting.6
Underlying Assumptions
3. The macroeconomic outlook reflects recent political and macroeconomic stability, particularly following the 2014 elections. The success of the elections, recent IMF support under the Rapid Credit facility (RCF), the success of the country’s roundtable meetings in Brussels in March 2015 to solicit financing from development partners for re-building the economy, and the prospects of an IMF ECF-supported program, have helped the resumption of financial support by Guinea-Bissau’s development partners. Therefore, the baseline scenario assumes economic recovery to be driven by a rise in investments financed through concessional borrowing and grants. In particular, compared to the previous DSA, current assumptions are:
The medium-term growth projections point to an increase in growth relative to the immediate past years. For 2015, projected GDP growth is 0.7 percentage points higher than under the previous DSA update, and the long-term average growth is increased to 5.0 percent per year. This assumes increasing public investment, reflected in a strong increase in imports over the long term compared to the previous assessment, and continued implementation of sound macroeconomic policies and structural reforms.
The fiscal projections feature higher revenue and grants than under the previous DSA, along with correspondingly higher spending. The latter reflects expectations of higher foreign support for addressing the infrastructure gap and enhancing the efficiency of, and access to, public service delivery in priority health and education sectors. As a result, the primary balance is projected at 0.8 percent of GDP, but to worsen to average 1.3 percent per year in the long term (Text Table 2).7
The non-interest external current account deficit is projected to decline to average 4.6 percent of GDP in the long term, reflecting the authorities’ efforts to improve the business environment, including upgrades to infrastructure, and to increase exports. Historical non-interest current account figures, as well as exports and imports figures, have been revised by the authorities to more fully capture available information.
Guinea-Bissau: Evolution of Selected Macroeconomic Indicators
Long term value of the indicator is defined as an average over the last 15 years of the projections.
Guinea-Bissau: Evolution of Selected Macroeconomic Indicators
| 2012 | 2013 | 2014 | 2015 | Long Term1 | ||
|---|---|---|---|---|---|---|
| Real GDP growth (percent) | ||||||
| Previous DSA | −2.2 | 0.3 | 2.5 | 4.0 | 4.0 | |
| Current DSA | −1.8 | 0.8 | 2.5 | 4.7 | 5.0 | |
| Revenue and Grants (percent of GDP) | ||||||
| Previous DSA | 11.9 | 12.4 | 19.5 | 15.8 | 17.2 | |
| Current DSA | 11.4 | 11.6 | 21.0 | 18.7 | 23.0 | |
| Primary (non-interest) expenditure (percent of GDP) | ||||||
| Previous DSA | 14.0 | 14.1 | 19.1 | 18.9 | 17.6 | |
| Current DSA | 13.5 | 13.2 | 22.0 | 17.9 | 24.3 | |
| Primary balance (percent of GDP) | ||||||
| Previous DSA | −2.1 | −1.7 | −0.4 | −3.1 | −0.4 | |
| Current DSA | −2.0 | −1.6 | −1.0 | −0.8 | −1.3 | |
| Non-interest current account deficit (percent of GDP) | ||||||
| Previous DSA | 4.6 | 4.0 | 0.3 | 3.8 | 4.9 | |
| Current DSA | 8.8 | 4.3 | 0.9 | 3.5 | 4.6 | |
| Growth of exports (percent) | ||||||
| Previous DSA | −41.4 | 5.4 | 13.2 | 4.3 | 6.4 | |
| Current DSA | −44.8 | 16.3 | 12.7 | 13.1 | 7.5 | |
| Growth of imports (percent) | ||||||
| Previous DSA | −25.2 | −1.2 | 21.2 | 4.7 | 5.5 | |
| Current DSA | −24.4 | 0.6 | 24.7 | 7.9 | 6.2 | |
Long term value of the indicator is defined as an average over the last 15 years of the projections.
Guinea-Bissau: Evolution of Selected Macroeconomic Indicators
| 2012 | 2013 | 2014 | 2015 | Long Term1 | ||
|---|---|---|---|---|---|---|
| Real GDP growth (percent) | ||||||
| Previous DSA | −2.2 | 0.3 | 2.5 | 4.0 | 4.0 | |
| Current DSA | −1.8 | 0.8 | 2.5 | 4.7 | 5.0 | |
| Revenue and Grants (percent of GDP) | ||||||
| Previous DSA | 11.9 | 12.4 | 19.5 | 15.8 | 17.2 | |
| Current DSA | 11.4 | 11.6 | 21.0 | 18.7 | 23.0 | |
| Primary (non-interest) expenditure (percent of GDP) | ||||||
| Previous DSA | 14.0 | 14.1 | 19.1 | 18.9 | 17.6 | |
| Current DSA | 13.5 | 13.2 | 22.0 | 17.9 | 24.3 | |
| Primary balance (percent of GDP) | ||||||
| Previous DSA | −2.1 | −1.7 | −0.4 | −3.1 | −0.4 | |
| Current DSA | −2.0 | −1.6 | −1.0 | −0.8 | −1.3 | |
| Non-interest current account deficit (percent of GDP) | ||||||
| Previous DSA | 4.6 | 4.0 | 0.3 | 3.8 | 4.9 | |
| Current DSA | 8.8 | 4.3 | 0.9 | 3.5 | 4.6 | |
| Growth of exports (percent) | ||||||
| Previous DSA | −41.4 | 5.4 | 13.2 | 4.3 | 6.4 | |
| Current DSA | −44.8 | 16.3 | 12.7 | 13.1 | 7.5 | |
| Growth of imports (percent) | ||||||
| Previous DSA | −25.2 | −1.2 | 21.2 | 4.7 | 5.5 | |
| Current DSA | −24.4 | 0.6 | 24.7 | 7.9 | 6.2 | |
Long term value of the indicator is defined as an average over the last 15 years of the projections.
Baseline Macroeconomic Assumptions
Real GDP growth is projected to reach 4.7 percent in 2015, following poor economic growth in 2012 (-1.8 percent) and 2013 (0.8 percent), and a slight recovery in 2014 (2.5 percent). The pickup in 2014 was mainly due to the resumption of infrastructure investments, provision of water and electricity, and expansion in cashew nuts production. Over the long run, growth is expected to stabilize at around 5 percent, on account of sound economic policies, increased investment, particularly in infrastructure, and structural reforms (in public financial management, tax administration and debt management) with associated efficiency gains.
Consumer price inflation declined continuously from 2.1 percent in 2012 to -1 percent in 2014, following years of depressed consumer demand as payment arrears were accumulated. With the clearance of payment arrears and increasing cashew nut prices, disposable incomes are expected to recover. As a result, inflation is expected to increase to 1.3 percent and 2.3 percent in 2015 and 2016, respectively, and converge to 3 percent in the medium to long term.
Government balances: The primary fiscal deficit is expected to reach 0.8 percent of GDP in 2015, and 1.3 on average in the medium to long term. Reflecting these developments, domestic debt is projected to decline in the medium term, reaching around 24.7 percent of GDP by 2020. In the long run, the authorities’ commitment to prudent debt management, coupled with regular repayment of outstanding debt, is expected to help decrease the public debt-GDP ratio significantly by the end of the projection period, 2035.
External current account balance: The expected increase in imports, partly to finance infrastructure development, and the expected short-term weakening of the fiscal balance are expected to increase the external current account deficit to average 6 percent of GDP per year during 2015–20. Thereafter, the current account deficit is expected to improve to around 5 percent of GDP by 2035, reflecting improved exports and fiscal performance.
Financing flows: FDI is expected to pick up, as political stability takes hold and the business environment and infrastructure are improved. Current official transfers are expected to average 1.7 percent of GDP during 2015–20, and to remain at about this level until the end of the projection horizon. Concessional loans are assumed to be at the standard terms—i.e., on 0.75 percent interest rate with 40 (IDA) and 50 (AFDB) years maturity and ten-year grace period. Paris Club (Non-Paris Club) loans assume average interest rates of 1.9 (1.6) percent with 23 (23) years of maturity and 11 (6) years grace period.
External and Public Debt Sustainability
External Debt Sustainability Analysis
4. Under the baseline scenario, all debt burden indicators are expected to remain under their respective policy-dependent thresholds. Reflecting scaled up concessional external borrowing, PV indicators are expected to increase in the medium-term but to remain at sustainable levels over the whole projection period. External debt service is expected to increase in the medium to long term, resulting in gradual increases in the debt service-to-exports ratio and the debt service-to-revenue ratio.
5. While favorable under the baseline, the external debt outlook is sensitive to extreme shocks. Based on standardized stress-tests, Guinea-Bissau’s external debt outlook is particularly vulnerable to an export shock. Under this extreme shock scenario, the PV of debt-to-exports indicator breaches the threshold by 2017 and remains above it for the remainder of the projection period (Figure 1c). A shock to the terms of trade or a one time-depreciation would also result in a significant deterioration in other indicators of external public debt vulnerability. However, these indicators would remain well below the thresholds even under these extreme scenarios. Nonetheless, the assessment is highly susceptible to a breach of the debt-to-exports ratio, given the country’s narrow export base, exposure to cashew price volatility, and the risk that the planned investments may not in the end help diversify and boost exports.
