Guinea-Bissau: Request for a Three-Year Arrangement Under the Extended Credit Facility-Press Release; and Staff Report
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International Monetary Fund. African Dept.
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Publication Date:
15 Feb 2023
eISBN:
9798400234361
ISBN:
9798400234361
Language:
English
Keywords:
priority spending; fiscal consolidation strategy; government stake; Guinea-Bissau authorities; private sector investment; Wages; Auditing; Global
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1. Guinea-Bissau is a fragile state with long-standing challenges (Annex I).1 Poverty is high and the country ranks low in human development. The economy relies heavily on the exports of unprocessed cashew nuts, making most households highly vulnerable to cashew nut price shocks and climate change. Growth has been low and volatile and food insecurity is significant.2 High levels of corruption, a weak judicial system and the illicit drug trade add to the country's challenges and to a long history of political instability and fragility. A weak business environment has constrained private sector investment and economic diversification.

Abstract

1. Guinea-Bissau is a fragile state with long-standing challenges (Annex I).1 Poverty is high and the country ranks low in human development. The economy relies heavily on the exports of unprocessed cashew nuts, making most households highly vulnerable to cashew nut price shocks and climate change. Growth has been low and volatile and food insecurity is significant.2 High levels of corruption, a weak judicial system and the illicit drug trade add to the country's challenges and to a long history of political instability and fragility. A weak business environment has constrained private sector investment and economic diversification.

Context

1. Guinea-Bissau is a fragile state with long-standing challenges (Annex I).1 Poverty is high and the country ranks low in human development. The economy relies heavily on the exports of unprocessed cashew nuts, making most households highly vulnerable to cashew nut price shocks and climate change. Growth has been low and volatile and food insecurity is significant.2 High levels of corruption, a weak judicial system and the illicit drug trade add to the country's challenges and to a long history of political instability and fragility. A weak business environment has constrained private sector investment and economic diversification.

2. Guinea-Bissau has experienced a period of relative political stability, including during the pandemic.

  • COVID-19. By December 2022, there were 8,931 confirmed cases and 176 deaths. The authorities contained infections and limited the economic impact of the pandemic.3 About 58 percent of the adult population has been vaccinated.

  • Political situation. The political environment has been stable since the new government was appointed in 2020. A putsch attempt took place in February 2022 which authorities attributed to drug traffickers and corrupt officials. ECOWAS redeployed a stabilization force to the country. The President dissolved the parliament in mid-May 2022. Next legislative and presidential elections are scheduled for June-2023 and December-2024.

3. The authorities requested an Extended Credit Facility (ECF) arrangement to support an ambitious reform agenda. Currently, there is strong commitment at the highest political level to the policies and reforms under the program. This commitment is supported by the major political parties represented in the multi-party Permanent Commission of the National Popular Assembly, which is chaired by the main opposition party. The agenda includes a commitment to maintain macroeconomic stability based on an ambitious fiscal consolidation, preserving debt sustainability, securing the recovery from the pandemic, fighting corruption, and improving AML/CFT effectiveness, governance, and transparency.

Recent Economic Developments

4. Growth is expected to moderate to 3.5 percent, while average inflation is expected to increase to 7.8 percent in 2022 (Text Table 1). Growth accelerated from 1.5 percent in 2020 to 6.4 percent in 2021 due to record high exports of cashew nuts, a high level of public investments, and the gradual lifting of COVID-19 containment measures. In 2022, growth has been negatively affected by lower-than-expected cashew exports, which slowed mainly due to logistical constraints. The surge in commodity prices associated with the war in Ukraine has added renewed pressures on inflation, especially in food and fuel. Growth in 2022 will be supported by higher agricultural production, private sector investment and relative political stability, which partially offset the impact of higher cost-of-living and negative external shocks.

Text Table 1.

Guinea-Bissau: Macro Performance 2019–22

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Sources: Guinea-Bissau authorities; and IMF staff estimates and projections. 1/ Projections as of January 2020, before COVID-19 shock. 2/ Projections as of January 2021, before Ukraine war shock. 3/ In 2019 the current account deficit includes the one-off import (3.5 percent of GDP) of a power-generation ship that is anchored off the coast of Bissau and supplies electricity to the city. 4/ Revised figures based on the release of the national account estimates for 2018.