Guinea-Bissau: Indicators of Public and Publicly Guaranteed External Debt under Alternatives Scenarios, 2015–35 1/
Citation: IMF Staff Country Reports 2015, 194; 10.5089/9781513566825.002.A002
Sources: Country authorities; and staff estimates and projections.1/ The most extreme stress test is the test that yields the highest ratio on or before 2025. In figure b. it corresponds to a One-time depreciation shock; in c. to a Exports shock; in d. to a One-time depreciation shock; in e. to a Exports shock and in figure f. to a Terms shock
Guinea-Bissau: Indicators of Public and Publicly Guaranteed External Debt under Alternatives Scenarios, 2015–35 1/
Citation: IMF Staff Country Reports 2015, 194; 10.5089/9781513566825.002.A002
Sources: Country authorities; and staff estimates and projections.1/ The most extreme stress test is the test that yields the highest ratio on or before 2025. In figure b. it corresponds to a One-time depreciation shock; in c. to a Exports shock; in d. to a One-time depreciation shock; in e. to a Exports shock and in figure f. to a Terms shockGuinea-Bissau: Indicators of Public and Publicly Guaranteed External Debt under Alternatives Scenarios, 2015–35 1/
Citation: IMF Staff Country Reports 2015, 194; 10.5089/9781513566825.002.A002
Sources: Country authorities; and staff estimates and projections.1/ The most extreme stress test is the test that yields the highest ratio on or before 2025. In figure b. it corresponds to a One-time depreciation shock; in c. to a Exports shock; in d. to a One-time depreciation shock; in e. to a Exports shock and in figure f. to a Terms shockPublic Debt Sustainability Analysis
6. Total (external and domestic) public debt indicators are projected to decline gradually over time after an initial increase (Figure 2, Tables 3 and 4). Under the baseline scenario, the PV of public debt-to-GDP ratio is expected to decline gradually from 42 percent in 2015 to 20 percent by end-2035, due to the expectation of a switch to more concessional foreign financing of planned infrastructure projects that are in the pipeline as well as robust economic growth. Likewise, the PV of public debt-to-revenue ratio is projected to decline gradually into the long term, along with the PV of debt service-to-revenue ratio. The PV of debt-to-revenue and PV of debt-to-GDP ratios, however, are sensitive to shortfalls in economic growth (Table 4). However, the overall assessment depends critically on a favorable baseline scenario for growth, exports, and FDI.
Guinea-Bissau: Indicators of Public Debt Under Alternative Scenarios, 2015–35 1/
Citation: IMF Staff Country Reports 2015, 194; 10.5089/9781513566825.002.A002
Sources: Country authorities; and staff estimates and projections.1/ The most extreme stress test is the test that yields the highest ratio on or before 2025.2/ Revenues are defined inclusive of grants.
Guinea-Bissau: Indicators of Public Debt Under Alternative Scenarios, 2015–35 1/
Citation: IMF Staff Country Reports 2015, 194; 10.5089/9781513566825.002.A002
Sources: Country authorities; and staff estimates and projections.1/ The most extreme stress test is the test that yields the highest ratio on or before 2025.2/ Revenues are defined inclusive of grants.Guinea-Bissau: Indicators of Public Debt Under Alternative Scenarios, 2015–35 1/
Citation: IMF Staff Country Reports 2015, 194; 10.5089/9781513566825.002.A002
Sources: Country authorities; and staff estimates and projections.1/ The most extreme stress test is the test that yields the highest ratio on or before 2025.2/ Revenues are defined inclusive of grants.Guinea-Bissau; External Debt Sustainability Framework, Baseline Scenario, 2012–35
(In percent of GDP, unless otherwise indicated)
Includes both public and private sector external debt.
Derived as [r - g - ρ(1+g)]/(1+g+ρ+gρ) times previous period debt ratio, with r = nominal interest rate; g = real GDP growth rate, and ρ = growth rate of GDP deflator in U.S. dollar terms.
Includes exceptional financing (i.e., changes in arrears and debt relief); changes in gross foreign assets; and valuation adjustments. For projections also includes contribution from price and exchange rate changes.
Assumes that PV of private sector debt is equivalent to its face value.
Current-year interest payments divided by previous period debt stock.
Historical averages and standard deviations are generally derived over the past 10 years, subject to data availability.
Defined as grants, concessional loans, and debt relief.
Grant-equivalent financing includes grants provided directly to the government and through new borrowing (difference between the face value and the PV of new debt).
Guinea-Bissau; External Debt Sustainability Framework, Baseline Scenario, 2012–35
(In percent of GDP, unless otherwise indicated)
| Actual | Historical6 | Standard 6/ | Projections | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Average | Deviation | 2015–2020 | 2021–2035 | ||||||||||||||||
| 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | Average | 2025 | 2035 | Average | |||||||
| External debt (nominal) 1/ | 17.9 | 16.6 | 17.2 | 18.0 | 16.6 | 15.9 | 16.2 | 16.8 | 17.5 | 22.0 | 26.0 | ||||||||
| of which: public and publicly guaranteed (PPG) | 17.9 | 16.6 | 17.2 | 18.0 | 16.6 | 15.9 | 16.2 | 16.8 | 17.5 | 22.0 | 26.0 | ||||||||
| Change in external debt | 0.6 | −1.3 | 0.6 | 0.8 | −1.4 | −0.7 | 0.3 | 0.6 | 0.6 | 0.8 | 0.1 | ||||||||
| Identified net debt-creating flows | 10.0 | 1.9 | −2.0 | −0.3 | 0.4 | 0.8 | 1.7 | 3.0 | 4.1 | 0.8 | −0.4 | ||||||||
| Non-interest current account deficit | 8.8 | 4.3 | 0.9 | 3.2 | 3.4 | 3.5 | 4.6 | 5.4 | 5.9 | 6.9 | 8.0 | 4.8 | 3.6 | 4.6 | |||||
| Deficit in balance of goods and services | 10.2 | 7.7 | 9.7 | 10.3 | 11.2 | 11.8 | 12.1 | 12.9 | 13.8 | 9.9 | 7.8 | ||||||||
| Exports | 15.4 | 18.6 | 18.5 | 22.3 | 22.5 | 21.9 | 21.2 | 20.7 | 20.1 | 18.4 | 20.8 | ||||||||
| Imports | 25.5 | 26.3 | 28.2 | 32.7 | 33.6 | 33.6 | 33.3 | 33.6 | 33.9 | 28.4 | 28.6 | ||||||||
| Net current transfers (negative = inflow) | −4.2 | −3.7 | −7.0 | −6.6 | 2.4 | −4.9 | −4.8 | −4.7 | −4.6 | −4.5 | −4.4 | −4.2 | −3.7 | −4.0 | |||||
| of which: official | −1.8 | −0.8 | −4.3 | −1.8 | −1.6 | −1.6 | −1.6 | −1.6 | −1.6 | −1.6 | −1.6 | ||||||||
| Other current account flows (negative = net inflow) | 2.9 | 0.3 | −1.7 | −1.9 | −1.8 | −1.7 | −1.6 | −1.5 | −1.4 | −1.0 | −0.5 | ||||||||
| Net FDI (negative = inflow) | −0.7 | −1.9 | −1.9 | −2.0 | 0.9 | −3.0 | −3.5 | −3.9 | −3.6 | −3.3 | −3.3 | −3.1 | −3.0 | −3.1 | |||||
| Endogenous debt dynamics 2/ | 1.9 | −0.5 | −1.0 | −0.8 | −0.7 | −0.7 | −0.7 | −0.6 | −0.7 | −0.8 | −1.0 | ||||||||
| Denominator: 1+g+r+gr | 0.9 | 1.0 | 1.1 | 0.9 | 1.1 | 1.1 | 1.1 | 1.1 | 1.1 | 1.1 | 1.1 | ||||||||
| Contribution from nominal interest rate | 0.0 | 0.1 | 0.3 | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | 0.2 | ||||||||
| Contribution from real GDP growth | 0.3 | −0.1 | −0.4 | −0.9 | −0.8 | −0.8 | −0.7 | −0.7 | −0.8 | −1.0 | −1.2 | ||||||||
| Contribution from price and exchange rate changes | 1.6 | −0.4 | −0.9 | … | … | … | … | … | … | … | … | ||||||||
| Residual (3–4) 3/ | −9.5 | −3.2 | 2.6 | 1.1 | −1.8 | −1.5 | −1.4 | −2.3 | −3.4 | 0.0 | 0.6 | 0.0 | |||||||
| of which: exceptional financing | 0.0 | 0.0 | −0.5 | 0.2 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||||||
| PV of external debt 4/ | … | … | 8.3 | 9.0 | 8.5 | 8.4 | 8.6 | 9.0 | 9.5 | 12.7 | 16.0 | ||||||||
| In percent of exports | … | … | 45.0 | 40.3 | 38.0 | 38.3 | 40.5 | 43.7 | 47.3 | 69.1 | 77.0 | ||||||||
| PV of PPG external debt | … | … | 8.3 | 9.0 | 8.5 | 8.4 | 8.6 | 9.0 | 9.5 | 12.7 | 16.0 | ||||||||
| In percent of exports | … | … | 44.9 | 40.3 | 38.0 | 38.3 | 40.5 | 43.7 | 47.3 | 69.1 | 77.0 | ||||||||
| In percent of government revenues | … | … | 69.7 | 71.3 | 61.1 | 65.7 | 66.4 | 68.6 | 71.0 | 87.2 | 92.4 | ||||||||
| Debt service-to-exports ratio (in percent) | 1.2 | 1.8 | 2.1 | 0.9 | 1.3 | 1.7 | 2.0 | 2.1 | 2.0 | 2.5 | 4.2 | ||||||||
| PPG debt service-to-exports ratio (in percent) | 1.2 | 1.8 | 2.1 | 0.9 | 1.3 | 1.7 | 2.0 | 2.1 | 2.0 | 2.5 | 4.2 | ||||||||
| PPG debt service-to-revenue ratio (in percent) | 2.0 | 4.1 | 3.2 | 1.6 | 2.2 | 2.9 | 3.3 | 3.2 | 3.0 | 3.2 | 5.0 | ||||||||
| Total gross financing need (Millions of U.S. dollars) | 82.6 | 27.7 | −7.3 | 7.2 | 15.7 | 22.6 | 36.1 | 57.7 | 80.9 | 49.7 | 71.3 | ||||||||
| Non-interest current account deficit that stabilizes debt ratio | 8.2 | 5.6 | 0.3 | 2.7 | 5.9 | 6.1 | 5.7 | 6.3 | 7.4 | 3.9 | 3.4 | ||||||||
| Key macroeconomic assumptions | |||||||||||||||||||
| Real GDP growth (in percent) | −1.8 | 0.8 | 2.5 | 3.2 | 2.8 | 4.7 | 4.8 | 5.0 | 5.0 | 5.0 | 5.0 | 4.9 | 5.0 | 5.0 | 5.0 | ||||
| GDP deflator in US dollar terms (change in percent) | −8.3 | 2.3 | 5.5 | 4.8 | 10.4 | −11.1 | 2.3 | 3.5 | 3.9 | 4.0 | 4.5 | 1.2 | 2.8 | 2.8 | 2.8 | ||||
| Effective interest rate (percent) 5/ | 0.1 | 0.4 | 1.9 | 0.8 | 0.6 | 0.5 | 0.7 | 0.5 | 0.5 | 0.7 | 0.6 | 0.6 | 0.7 | 0.9 | 0.8 | ||||
| Growth of exports of G&S (US dollar terms, in percent) | −45.9 | 24.8 | 7.7 | 13.6 | 30.0 | 12.2 | 7.7 | 5.8 | 5.9 | 6.3 | 6.6 | 7.4 | 7.3 | 10.2 | 8.2 | ||||
| Growth of imports of G&S (US dollar terms, in percent) | −25.2 | 6.2 | 15.9 | 10.4 | 14.0 | 7.9 | 10.4 | 8.7 | 8.1 | 10.1 | 10.6 | 9.3 | 5.5 | 9.1 | 6.8 | ||||
| Grant element of new public sector borrowing (in percent) | … | … | … | … | … | 49.2 | 49.2 | 49.2 | 49.2 | 48.9 | 48.6 | 49.1 | 47.3 | 47.3 | 47.5 | ||||
| Government revenues (excluding grants, in percent of GDP) | 9.1 | 8.1 | 12.0 | 12.6 | 14.0 | 12.7 | 13.0 | 13.2 | 13.4 | 14.6 | 17.3 | 15.5 | |||||||
| Aid flows (in Millions of US dollars) 7/ | 42.2 | 42.9 | 109.5 | 69.7 | 66.7 | 82.3 | 100.8 | 117.0 | 132.1 | 213.2 | 486.6 | ||||||||
| of which: Grants | 23.8 | 35.9 | 100.3 | 62.6 | 66.0 | 74.2 | 83.1 | 93.2 | 105.0 | 168.9 | 391.1 | ||||||||
| of which: Concessional loans | 18.5 | 7.0 | 9.2 | 7.1 | 0.7 | 8.1 | 17.7 | 23.8 | 27.1 | 44.3 | 95.5 | ||||||||
| Grant-equivalent financing (in percent of GDP) 8/ | … | … | … | 6.5 | 6.0 | 6.6 | 7.3 | 7.7 | 7.9 | 8.6 | 9.2 | 8.8 | |||||||
| Grant-equivalent financing (in percent of external financing) 8/ | … | … | … | 92.9 | 99.3 | 93.2 | 88.1 | 86.4 | 86.2 | 85.6 | 86.4 | 86.1 | |||||||
| Memorandum items: | |||||||||||||||||||
| Nominal GDP (Millions of US dollars) | 996.1 | 1027.0 | 1111.3 | 1034.2 | 1108.5 | 1205.0 | 1314.1 | 1434.3 | 1573.1 | 2310.0 | 4978.5 | ||||||||
| Nominal dollar GDP growth | −10.0 | 3.1 | 8.2 | −6.9 | 7.2 | 8.7 | 9.1 | 9.2 | 9.7 | 6.1 | 8.0 | 8.0 | 8.0 | ||||||
| PV of PPG external debt (in Millions of US dollars) | 85.8 | 93.2 | 95.0 | 101.3 | 113.6 | 130.5 | 150.5 | 296.5 | 802.3 | ||||||||||
| (PVt-PVt-1)/GDPt-1 (in percent) | 0.7 | 0.2 | 0.6 | 1.0 | 1.3 | 1.4 | 0.9 | 1.7 | 1.4 | 1.5 | |||||||||
| Gross workers’ remittances (Millions of US dollars) | 24.3 | 30.0 | 31.0 | 32.7 | 34.6 | 36.6 | 38.7 | 41.0 | 43.5 | 58.1 | 103.7 | ||||||||
| PV of PPG external debt (in percent of GDP + remittances) | … | … | 8.1 | 8.7 | 8.3 | 8.1 | 8.4 | 8.8 | 9.2 | 12.4 | 15.7 | ||||||||
| PV of PPG external debt (in percent of exports + remittances) | … | … | 39.1 | 35.3 | 33.3 | 33.6 | 35.6 | 38.4 | 41.6 | 60.8 | 70.0 | ||||||||
| Debt service of PPG external debt (in percent of exports + remittance | … | … | 1.8 | 0.8 | 1.2 | 1.5 | 1.8 | 1.8 | 1.8 | 2.2 | 3.8 | ||||||||
Includes both public and private sector external debt.
Derived as [r - g - ρ(1+g)]/(1+g+ρ+gρ) times previous period debt ratio, with r = nominal interest rate; g = real GDP growth rate, and ρ = growth rate of GDP deflator in U.S. dollar terms.
Includes exceptional financing (i.e., changes in arrears and debt relief); changes in gross foreign assets; and valuation adjustments. For projections also includes contribution from price and exchange rate changes.
Assumes that PV of private sector debt is equivalent to its face value.
Current-year interest payments divided by previous period debt stock.
Historical averages and standard deviations are generally derived over the past 10 years, subject to data availability.
Defined as grants, concessional loans, and debt relief.
Grant-equivalent financing includes grants provided directly to the government and through new borrowing (difference between the face value and the PV of new debt).
Guinea-Bissau; External Debt Sustainability Framework, Baseline Scenario, 2012–35
(In percent of GDP, unless otherwise indicated)
| Actual | Historical6 | Standard 6/ | Projections | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Average | Deviation | 2015–2020 | 2021–2035 | ||||||||||||||||
| 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | Average | 2025 | 2035 | Average | |||||||
| External debt (nominal) 1/ | 17.9 | 16.6 | 17.2 | 18.0 | 16.6 | 15.9 | 16.2 | 16.8 | 17.5 | 22.0 | 26.0 | ||||||||
| of which: public and publicly guaranteed (PPG) | 17.9 | 16.6 | 17.2 | 18.0 | 16.6 | 15.9 | 16.2 | 16.8 | 17.5 | 22.0 | 26.0 | ||||||||
| Change in external debt | 0.6 | −1.3 | 0.6 | 0.8 | −1.4 | −0.7 | 0.3 | 0.6 | 0.6 | 0.8 | 0.1 | ||||||||
| Identified net debt-creating flows | 10.0 | 1.9 | −2.0 | −0.3 | 0.4 | 0.8 | 1.7 | 3.0 | 4.1 | 0.8 | −0.4 | ||||||||
| Non-interest current account deficit | 8.8 | 4.3 | 0.9 | 3.2 | 3.4 | 3.5 | 4.6 | 5.4 | 5.9 | 6.9 | 8.0 | 4.8 | 3.6 | 4.6 | |||||
| Deficit in balance of goods and services | 10.2 | 7.7 | 9.7 | 10.3 | 11.2 | 11.8 | 12.1 | 12.9 | 13.8 | 9.9 | 7.8 | ||||||||
| Exports | 15.4 | 18.6 | 18.5 | 22.3 | 22.5 | 21.9 | 21.2 | 20.7 | 20.1 | 18.4 | 20.8 | ||||||||
| Imports | 25.5 | 26.3 | 28.2 | 32.7 | 33.6 | 33.6 | 33.3 | 33.6 | 33.9 | 28.4 | 28.6 | ||||||||
| Net current transfers (negative = inflow) | −4.2 | −3.7 | −7.0 | −6.6 | 2.4 | −4.9 | −4.8 | −4.7 | −4.6 | −4.5 | −4.4 | −4.2 | −3.7 | −4.0 | |||||
| of which: official | −1.8 | −0.8 | −4.3 | −1.8 | −1.6 | −1.6 | −1.6 | −1.6 | −1.6 | −1.6 | −1.6 | ||||||||