5. The overall fiscal deficit in the first half of 2022 was higher than projected due to an increase in spending pressures. The overall fiscal deficit on a commitment basis fell to 5.7 percent of GDP in 2021 from 9.6 percent in 2020. In the first half of 2022, the deficit was higher than projected by 0.4 percent of GDP because of an expenditure overrun. Wage spending exceeded its forecast by 0.3 percent of GDP due to the irregular hiring of workers. Other current expenditures were higher by 0.3 percent of GDP, reflecting spending on the upcoming election (Text Table 2). By contrast, tax revenue was 0.2 percent of GDP higher than projected, percent because of higher inflation and economic activity.

Text Table 2.

Guinea-Bissau: Fiscal Performance at End-June 2022

(Percent of GDP cumulative)

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Sources: Guinea-Bissau authorities and IMF staff estimations

6. The external position is expected to deteriorate. The current account deficit improved to 0.8 percent of GDP in 2021 from 2.7 percent of GDP in 2020 because of record high cashew exports. The August 2021 SDR allocation enabled the authorities to repay debt service of the BOAD, the regional development bank, due in 2021 and 2022 in line with the staff recommendations.4 In 2022, the current account deficit is projected to worsen to 5.9 percent of GDP because of lower cashew nuts exports and higher import prices.

7. The stock of public debt is projected to increase slightly in 2022. The public debt burden increased by 2.0 percent of GDP with an increase corresponding to the SDR allocation on-lent by the BCEAO. External debt remained broadly stable in 2021 with the pre-payment of debt to BOAD due in 2022 compensating higher foreign financing.5 In 2022, the stock of public debt increased to 81 percent of GDP due to the higher financing needs, new government guarantees on EAGB and recognition of legacy arrears.

8. Pandemic-related measures implemented by the BCEAO, the regional central bank, have supported credit. The accommodative stance of the BCEAO improved the liquidity of the banking system and credit to the economy grew by 7.3 percent in 2021. Except for one large undercapitalized bank, the banking sector has adequate capital levels, meeting the regional prudential criteria (Table 5). While gross NPLs to total loans declined in 2022, they remain high, but banks are well provisioned. The financial vulnerabilities stemming from the sovereign debt and exchange rate exposures in the banking sector are low.6

Outlook and Risks

9. The near-term outlook projects a moderate recovery and sustained growth over the medium term, but risks are tilted to the downside.

  • Near-term. In 2023, the growth is expected to recover to 4.5 percent, assuming the cashew nut export volume reaches to 2021 levels and high private sector investment continues, including in the energy sector. Average inflation is expected to peak as global prices normalize but should remain at 5 percent because of persistence of inflation in key items such as rice.

  • Medium term. Despite global headwinds, Guinea-Bissau is expected to tap its economic potential and reach 5 percent growth per year through greater dynamism in agriculture, mining, tourism, and fisheries and the continuation of authorities' efforts in strengthening fiscal management. Greater political stability and donor support catalyzed by IMF engagement as well as enhancements in business environment, greater access to finance and governance reforms boosting private investment should also support growth (Text Table 3)7. Inflation is expected to gradually converge to about 2 percent as the security crisis in Europe subsides. The current account deficit is expected to improve because of sustained fiscal consolidation and more favorable terms-of-trade. Higher, revenue mobilization, wage bill control, and increased concessional financing should make the overall fiscal deficit converge to the 3 percent by 2025.

  • Outlook risks (Annex II). Downside risks arise from domestic political risks and weak state capacity, disappointing cashew nut exports, and the war in Ukraine which could further impact food and oil prices and donor support. In addition, Guinea-Bissau is highly vulnerable to climate change and climate shocks are an important source of risks and volatility of agricultural production.8 The growth outlook will also depend on the authorities' commitments to policy implementation. Lack of political support may constrain revenue mobilization and expenditure containment measures. Worsening of debt risks would further constrain access to financing. Financial stress in SOEs (Annex III) and banking fragilities could also generate contingent liabilities.9 Should downside risks materialize, the authorities should further rationalize non-priority expenditures, domestically financed investment and seek for additional IFIs' support. On the upside, a stronger performance of the cashew sector and a successful implementation of reforms would underpin a faster recovery.

Text Table 3.

Guinea-Bissau: Economic Performance and Medium-Term

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Sources: Guinea-Bissau authorities; and IMF staff estimates and projections. 1/ Projections as of January 2021, before Ukraine war shock. 2/ Revised figures based on the release of the national account estimates for 2018.