| Other current account flows (negative = net inflow) | 2.9 | 0.3 | −1.7 | −1.9 | −1.8 | −1.7 | −1.6 | −1.5 | −1.4 | −1.0 | −0.5 | ||||||||
| Net FDI (negative = inflow) | −0.7 | −1.9 | −1.9 | −2.0 | 0.9 | −3.0 | −3.5 | −3.9 | −3.6 | −3.3 | −3.3 | −3.1 | −3.0 | −3.1 | |||||
| Endogenous debt dynamics 2/ | 1.9 | −0.5 | −1.0 | −0.8 | −0.7 | −0.7 | −0.7 | −0.6 | −0.7 | −0.8 | −1.0 | ||||||||
| Denominator: 1+g+r+gr | 0.9 | 1.0 | 1.1 | 0.9 | 1.1 | 1.1 | 1.1 | 1.1 | 1.1 | 1.1 | 1.1 | ||||||||
| Contribution from nominal interest rate | 0.0 | 0.1 | 0.3 | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | 0.2 | ||||||||
| Contribution from real GDP growth | 0.3 | −0.1 | −0.4 | −0.9 | −0.8 | −0.8 | −0.7 | −0.7 | −0.8 | −1.0 | −1.2 | ||||||||
| Contribution from price and exchange rate changes | 1.6 | −0.4 | −0.9 | … | … | … | … | … | … | … | … | ||||||||
| Residual (3–4) 3/ | −9.5 | −3.2 | 2.6 | 1.1 | −1.8 | −1.5 | −1.4 | −2.3 | −3.4 | 0.0 | 0.6 | 0.0 | |||||||
| of which: exceptional financing | 0.0 | 0.0 | −0.5 | 0.2 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||||||
| PV of external debt 4/ | … | … | 8.3 | 9.0 | 8.5 | 8.4 | 8.6 | 9.0 | 9.5 | 12.7 | 16.0 | ||||||||
| In percent of exports | … | … | 45.0 | 40.3 | 38.0 | 38.3 | 40.5 | 43.7 | 47.3 | 69.1 | 77.0 | ||||||||
| PV of PPG external debt | … | … | 8.3 | 9.0 | 8.5 | 8.4 | 8.6 | 9.0 | 9.5 | 12.7 | 16.0 | ||||||||
| In percent of exports | … | … | 44.9 | 40.3 | 38.0 | 38.3 | 40.5 | 43.7 | 47.3 | 69.1 | 77.0 | ||||||||
| In percent of government revenues | … | … | 69.7 | 71.3 | 61.1 | 65.7 | 66.4 | 68.6 | 71.0 | 87.2 | 92.4 | ||||||||
| Debt service-to-exports ratio (in percent) | 1.2 | 1.8 | 2.1 | 0.9 | 1.3 | 1.7 | 2.0 | 2.1 | 2.0 | 2.5 | 4.2 | ||||||||
| PPG debt service-to-exports ratio (in percent) | 1.2 | 1.8 | 2.1 | 0.9 | 1.3 | 1.7 | 2.0 | 2.1 | 2.0 | 2.5 | 4.2 | ||||||||
| PPG debt service-to-revenue ratio (in percent) | 2.0 | 4.1 | 3.2 | 1.6 | 2.2 | 2.9 | 3.3 | 3.2 | 3.0 | 3.2 | 5.0 | ||||||||
| Total gross financing need (Millions of U.S. dollars) | 82.6 | 27.7 | −7.3 | 7.2 | 15.7 | 22.6 | 36.1 | 57.7 | 80.9 | 49.7 | 71.3 | ||||||||
| Non-interest current account deficit that stabilizes debt ratio | 8.2 | 5.6 | 0.3 | 2.7 | 5.9 | 6.1 | 5.7 | 6.3 | 7.4 | 3.9 | 3.4 | ||||||||
| Key macroeconomic assumptions | |||||||||||||||||||
| Real GDP growth (in percent) | −1.8 | 0.8 | 2.5 | 3.2 | 2.8 | 4.7 | 4.8 | 5.0 | 5.0 | 5.0 | 5.0 | 4.9 | 5.0 | 5.0 | 5.0 | ||||
| GDP deflator in US dollar terms (change in percent) | −8.3 | 2.3 | 5.5 | 4.8 | 10.4 | −11.1 | 2.3 | 3.5 | 3.9 | 4.0 | 4.5 | 1.2 | 2.8 | 2.8 | 2.8 | ||||
| Effective interest rate (percent) 5/ | 0.1 | 0.4 | 1.9 | 0.8 | 0.6 | 0.5 | 0.7 | 0.5 | 0.5 | 0.7 | 0.6 | 0.6 | 0.7 | 0.9 | 0.8 | ||||
| Growth of exports of G&S (US dollar terms, in percent) | −45.9 | 24.8 | 7.7 | 13.6 | 30.0 | 12.2 | 7.7 | 5.8 | 5.9 | 6.3 | 6.6 | 7.4 | 7.3 | 10.2 | 8.2 | ||||
| Growth of imports of G&S (US dollar terms, in percent) | −25.2 | 6.2 | 15.9 | 10.4 | 14.0 | 7.9 | 10.4 | 8.7 | 8.1 | 10.1 | 10.6 | 9.3 | 5.5 | 9.1 | 6.8 | ||||
| Grant element of new public sector borrowing (in percent) | … | … | … | … | … | 49.2 | 49.2 | 49.2 | 49.2 | 48.9 | 48.6 | 49.1 | 47.3 | 47.3 | 47.5 | ||||
| Government revenues (excluding grants, in percent of GDP) | 9.1 | 8.1 | 12.0 | 12.6 | 14.0 | 12.7 | 13.0 | 13.2 | 13.4 | 14.6 | 17.3 | 15.5 | |||||||
| Aid flows (in Millions of US dollars) 7/ | 42.2 | 42.9 | 109.5 | 69.7 | 66.7 | 82.3 | 100.8 | 117.0 | 132.1 | 213.2 | 486.6 | ||||||||
| of which: Grants | 23.8 | 35.9 | 100.3 | 62.6 | 66.0 | 74.2 | 83.1 | 93.2 | 105.0 | 168.9 | 391.1 | ||||||||
| of which: Concessional loans | 18.5 | 7.0 | 9.2 | 7.1 | 0.7 | 8.1 | 17.7 | 23.8 | 27.1 | 44.3 | 95.5 | ||||||||
| Grant-equivalent financing (in percent of GDP) 8/ | … | … | … | 6.5 | 6.0 | 6.6 | 7.3 | 7.7 | 7.9 | 8.6 | 9.2 | 8.8 | |||||||
| Grant-equivalent financing (in percent of external financing) 8/ | … | … | … | 92.9 | 99.3 | 93.2 | 88.1 | 86.4 | 86.2 | 85.6 | 86.4 | 86.1 | |||||||
| Memorandum items: | |||||||||||||||||||
| Nominal GDP (Millions of US dollars) | 996.1 | 1027.0 | 1111.3 | 1034.2 | 1108.5 | 1205.0 | 1314.1 | 1434.3 | 1573.1 | 2310.0 | 4978.5 | ||||||||
| Nominal dollar GDP growth | −10.0 | 3.1 | 8.2 | −6.9 | 7.2 | 8.7 | 9.1 | 9.2 | 9.7 | 6.1 | 8.0 | 8.0 | 8.0 | ||||||
| PV of PPG external debt (in Millions of US dollars) | 85.8 | 93.2 | 95.0 | 101.3 | 113.6 | 130.5 | 150.5 | 296.5 | 802.3 | ||||||||||
| (PVt-PVt-1)/GDPt-1 (in percent) | 0.7 | 0.2 | 0.6 | 1.0 | 1.3 | 1.4 | 0.9 | 1.7 | 1.4 | 1.5 | |||||||||
| Gross workers’ remittances (Millions of US dollars) | 24.3 | 30.0 | 31.0 | 32.7 | 34.6 | 36.6 | 38.7 | 41.0 | 43.5 | 58.1 | 103.7 | ||||||||
| PV of PPG external debt (in percent of GDP + remittances) | … | … | 8.1 | 8.7 | 8.3 | 8.1 | 8.4 | 8.8 | 9.2 | 12.4 | 15.7 | ||||||||
| PV of PPG external debt (in percent of exports + remittances) | … | … | 39.1 | 35.3 | 33.3 | 33.6 | 35.6 | 38.4 | 41.6 | 60.8 | 70.0 | ||||||||
| Debt service of PPG external debt (in percent of exports + remittance | … | … | 1.8 | 0.8 | 1.2 | 1.5 | 1.8 | 1.8 | 1.8 | 2.2 | 3.8 | ||||||||
Includes both public and private sector external debt.
Derived as [r - g - ρ(1+g)]/(1+g+ρ+gρ) times previous period debt ratio, with r = nominal interest rate; g = real GDP growth rate, and ρ = growth rate of GDP deflator in U.S. dollar terms.
Includes exceptional financing (i.e., changes in arrears and debt relief); changes in gross foreign assets; and valuation adjustments. For projections also includes contribution from price and exchange rate changes.
Assumes that PV of private sector debt is equivalent to its face value.
Current-year interest payments divided by previous period debt stock.
Historical averages and standard deviations are generally derived over the past 10 years, subject to data availability.
Defined as grants, concessional loans, and debt relief.
Grant-equivalent financing includes grants provided directly to the government and through new borrowing (difference between the face value and the PV of new debt).
Guinea-Bissau: Sensitivity Analysis for Key Indicators of Public and Publicly Guaranteed External Debt, 2015–35
(in percent)
Variables include real GDP growth, growth of GDP deflator (in U.S. dollar terms), non-interest current account in percent of GDP, and non-debt creating flows.
Assumes that the interest rate on new borrowing is by 2 percentage points higher than in the baseline., while grace and maturity periods are the same as in the baseline.
Exports values are assumed to remain permanently at the lower level, but the current account as a share of GDP is assumed to return to its baseline level after an offsetting adjustment in import levels).
Includes official and private transfers and FDI.
Depreciation is defined as percentage decline in dollar/local currency rate, such that it never exceeds 100 percent.
Applies to all stress scenarios except for A2 (less favorable financing) in which the terms on all new financing are as specified in footnote 2.
Guinea-Bissau: Sensitivity Analysis for Key Indicators of Public and Publicly Guaranteed External Debt, 2015–35
(in percent)
| Projections | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2025 | 2035 | |
| PV of debt-to GDP ratio | ||||||||
| Baseline | 9 | 9 | 8 | 9 | 9 | 10 | 13 | 16 |
| A. Alternative Scenarios | ||||||||
| A1. Key variables at their historical averages in 2015–2035 1/ | 9 | 9 | 8 | 8 | 7 | 6 | 7 | 15 |
| A2. New public sector loans on less favorable terms in 2015–2035 2/ | 9 | 9 | 9 | 9 | 10 | 11 | 17 | 24 |
| B. Bound Tests | ||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2016–2017 | 9 | 9 | 9 | 9 | 10 | 10 | 14 | 18 |
| B2. Export value growth at historical average minus one standard deviation in 2016–2017 3/ | 9 | 11 | 15 | 15 | 16 | 16 | 17 | 17 |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2016–2017 | 9 | 9 | 10 | 10 | 11 | 11 | 15 | 19 |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2016–2017 4/ | 9 | 10 | 12 | 12 | 12 | 12 | 15 | 17 |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 9 | 11 | 15 | 15 | 15 | 16 | 18 | 19 |
| B6. One-time 30 percent nominal depreciation relative to the baseline in 2016 5/ | 9 | 12 | 12 | 12 | 13 | 14 | 18 | 23 |
| PV of debt-to-exports ratio | ||||||||
| Baseline | 40 | 38 | 38 | 41 | 44 | 47 | 69 | 77 |
| A. Alternative Scenarios | ||||||||
| A1. Key variables at their historical averages in 2015–2035 1/ | 40 | 38 | 38 | 37 | 35 | 30 | 36 | 73 |
| A2. New public sector loans on less favorable terms in 2015–2035 2/ | 40 | 38 | 40 | 44 | 50 | 56 | 93 | 116 |
| B. Bound Tests | ||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2016–2017 | 40 | 38 | 38 | 41 | 44 | 48 | 70 | 78 |
| B2. Export value growth at historical average minus one standard deviation in 2016–2017 3/ | 40 | 65 | 115 | 118 | 123 | 128 | 151 | 137 |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2016–2017 | 40 | 38 | 38 | 41 | 44 | 48 | 70 | 78 |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2016–2017 4/ | 40 | 45 | 53 | 55 | 58 | 62 | 80 | 80 |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 40 | 51 | 71 | 73 | 77 | 80 | 100 | 96 |
| B6. One-time 30 percent nominal depreciation relative to the baseline in 2016 5/ | 40 | 38 | 38 | 41 | 44 | 48 | 70 | 78 |
| PV of debt-to-revenue ratio | ||||||||
| Baseline | 71 | 61 | 66 | 66 | 69 | 71 | 87 | 92 |
| A. Alternative Scenarios | ||||||||
| A1. Key variables at their historical averages in 2015–2035 1/ | 71 | 61 | 65 | 61 | 55 | 45 | 45 | 87 |
| A2. New public sector loans on less favorable terms in 2015–2035 2/ | 71 | 62 | 68 | 72 | 78 | 84 | 117 | 139 |
| B. Bound Tests | ||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2016–2017 | 71 | 64 | 72 | 73 | 75 | 78 | 96 | 102 |
| B2. Export value growth at historical average minus one standard deviation in 2016–2017 3/ | 71 | 81 | 122 | 119 | 118 | 117 | 117 | 101 |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2016–2017 | 71 | 67 | 78 | 79 | 82 | 85 | 104 | 110 |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2016–2017 4/ | 71 | 73 | 91 | 91 | 91 | 92 | 101 | 96 |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 71 | 79 | 118 | 116 | 116 | 117 | 122 | 111 |
| B6. One-time 30 percent nominal depreciation relative to the baseline in 2016 5/ | 71 | 87 | 94 | 94 | 98 | 101 | 124 | 132 |
| Debt service-to-exports ratio | ||||||||
| Baseline | 1 | 1 | 2 | 2 | 2 | 2 | 3 | 4 |
| A. Alternative Scenarios | ||||||||
| A1. Key variables at their historical averages in 2015–2035 1/ | 1 | 1 | 2 | 2 | 2 | 2 | 2 | 3 |
| A2. New public sector loans on less favorable terms in 2015–2035 2/ | 1 | 1 | 2 | 2 | 2 | 2 | 4 | 7 |
| B. Bound Tests | ||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2016–2017 | 1 | 1 | 2 | 2 | 2 | 2 | 3 | 4 |
| B2. Export value growth at historical average minus one standard deviation in 2016–2017 3/ | 1 | 2 | 3 | 4 | 4 | 4 | 7 | 8 |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2016–2017 | 1 | 1 | 2 | 2 | 2 | 2 | 3 | 4 |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2016–2017 4/ | 1 | 1 | 2 | 2 | 2 | 2 | 3 | 5 |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 1 | 1 | 2 | 3 | 3 | 3 | 4 | 6 |
| B6. One-time 30 percent nominal depreciation relative to the baseline in 2016 5/ | 1 | 1 | 2 | 2 | 2 | 2 | 3 | 4 |
| Debt service-to-revenue ratio | ||||||||
| Baseline | 2 | 2 | 3 | 3 | 3 | 3 | 3 | 5 |
| A. Alternative Scenarios | ||||||||
| A1. Key variables at their historical averages in 2015–2035 1/ | 2 | 2 | 3 | 3 | 3 | 3 | 2 | 4 |
| A2. New public sector loans on less favorable terms in 2015–2035 2/ | 2 | 2 | 3 | 3 | 4 | 4 | 6 | 8 |
| B. Bound Tests | ||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2016–2017 | 2 | 2 | 3 | 4 | 4 | 3 | 4 | 6 |
| B2. Export value growth at historical average minus one standard deviation in 2016–2017 3/ | 2 | 2 | 3 | 4 | 4 | 4 | 6 | 6 |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2016–2017 | 2 | 2 | 3 | 4 | 4 | 4 | 4 | 6 |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2016–2017 4/ | 2 | 2 | 3 | 4 | 4 | 3 | 4 | 5 |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 2 | 2 | 3 | 4 | 4 | 4 | 5 | 6 |
| B6. One-time 30 percent nominal depreciation relative to the baseline in 2016 5/ | 2 | 3 | 4 | 5 | 5 | 4 | 5 | 7 |
| Memorandum item: | ||||||||
| Grant element assumed on residual financing (i.e., financing required above baseline) 6/ | 47 | 47 | 47 | 47 | 47 | 47 | 47 | 47 |
Variables include real GDP growth, growth of GDP deflator (in U.S. dollar terms), non-interest current account in percent of GDP, and non-debt creating flows.
Assumes that the interest rate on new borrowing is by 2 percentage points higher than in the baseline., while grace and maturity periods are the same as in the baseline.
Exports values are assumed to remain permanently at the lower level, but the current account as a share of GDP is assumed to return to its baseline level after an offsetting adjustment in import levels).
Includes official and private transfers and FDI.
Depreciation is defined as percentage decline in dollar/local currency rate, such that it never exceeds 100 percent.
Applies to all stress scenarios except for A2 (less favorable financing) in which the terms on all new financing are as specified in footnote 2.
Guinea-Bissau: Sensitivity Analysis for Key Indicators of Public and Publicly Guaranteed External Debt, 2015–35
(in percent)
| Projections | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2025 | 2035 | |
| PV of debt-to GDP ratio | ||||||||
| Baseline | 9 | 9 | 8 | 9 | 9 | 10 | 13 | 16 |
| A. Alternative Scenarios | ||||||||
| A1. Key variables at their historical averages in 2015–2035 1/ | 9 | 9 | 8 | 8 | 7 | 6 | 7 | 15 |
| A2. New public sector loans on less favorable terms in 2015–2035 2/ | 9 | 9 | 9 | 9 | 10 | 11 | 17 | 24 |
| B. Bound Tests | ||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2016–2017 | 9 | 9 | 9 | 9 | 10 | 10 | 14 | 18 |
| B2. Export value growth at historical average minus one standard deviation in 2016–2017 3/ | 9 | 11 | 15 | 15 | 16 | 16 | 17 | 17 |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2016–2017 | 9 | 9 | 10 | 10 | 11 | 11 | 15 | 19 |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2016–2017 4/ | 9 | 10 | 12 | 12 | 12 | 12 | 15 | 17 |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 9 | 11 | 15 | 15 | 15 | 16 | 18 | 19 |
| B6. One-time 30 percent nominal depreciation relative to the baseline in 2016 5/ | 9 | 12 | 12 | 12 | 13 | 14 | 18 | 23 |
| PV of debt-to-exports ratio | ||||||||
| Baseline | 40 | 38 | 38 | 41 | 44 | 47 | 69 | 77 |
| A. Alternative Scenarios | ||||||||
| A1. Key variables at their historical averages in 2015–2035 1/ | 40 | 38 | 38 | 37 | 35 | 30 | 36 | 73 |
| A2. New public sector loans on less favorable terms in 2015–2035 2/ | 40 | 38 | 40 | 44 | 50 | 56 | 93 | 116 |
| B. Bound Tests | ||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2016–2017 | 40 | 38 | 38 | 41 | 44 | 48 | 70 | 78 |
| B2. Export value growth at historical average minus one standard deviation in 2016–2017 3/ | 40 | 65 | 115 | 118 | 123 | 128 | 151 | 137 |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2016–2017 | 40 | 38 | 38 | 41 | 44 | 48 | 70 | 78 |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2016–2017 4/ | 40 | 45 | 53 | 55 | 58 | 62 | 80 | 80 |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 40 | 51 | 71 | 73 | 77 | 80 | 100 | 96 |
| B6. One-time 30 percent nominal depreciation relative to the baseline in 2016 5/ | 40 | 38 | 38 | 41 | 44 | 48 | 70 | 78 |
| PV of debt-to-revenue ratio | ||||||||
| Baseline | 71 | 61 | 66 | 66 | 69 | 71 | 87 | 92 |
| A. Alternative Scenarios | ||||||||
| A1. Key variables at their historical averages in 2015–2035 1/ | 71 | 61 | 65 | 61 | 55 | 45 | 45 | 87 |
| A2. New public sector loans on less favorable terms in 2015–2035 2/ | 71 | 62 | 68 | 72 | 78 | 84 | 117 | 139 |
| B. Bound Tests | ||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2016–2017 | 71 | 64 | 72 | 73 | 75 | 78 | 96 | 102 |
| B2. Export value growth at historical average minus one standard deviation in 2016–2017 3/ | 71 | 81 | 122 | 119 | 118 | 117 | 117 | 101 |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2016–2017 | 71 | 67 | 78 | 79 | 82 | 85 | 104 | 110 |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2016–2017 4/ | 71 | 73 | 91 | 91 | 91 | 92 | 101 | 96 |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 71 | 79 | 118 | 116 | 116 | 117 | 122 | 111 |
| B6. One-time 30 percent nominal depreciation relative to the baseline in 2016 5/ | 71 | 87 | 94 | 94 | 98 | 101 | 124 | 132 |
| Debt service-to-exports ratio | ||||||||
| Baseline | 1 | 1 | 2 | 2 | 2 | 2 | 3 | 4 |
| A. Alternative Scenarios | ||||||||
| A1. Key variables at their historical averages in 2015–2035 1/ | 1 | 1 | 2 | 2 | 2 | 2 | 2 | 3 |
| A2. New public sector loans on less favorable terms in 2015–2035 2/ | 1 | 1 | 2 | 2 | 2 | 2 | 4 | 7 |
| B. Bound Tests | ||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2016–2017 | 1 | 1 | 2 | 2 | 2 | 2 | 3 | 4 |
| B2. Export value growth at historical average minus one standard deviation in 2016–2017 3/ | 1 | 2 | 3 | 4 | 4 | 4 | 7 | 8 |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2016–2017 | 1 | 1 | 2 | 2 | 2 | 2 | 3 | 4 |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2016–2017 4/ | 1 | 1 | 2 | 2 | 2 | 2 | 3 | 5 |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 1 | 1 | 2 | 3 | 3 | 3 | 4 | 6 |
| B6. One-time 30 percent nominal depreciation relative to the baseline in 2016 5/ | 1 | 1 | 2 | 2 | 2 | 2 | 3 | 4 |
| Debt service-to-revenue ratio | ||||||||
| Baseline | 2 | 2 | 3 | 3 | 3 | 3 | 3 | 5 |
| A. Alternative Scenarios | ||||||||
| A1. Key variables at their historical averages in 2015–2035 1/ | 2 | 2 | 3 | 3 | 3 | 3 | 2 | 4 |
| A2. New public sector loans on less favorable terms in 2015–2035 2/ | 2 | 2 | 3 | 3 | 4 | 4 | 6 | 8 |
| B. Bound Tests | ||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2016–2017 | 2 | 2 | 3 | 4 | 4 | 3 | 4 | 6 |
| B2. Export value growth at historical average minus one standard deviation in 2016–2017 3/ | 2 | 2 | 3 | 4 | 4 | 4 | 6 | 6 |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2016–2017 | 2 | 2 | 3 | 4 | 4 | 4 | 4 | 6 |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2016–2017 4/ | 2 | 2 | 3 | 4 | 4 | 3 | 4 | 5 |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 2 | 2 | 3 | 4 | 4 | 4 | 5 | 6 |
| B6. One-time 30 percent nominal depreciation relative to the baseline in 2016 5/ | 2 | 3 | 4 | 5 | 5 | 4 | 5 | 7 |
| Memorandum item: | ||||||||
| Grant element assumed on residual financing (i.e., financing required above baseline) 6/ | 47 | 47 | 47 | 47 | 47 | 47 | 47 | 47 |
Variables include real GDP growth, growth of GDP deflator (in U.S. dollar terms), non-interest current account in percent of GDP, and non-debt creating flows.