Program Objectives

10. The ECF arrangement will focus on supporting a credible fiscal consolidation and improving governance and transparency through the implementation of a parsimonious structural agenda. Financing under the ECF arrangement will meet protracted BOP needs triggered by worsened current account deficits and reliance on portfolio investments, until sustained fiscal consolidation and better terms of trade improve external positions. During the program period, remaining financing needs are expected to be met by issuance of Treasury securities in regional markets, which will be reduced from 6.3 percent of GDP in 2021 to 2.3 percent of GDP by 2024. Planned reforms build on implementation of past recommendations (Annex IV) and the SMP achievements (Annex V).

  • Supporting fiscal consolidation and ensuring debt sustainability. The program will aim at ensuring that the fiscal consolidation over 2023-2025 is executed without arrears accumulation and expensive non-concessional borrowing. This will be achieved through (i) stronger revenue mobilization and expenditure containment including in the wage bill, generating fiscal space to protect social spending and undertake key infrastructure investments to sustain growth and make progress towards durable poverty reduction; (ii) strengthening SOE oversight, especially of the public utility company, and mitigating fiscal risks; and (iii) assisting the authorities to seek additional grants and concessional financing.

  • Implementing governance, AML/CFT effectiveness, and transparency reforms that will strengthen expenditure control, mobilize revenues, and fight corruption. Implementation of reforms focuses on deepening governance reforms aimed at efficient management of fiscal resources and public investment, enhancing fiscal transparency and countering corruption.

Policy Issues

Policy priorities are supporting an ambitious fiscal consolidation program to ensure debt sustainability while addressing Guinea-Bissau's vast developmental needs through spending efficiency, enhancing revenue mobilization, and strengthening fiscal governance and transparency.

A. Macroeconomic Policies

Addressing Fiscal Consolidation

11. Despite better-than-expected revenue mobilization, a significant wage overrun has undermined the authorities' fiscal goals for 2022. The overall fiscal deficit is projected to be higher by 1.3 percentage points of GDP compared to the 2022 Article IV report, because of higher wage spending due to the irregular hiring of workers and higher other current expenditures. The latter was due to unexpected spending for the preparation of the upcoming parliamentary elections as well as higher spending in security and defense, and social and diplomatic services. The authorities have taken corrective actions to contain the wage bill in the second half of 2022 (Box I) and are also rationalizing all non-priority spending in the last three months of 2022. While budget support has been higher than expected—France and Portugual have each provided CFAF 3.3 billion in 2022—lower tax revenue has also impacted fiscal goals.

Guinea-Bissau: Wage Bill Overrun in 2022

A large number of public sector workers were irregularly hired in the social priority sectors and justice administration. Despite the issuance of an executive order in end-December 2021 to end the irregular hiring of workers, such practice continued in the education, health and justice administration. The irregular hiring of workers resulted in higher wage spending of CFAF 7.4 billion or 0.7 percent of GDP in 2022. The authorities intend to clear the wage arrears due to the irregular hiring of workers by end-2022.

The authorities have taken corrective actions. They include: (i) the dismissal of the irregular workers (except for those regularized in the education sector and justice administration); (ii) total freezing of promotion, hiring and salary increases; (iii) capping salary expenses for key ministries; (iv) full inventory of health and education facilities to assess the personnel needs and identify ghost workers; (v) a new decree stipulating that all contracts should be carried out by submitting the vacancies authorized by the Ministry of Labor and the Ministry of Finance; and (vi) elimination of two-thirds of advisor positions at the Presidency, Prime Minister's Office, the Presidency of the Parliament, and the Presidencies of the Constitutional and Audit Courts.

In addition to the continuation of the 2022 corrective actions, the authorities will implement in 2023 additional measures in health and education to secure the appropriate allocation of resources. They will update the inventory of existing health and schooling facilities, and check the number of health and educations workers assigned to each facility. They will also conduct a new census of public administration within the framework of the World Bank project on capacity building in the public sector. Moreover, recent IMF wage bill management TA mission provided recommendations to improve wage bill spending efficiency and suggested reforms for effective management of the wage bill over the medium-term (SBs, Table 9).