Assumes that the interest rate on new borrowing is by 2 percentage points higher than in the baseline., while grace and maturity periods are the same as in the baseline.
Exports values are assumed to remain permanently at the lower level, but the current account as a share of GDP is assumed to return to its baseline level after an offsetting adjustment in import levels).
Includes official and private transfers and FDI.
Depreciation is defined as percentage decline in dollar/local currency rate, such that it never exceeds 100 percent.
Applies to all stress scenarios except for A2 (less favorable financing) in which the terms on all new financing are as specified in footnote 2.
Guinea-Bissau: Public Sector Debt Sustainability Framework, Baseline Scenario, 2012–35
(In percent of GDP, unless otherwise indicated)
Central government and central government guaranteed debt only.
Gross financing need is defined as the primary deficit plus debt service plus the stock of short-term debt at the end of the last period.
Revenues excluding grants.
Debt service is defined as the sum of interest and amortization of medium and long-term debt.
Historical averages and standard deviations are generally derived over the past 10 years, subject to data availability.
Guinea-Bissau: Public Sector Debt Sustainability Framework, Baseline Scenario, 2012–35
(In percent of GDP, unless otherwise indicated)
| Actual | Estimate | Projections | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Average 5/ | Standard 5/ | 2015–20 | 2021–35 | |||||||||||||||
| 2012 | 2013 | 2014 | Deviation | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | Average | 2025 | 2035 | Average | |||||
| Public sector debt 1/ | 47.3 | 49.8 | 51.9 | 50.9 | 49.5 | 48.7 | 2.7 46.4 | 44.3 | 42.1 | 36.6 | 29.8 | |||||||
| of which: foreign-currency denominated | 17.9 | 16.6 | 17.2 | 18.0 | 16.6 | 15.9 | 16.2 | 16.8 | 17.5 | 22.0 | 26.0 | |||||||
| 32.9 | 32.9 | 32.7 | 30.2 | 27.5 | 24.7 | |||||||||||||
| Change in public sector debt | 3.7 | 2.4 | 2.1 | −1.0 | −1.4 | −0.8 | −2.3 | −2.1 | −2.2 | −1.0 | −0.4 | |||||||
| Identified debt-creating flows | 3.5 | 1.2 | −1.0 | −2.7 | −1.9 | −1.4 | −2.2 | −2.2 | −2.6 | −1.0 | −0.5 | |||||||
| Primary deficit | 2.0 | 1.6 | 1.1 | 0.7 | 3.1 | −0.1 | 1.1 | 1.7 | 1.1 | 1.0 | 0.6 | 0.9 | 1.5 | 1.5 | 1.4 | |||
| Revenue and grants | 11.4 | 11.6 | 21.0 | 18.7 | 19.9 | 18.9 | 19.3 | 19.7 | 20.1 | 21.9 | 25.2 | |||||||
| of which: grants | 2.4 | 3.5 | 9.0 | 6.0 | 6.0 | 6.2 | 6.3 | 6.5 | 6.7 | 7.3 | 7.9 | |||||||
| Primary (noninterest) expenditure | 13.5 | 13.2 | 22.0 | 18.6 | 21.0 | 20.6 | 20.4 | 20.6 | 20.6 | 23.4 | 26.6 | |||||||
| Automatic debt dynamics | 1.4 | −0.5 | −1.6 | −2.7 | −3.0 | −3.1 | −3.3 | −3.2 | −3.2 | −2.5 | −2.0 | |||||||
| Contribution from interest rate/growth differential | 0.9 | −0.1 | −2.8 | −3.6 | −2.9 | −2.9 | −3.1 | −3.0 | −2.8 | −2.3 | −1.8 | |||||||
| of which: contribution from average real interest rate | 0.1 | 0.3 | −1.5 | −1.2 | −0.5 | −0.6 | −0.7 | −0.7 | −0.7 | −0.5 | −0.3 | |||||||
| of which: contribution from real GDP growth | 0.8 | −0.4 | −1.2 | −2.3 | −2.3 | −2.4 | −2.3 | −2.2 | −2.1 | −1.8 | −1.4 | |||||||
| Contribution from real exchange rate depreciation | 0.5 | −0.3 | 1.1 | 0.9 | −0.2 | −0.2 | −0.2 | −0.3 | −0.4 | … | … | |||||||
| Other identified debt-creating flows | 0.0 | 0.0 | −0.4 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||
| Privatization receipts (negative) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||
| Recognition of implicit or contingent liabilities | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||
| Debt relief (HIPC and other) | 0.0 | 0.0 | −0.5 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||
| Other (specify, e.g. bank recapitalization) | … | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||
| Residual, including asset changes | 0.2 | 1.2 | 3.1 | 1.7 | 0.5 | 0.6 | −0.1 | 0.1 | 0.4 | 0.0 | 0.0 | |||||||
| Other Sustainability Indicators | ||||||||||||||||||
| PV of public sector debt | … | … | 43.0 | 41.9 | 41.4 | 41.1 | 38.8 | 36.5 | 34.2 | 27.4 | 19.8 | |||||||
| of which: foreign-currency denominated | … | … | 8.3 | 9.0 | 8.5 | 8.4 | 8.6 | 9.0 | 9.5 | 12.7 | 16.0 | |||||||
| of which: external | … | … | 8.3 | 9.0 | 8.5 | 8.4 | 8.6 | 9.0 | 9.5 | 12.7 | 16.0 | |||||||
| PV of contingent liabilities (not included in public sector debt) | … | … | … | … | … | … | … | … | … | … | … | |||||||
| Gross financing need 2/ | 8.6 | 8.4 | 7.2 | 6.2 | 6.9 | 7.1 | 6.0 | 5.4 | 4.5 | 3.6 | 2.5 | |||||||
| PV of public sector debt-to-revenue and grants ratio (in percent) | … | … | 205.0 | 224.4 | 208.0 | 217.8 | 201.5 | 185.6 | 170.2 | 124.9 | 78.5 | |||||||
| PV of public sector debt-to-revenue ratio (in percent) | … | … | 359.8 | 332.0 | 296.8 | 323.2 | 299.9 | 277.1 | 255.1 | 187.4 | 114.0 | |||||||
| of which: external 3/ | … | … | 69.7 | 71.3 | 61.1 | 65.7 | 66.4 | 68.6 | 71.0 | 87.2 | 92.4 | |||||||
| Debt service-to-revenue and grants ratio (in percent) 4/ | 4.5 | 6.1 | 2.4 | 6.6 | 5.3 | 7.2 | 6.2 | 5.0 | 3.8 | 3.4 | 4.0 | |||||||
| Debt service-to-revenue ratio (in percent) 4/ | 5.7 | 8.8 | 4.2 | 9.8 | 7.6 | 10.7 | 9.2 | 7.4 | 5.7 | 5.1 | 5.9 | |||||||
| Primary deficit that stabilizes the debt-to-GDP ratio | … | … | −1.0 | 0.9 | 2.5 | 2.5 | 3.3 | 3.1 | 2.7 | 2.5 | 1.9 | |||||||
| Key macroeconomic and fiscal assumptions | ||||||||||||||||||
| Real GDP growth (in percent) | −18 | 0.8 | 2.5 | 3.2 | 2.8 | 4.7 | 4.8 | 5.0 | 5.0 | 5.0 | 5.0 | 4.9 | 5.0 | 5.0 | 5.0 | |||
| Average nominal interest rate on forex debt (in percent) | 0.1 | 0.4 | 1.9 | 0.8 | 0.6 | 0.5 | 0.7 | 0.5 | 0.5 | 0.7 | 0.6 | 0.6 | 0.7 | 0.9 | 0.8 | |||
| Average real interest rate on domestic debt (in percent) | 15 | 1.5 | −5.0 | −3.1 | 5.3 | −3.4 | −1.2 | −1.0 | −1.6 | −1.8 | −1.9 | −1.8 | −1.8 | −1.1 | −1.6 | |||
| Real exchange rate depreciation (in percent, + indicates depreciation) | 3.1 | −1.8 | 7.0 | −0.6 | 7.5 | 5.4 | … | … | … | … | … | … | … | … | … | |||
| Inflation rate (GDP deflator, in percent) | −0.8 | −1.0 | 5.4 | 3.8 | 5.8 | 5.9 | 1.8 | 2.3 | 2.7 | 2.8 | 2.9 | 3.0 | 2.8 | 2.8 | 2.8 | |||
| Growth of real primary spending (deflated by GDP deflator, in percent | −23.5 | −1.3 | 71.3 | 4.7 | 24.5 | −11.7 | 18.5 | 2.8 | 3.8 | 6.5 | 4.9 | 4.1 | 7.3 | 5.8 | 6.8 | |||
| Grant element of new external borrowing (in percent) | … | … | … | … | … | 49.2 | 49.2 | 49.2 | 49.2 | 48.9 | 48.6 | 49.1 | 47.3 | 47.3 | … | |||
Central government and central government guaranteed debt only.
Gross financing need is defined as the primary deficit plus debt service plus the stock of short-term debt at the end of the last period.
Revenues excluding grants.
Debt service is defined as the sum of interest and amortization of medium and long-term debt.
Historical averages and standard deviations are generally derived over the past 10 years, subject to data availability.
Guinea-Bissau: Public Sector Debt Sustainability Framework, Baseline Scenario, 2012–35
(In percent of GDP, unless otherwise indicated)
| Actual | Estimate | Projections | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Average 5/ | Standard 5/ | 2015–20 | 2021–35 | |||||||||||||||
| 2012 | 2013 | 2014 | Deviation | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | Average | 2025 | 2035 | Average | |||||
| Public sector debt 1/ | 47.3 | 49.8 | 51.9 | 50.9 | 49.5 | 48.7 | 2.7 46.4 | 44.3 | 42.1 | 36.6 | 29.8 | |||||||
| of which: foreign-currency denominated | 17.9 | 16.6 | 17.2 | 18.0 | 16.6 | 15.9 | 16.2 | 16.8 | 17.5 | 22.0 | 26.0 | |||||||
| 32.9 | 32.9 | 32.7 | 30.2 | 27.5 | 24.7 | |||||||||||||
| Change in public sector debt | 3.7 | 2.4 | 2.1 | −1.0 | −1.4 | −0.8 | −2.3 | −2.1 | −2.2 | −1.0 | −0.4 | |||||||
| Identified debt-creating flows | 3.5 | 1.2 | −1.0 | −2.7 | −1.9 | −1.4 | −2.2 | −2.2 | −2.6 | −1.0 | −0.5 | |||||||
| Primary deficit | 2.0 | 1.6 | 1.1 | 0.7 | 3.1 | −0.1 | 1.1 | 1.7 | 1.1 | 1.0 | 0.6 | 0.9 | 1.5 | 1.5 | 1.4 | |||
| Revenue and grants | 11.4 | 11.6 | 21.0 | 18.7 | 19.9 | 18.9 | 19.3 | 19.7 | 20.1 | 21.9 | 25.2 | |||||||
| of which: grants | 2.4 | 3.5 | 9.0 | 6.0 | 6.0 | 6.2 | 6.3 | 6.5 | 6.7 | 7.3 | 7.9 | |||||||
| Primary (noninterest) expenditure | 13.5 | 13.2 | 22.0 | 18.6 | 21.0 | 20.6 | 20.4 | 20.6 | 20.6 | 23.4 | 26.6 | |||||||
| Automatic debt dynamics | 1.4 | −0.5 | −1.6 | −2.7 | −3.0 | −3.1 | −3.3 | −3.2 | −3.2 | −2.5 | −2.0 | |||||||
| Contribution from interest rate/growth differential | 0.9 | −0.1 | −2.8 | −3.6 | −2.9 | −2.9 | −3.1 | −3.0 | −2.8 | −2.3 | −1.8 | |||||||
| of which: contribution from average real interest rate | 0.1 | 0.3 | −1.5 | −1.2 | −0.5 | −0.6 | −0.7 | −0.7 | −0.7 | −0.5 | −0.3 | |||||||
| of which: contribution from real GDP growth | 0.8 | −0.4 | −1.2 | −2.3 | −2.3 | −2.4 | −2.3 | −2.2 | −2.1 | −1.8 | −1.4 | |||||||
| Contribution from real exchange rate depreciation | 0.5 | −0.3 | 1.1 | 0.9 | −0.2 | −0.2 | −0.2 | −0.3 | −0.4 | … | … | |||||||
| Other identified debt-creating flows | 0.0 | 0.0 | −0.4 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||
| Privatization receipts (negative) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||
| Recognition of implicit or contingent liabilities | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||
| Debt relief (HIPC and other) | 0.0 | 0.0 | −0.5 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||
| Other (specify, e.g. bank recapitalization) | … | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||
| Residual, including asset changes | 0.2 | 1.2 | 3.1 | 1.7 | 0.5 | 0.6 | −0.1 | 0.1 | 0.4 | 0.0 | 0.0 | |||||||
| Other Sustainability Indicators | ||||||||||||||||||
| PV of public sector debt | … | … | 43.0 | 41.9 | 41.4 | 41.1 | 38.8 | 36.5 | 34.2 | 27.4 | 19.8 | |||||||
| of which: foreign-currency denominated | … | … | 8.3 | 9.0 | 8.5 | 8.4 | 8.6 | 9.0 | 9.5 | 12.7 | 16.0 | |||||||
| of which: external | … | … | 8.3 | 9.0 | 8.5 | 8.4 | 8.6 | 9.0 | 9.5 | 12.7 | 16.0 | |||||||
| PV of contingent liabilities (not included in public sector debt) | … | … | … | … | … | … | … | … | … | … | … | |||||||
| Gross financing need 2/ | 8.6 | 8.4 | 7.2 | 6.2 | 6.9 | 7.1 | 6.0 | 5.4 | 4.5 | 3.6 | 2.5 | |||||||
| PV of public sector debt-to-revenue and grants ratio (in percent) | … | … | 205.0 | 224.4 | 208.0 | 217.8 | 201.5 | 185.6 | 170.2 | 124.9 | 78.5 | |||||||
| PV of public sector debt-to-revenue ratio (in percent) | … | … | 359.8 | 332.0 | 296.8 | 323.2 | 299.9 | 277.1 | 255.1 | 187.4 | 114.0 | |||||||
| of which: external 3/ | … | … | 69.7 | 71.3 | 61.1 | 65.7 | 66.4 | 68.6 | 71.0 | 87.2 | 92.4 | |||||||
| Debt service-to-revenue and grants ratio (in percent) 4/ | 4.5 | 6.1 | 2.4 | 6.6 | 5.3 | 7.2 | 6.2 | 5.0 | 3.8 | 3.4 | 4.0 | |||||||
| Debt service-to-revenue ratio (in percent) 4/ | 5.7 | 8.8 | 4.2 | 9.8 | 7.6 | 10.7 | 9.2 | 7.4 | 5.7 | 5.1 | 5.9 | |||||||
| Primary deficit that stabilizes the debt-to-GDP ratio | … | … | −1.0 | 0.9 | 2.5 | 2.5 | 3.3 | 3.1 | 2.7 | 2.5 | 1.9 | |||||||
| Key macroeconomic and fiscal assumptions | ||||||||||||||||||
| Real GDP growth (in percent) | −18 | 0.8 | 2.5 | 3.2 | 2.8 | 4.7 | 4.8 | 5.0 | 5.0 | 5.0 | 5.0 | 4.9 | 5.0 | 5.0 | 5.0 | |||
| Average nominal interest rate on forex debt (in percent) | 0.1 | 0.4 | 1.9 | 0.8 | 0.6 | 0.5 | 0.7 | 0.5 | 0.5 | 0.7 | 0.6 | 0.6 | 0.7 | 0.9 | 0.8 | |||
| Average real interest rate on domestic debt (in percent) | 15 | 1.5 | −5.0 | −3.1 | 5.3 | −3.4 | −1.2 | −1.0 | −1.6 | −1.8 | −1.9 | −1.8 | −1.8 | −1.1 | −1.6 | |||
| Real exchange rate depreciation (in percent, + indicates depreciation) | 3.1 | −1.8 | 7.0 | −0.6 | 7.5 | 5.4 | … | … | … | … | … | … | … | … | … | |||
| Inflation rate (GDP deflator, in percent) | −0.8 | −1.0 | 5.4 | 3.8 | 5.8 | 5.9 | 1.8 | 2.3 | 2.7 | 2.8 | 2.9 | 3.0 | 2.8 | 2.8 | 2.8 | |||
| Growth of real primary spending (deflated by GDP deflator, in percent | −23.5 | −1.3 | 71.3 | 4.7 | 24.5 | −11.7 | 18.5 | 2.8 | 3.8 | 6.5 | 4.9 | 4.1 | 7.3 | 5.8 | 6.8 | |||
| Grant element of new external borrowing (in percent) | … | … | … | … | … | 49.2 | 49.2 | 49.2 | 49.2 | 48.9 | 48.6 | 49.1 | 47.3 | 47.3 | … | |||
Central government and central government guaranteed debt only.
Gross financing need is defined as the primary deficit plus debt service plus the stock of short-term debt at the end of the last period.
Revenues excluding grants.
Debt service is defined as the sum of interest and amortization of medium and long-term debt.
Historical averages and standard deviations are generally derived over the past 10 years, subject to data availability.
Guinea Bissau: Sensitivity Analysis for Key Indicators of Public Debt, 2015–35
Assumes that real GDP growth is at baseline minus one standard deviation divided by the square root of the length of the projection period.
Revenues are defined inclusive of grants.
Guinea Bissau: Sensitivity Analysis for Key Indicators of Public Debt, 2015–35
| Projections | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2025 | 2035 | |
| PV of Debt-to-GDP Ratio | ||||||||
| Baseline | 42 | 41 | 41 | 39 | 37 | 34 | 27 | 20 |
| A. Alternative scenarios | ||||||||
| A1. Real GDP growth and primary balance are at historical averages | 42 | 42 | 42 | 40 | 38 | 36 | 30 | 21 |
| A2. Primary balance is unchanged from 2015 | 42 | 41 | 40 | 37 | 34 | 31 | 22 | 10 |
| A3. Permanently lower GDP growth 1/ | 42 | 42 | 42 | 40 | 38 | 36 | 31 | 31 |
| B. Bound tests | ||||||||
| B1. Real GDP growth is at historical average minus one standard deviations in 2016–201 | 42 | 44 | 46 | 44 | 42 | 40 | 35 | 31 |
| B2. Primary balance is at historical average minus one standard deviations in 2016–2017 | 42 | 43 | 44 | 41 | 39 | 36 | 29 | 21 |
| B3. Combination of B1-B2 using one half standard deviation shocks | 42 | 43 | 45 | 43 | 40 | 38 | 33 | 28 |
| B4. One-time 30 percent real depreciation in 2016 | 42 | 45 | 44 | 42 | 39 | 36 | 27 | 17 |
| B5. 10 percent of GDP increase in other debt-creating flows in 2016 | 42 | 47 | 46 | 44 | 41 | 38 | 31 | 21 |
| PV of Debt-to-Revenue Ratio 2/ | ||||||||
| Baseline | 224 | 208 | 218 | 201 | 186 | 170 | 125 | 78 |
| A. Alternative scenarios | ||||||||
| A1. Real GDP growth and primary balance are at historical averages | 224 | 209 | 219 | 204 | 189 | 175 | 127 | 72 |
| A2. Primary balance is unchanged from 2015 | 224 | 205 | 210 | 191 | 173 | 157 | 99 | 39 |
| A3. Permanently lower GDP growth 1/ | 224 | 209 | 220 | 205 | 191 | 176 | 140 | 118 |
| B. Bound tests | ||||||||
| B1. Real GDP growth is at historical average minus one standard deviations in 2016–201 | 224 | 216 | 236 | 221 | 207 | 193 | 156 | 121 |
| B2. Primary balance is at historical average minus one standard deviations in 2016–2017 | 224 | 215 | 231 | 214 | 197 | 181 | 133 | 82 |
| B3. Combination of B1-B2 using one half standard deviation shocks | 224 | 215 | 231 | 216 | 201 | 187 | 147 | 108 |
| B4. One-time 30 percent real depreciation in 2016 | 224 | 227 | 235 | 216 | 196 | 177 | 122 | 67 |
| B5. 10 percent of GDP increase in other debt-creating flows in 2016 | 224 | 234 | 244 | 226 | 208 | 191 | 140 | 85 |
| Debt Service-to-Revenue Ratio 2/ | ||||||||
| Baseline | 7 | 5 | 7 | 6 | 5 | 4 | 3 | 4 |
| A. Alternative scenarios | ||||||||
| A1. Real GDP growth and primary balance are at historical averages | 7 | 5 | 7 | 6 | 5 | 4 | 3 | 4 |
| A2. Primary balance is unchanged from 2015 | 7 | 5 | 7 | 6 | 5 | 4 | 3 | 2 |
| A3. Permanently lower GDP growth 1/ | 7 | 5 | 7 | 6 | 5 | 4 | 4 | 5 |
| B. Bound tests | ||||||||
| B1. Real GDP growth is at historical average minus one standard deviations in 2016–201 | 7 | 5 | 8 | 7 | 5 | 4 | 4 | 6 |
| B2. Primary balance is at historical average minus one standard deviations in 2016–2017 | 7 | 5 | 7 | 6 | 5 | 4 | 4 | 4 |
| B3. Combination of B1-B2 using one half standard deviation shocks | 7 | 5 | 8 | 7 | 5 | 4 | 4 | 5 |
| B4. One-time 30 percent real depreciation in 2016 | 7 | 6 | 8 | 7 | 6 | 5 | 4 | 6 |
| B5. 10 percent of GDP increase in other debt-creating flows in 2016 | 7 | 5 | 8 | 7 | 5 | 4 | 5 | 5 |
Assumes that real GDP growth is at baseline minus one standard deviation divided by the square root of the length of the projection period.
Revenues are defined inclusive of grants.
Guinea Bissau: Sensitivity Analysis for Key Indicators of Public Debt, 2015–35
| Projections | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2025 | 2035 | |
| PV of Debt-to-GDP Ratio | ||||||||
| Baseline | 42 | 41 | 41 | 39 | 37 | 34 | 27 | 20 |
| A. Alternative scenarios | ||||||||
| A1. Real GDP growth and primary balance are at historical averages | 42 | 42 | 42 | 40 | 38 | 36 | 30 | 21 |
| A2. Primary balance is unchanged from 2015 | 42 | 41 | 40 | 37 | 34 | 31 | 22 | 10 |
| A3. Permanently lower GDP growth 1/ | 42 | 42 | 42 | 40 | 38 | 36 | 31 | 31 |
| B. Bound tests | ||||||||
| B1. Real GDP growth is at historical average minus one standard deviations in 2016–201 | 42 | 44 | 46 | 44 | 42 | 40 | 35 | 31 |
| B2. Primary balance is at historical average minus one standard deviations in 2016–2017 | 42 | 43 | 44 | 41 | 39 | 36 | 29 | 21 |
| B3. Combination of B1-B2 using one half standard deviation shocks | 42 | 43 | 45 | 43 | 40 | 38 | 33 | 28 |
| B4. One-time 30 percent real depreciation in 2016 | 42 | 45 | 44 | 42 | 39 | 36 | 27 | 17 |
| B5. 10 percent of GDP increase in other debt-creating flows in 2016 | 42 | 47 | 46 | 44 | 41 | 38 | 31 | 21 |
| PV of Debt-to-Revenue Ratio 2/ | ||||||||
| Baseline | 224 | 208 | 218 | 201 | 186 | 170 | 125 | 78 |
| A. Alternative scenarios | ||||||||
| A1. Real GDP growth and primary balance are at historical averages | 224 | 209 | 219 | 204 | 189 | 175 | 127 | 72 |
| A2. Primary balance is unchanged from 2015 | 224 | 205 | 210 | 191 | 173 | 157 | 99 | 39 |
| A3. Permanently lower GDP growth 1/ | 224 | 209 | 220 | 205 | 191 | 176 | 140 | 118 |
| B. Bound tests | ||||||||
| B1. Real GDP growth is at historical average minus one standard deviations in 2016–201 | 224 | 216 | 236 | 221 | 207 | 193 | 156 | 121 |
| B2. Primary balance is at historical average minus one standard deviations in 2016–2017 | 224 | 215 | 231 | 214 | 197 | 181 | 133 | 82 |
| B3. Combination of B1-B2 using one half standard deviation shocks | 224 | 215 | 231 | 216 | 201 | 187 | 147 | 108 |
| B4. One-time 30 percent real depreciation in 2016 | 224 | 227 | 235 | 216 | 196 | 177 | 122 | 67 |
| B5. 10 percent of GDP increase in other debt-creating flows in 2016 | 224 | 234 | 244 | 226 | 208 | 191 | 140 | 85 |
| Debt Service-to-Revenue Ratio 2/ | ||||||||
| Baseline | 7 | 5 | 7 | 6 | 5 | 4 | 3 | 4 |
| A. Alternative scenarios | ||||||||
| A1. Real GDP growth and primary balance are at historical averages | 7 | 5 | 7 | 6 | 5 | 4 | 3 | 4 |
| A2. Primary balance is unchanged from 2015 | 7 | 5 | 7 | 6 | 5 | 4 | 3 | 2 |
| A3. Permanently lower GDP growth 1/ | 7 | 5 | 7 | 6 | 5 | 4 | 4 | 5 |
| B. Bound tests | ||||||||
| B1. Real GDP growth is at historical average minus one standard deviations in 2016–201 | 7 | 5 | 8 | 7 | 5 | 4 | 4 | 6 |
| B2. Primary balance is at historical average minus one standard deviations in 2016–2017 | 7 | 5 | 7 | 6 | 5 | 4 | 4 | 4 |
| B3. Combination of B1-B2 using one half standard deviation shocks | 7 | 5 | 8 | 7 | 5 | 4 | 4 | 5 |
| B4. One-time 30 percent real depreciation in 2016 | 7 | 6 | 8 | 7 | 6 | 5 | 4 | 6 |
| B5. 10 percent of GDP increase in other debt-creating flows in 2016 | 7 | 5 | 8 | 7 | 5 | 4 | 5 | 5 |
Assumes that real GDP growth is at baseline minus one standard deviation divided by the square root of the length of the projection period.
Revenues are defined inclusive of grants.
7. Risks to the baseline scenario are linked to the country’s high dependence on cashew exports and foreign (concessional) support, and political tensions, but there is also an upside potential to economic growth. Adverse weather conditions and external market fluctuations could potentially dampen receipts from cashew exports. A weakening of the external environment could yield lower-than-expected remittances and concessional support. These factors translate into important downside risks to the outlook for growth, FDI and the current account dynamics. The possibility of renewed political instability is a major source of downside risk in the case of Guinea-Bissau. On the upside, improvements in infrastructure and the business environment would increase economic growth and exports above the baseline assumptions and reduce the country’s risk of debt distress. The results of the DSA are contingent on the availability of projected concessional external financing as well as on the ability of authorities to improve their debt management capacity.
Conclusion
8. In the staff’s view, Guinea-Bissau faces a moderate risk of debt distress. The standardized exercise shows that all indicators of external public debt vulnerability would remain below their policy-dependent thresholds under the baseline assumptions, and total public debt vulnerabilities are expected to decline in the medium to long term. However, stress tests show that the outlook is sensitive to shocks, given the narrow export base. Proactive debt management favorably skewed towards concessional borrowing and grant financing of public investments, reinforced by steadfast implementation of structural measures to boost exports, could help maintain (and even improve) these indicators into the medium and long term. To support these policies, sound macroeconomic management and careful consideration of borrowing opportunities would be essential.
9. Prudent debt management and monitoring are critical, as the country gears up to step up investments in infrastructure and priority social sectors. Non-concessional borrowing from BOAD in recent years, in view of difficulties in accessing external financing, has resulted in an increase in domestic debt. Notwithstanding the domestic debt dynamics described above, it is essential to strengthen debt management, particularly as the country gears up to close the infrastructure deficit and improve public service delivery. Any sizable negative deviation from the fiscal projections under the ECF-supported program would stall the projected decline in the public debt path.
Authorities’ Views
10. The authorities broadly concur with the staff’s views on debt sustainability analysis and recommendations. They agree that debt sustainability depends crucially on sound macroeconomic policies that would in turn increase their chances of accessing concessional financing. They emphasized that the pace of public investment would be determined on the basis of available external concessional resources. Thus, some risks identified in this DSA may not materialize. The authorities recognize the contributory role of prudent debt management and implementation of structural reforms to improve the business environment and to enhance overall growth and export prospects.
The DSA was prepared jointly by the staffs of the IMF and IDA, in consultation with the Debt Management Unit of Bissau-Guinean Ministry of Finance, and benefitted from comments from the World Bank. The fiscal year of Guinea-Bissau is January 1–December 31.
Debt sustainability thresholds are determined by the three-year (2011–13) average of the Country Policy and Institutional Assessment (CPIA) rating (2.7), which classifies Guinea-Bissau as having weak policy performance and institutional framework.
The previous DSA update was prepared in October 20, 2014. IMF Country Report No. 14/318.
Brazil is an ad hoc participant of the Paris Club that was participating in the Paris Club meetings and is expected to provide debt relief in line with the Paris Club Agreed Minutes for Guinea-Bissau’s debt treatment under the HIPC initiative.
Since the 2014 DSA, BOAD is considered to be domestic debt, in line with the treatment applied by other WAEMU countries.
The authorities are in the process of auditing an old stock of domestic arrears dating back to before 2013 and estimated at around 10 percent of GDP. Once these audits are completed and arrears are recognized, the public debt outlook would deteriorate.
The reckoning of the primary balance follows closely the definition used in the framework for low-income countries’ DSA, and thus differs from the concept of domestic primary balance used in the Staff Report.