Guinea Bissau: Irregular Workers in Social Priority Sectors and Justice Administration

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Sources: Guinea-Bissau authorities and IMF staff estimations

12. The authorities' fiscal consolidation strategy aims at ensuring medium-term fiscal sustainability while supporting economic recovery. The stock of public and publicly guaranteed debt is projected to increase to 81 percent of GDP in 2022. Staff will recommend containing the domestic primary deficit below the 2021 outturn and implementing measures to bring the fiscal deficit and debt ratio within 3 percent and 70 percent of GDP by 2025 and 2027 respectively, in line with the WAEMU convergence criteria. The fiscal consolidation effort will be supported by wage bill rationalization, revenue mobilization and measures to reduce non-essential transfers (Text Figure 1).

Text Figure 1.
Text Figure 1.

Guinea-Bissau: Domestic Primary Balance with and without Specific Fiscal Measures

(Percent of GDP)

Citation: IMF Staff Country Reports 2023, 087; 10.5089/9798400234361.002.A001

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

13. A balanced and durable growth-supportive fiscal consolidation will be supported by following measures:

  • Enhancing revenue mobilization. Measures cover both revenue administration and tax policy reforms, including broadening of tax bases, simplifying the tax system, and strengthening tax administration and compliance (MEFP ¶12). These measures should increase revenue by about 1 percentage point of GDP by 2025. In 2022, the authorities promulgated a tax package to simplify and enhance transparency of the tax system—including revised tax code, tax penalty regime, and a new VAT law, and have fully implemented the electronic filing of tax returns.10 These new measures will require IMF-supported technical assistance and capacity development11 for the reforms to the general exemptions regime and in tax administration (Annex V). In 2023, tax revenue will be bolstered by the implementation of the VAT which is expected to generate about 2.6 percent of GDP by 2027. The authorities have also requested IMF support to strengthen tax administration, modernize the income tax regime, draft a new legislation for the general exemption regime, and prepare a new legal framework and fiscal regime for exploitation of natural resources.

  • Strengthening PFM and expenditure control. Wage bill rationalization will be critical to create fiscal space for priority spending. Domestic primary expenditure is projected to decline by about 2.3 percentage points of GDP by 2025, of which 1.3 percentage points come from wage bill management measures. Recent FAD wage bill management TA provided reform options for wage bill management while protecting social priority spending. The estimated fiscal saving of wage bill and expenditure control would be about 1.9 percent of GDP by 2027. The authorities will undertake additional rationalization measures in 2023, including a new census of public administration12 and redistribution of staff workload in the Ministry of Education -the ministry with the largest number of civil servants. A prior action and SBs will enhance wage bill control (Table 8-9 and ¶19).

  • Improving SOE oversight and mitigating fiscal risks. The financial situation of the state-owned utility company (EAGB) is the largest source of fiscal risks (Annex III). The authorities are taking several measures to improve its financial situation and mitigate fiscal risks with the support of the World Bank (MEFP ¶13).13 Customer management and revenue collection will be improved with the instalation of 35,000 post and pre-paid electricity meters. EAGB also plans to progress in the connection to the Gambia River Basin Development Organization (OMVG) regional project, which will bring hydropower from neighboring Guineas and should lower the average generation costs and diversify Guinea-Bissau's sources of power generation.

  • Safeguarding social and priority spending and public investment. The program will safeguard social and priority spending and public investment over the medium term. Initiatives include addressing food insecurity, reducing poverty and enhancing climate resilence. A floor on social and priority spending is proposed as quantitative target (Table 6) and this spending is projected to increase by 0.7 percentage points of GDP during 2022-27 compared to pre-COVID-19 period (2010-19). Moreover, the authorities will undertake measures to strenghten public investment management (SB, Table 9) to enhance investment in priority sectors and infrastructure to sustain economic growth. Capital expenditure increased to an average of about 9 percent of GDP per annum during 2020-21, as the authorities ramped up the provision of healthcare-related services. In 2022-27, capital expenditure is projected to be 7.4 percent of GDP per annum on average, 1.5 percentage points higher than the pre-COVID-19 period (2010-19). Domestically financed capital investment is projected to increase significantly, underpinned by fiscal space created.

Financing and Debt

14. Together with fiscal consolidation, reducing financing costs and preserving debt sustainability entail additional financing needs of 1.9 percent of GDP over the next three years. Staff estimates a financing gap of CFAF 8.1 billion each year—around 0.6 percent of GDP to be covered by the ECF arrangement. Fiscal consolidation efforts and mitigating debt vulnerabilities will be aided by catalyzing financing from donors, contracting only new highly concessional loans, and rationalizing the disbursements of contracted non-concessional project loans. This strategy will alleviate financing pressures stemming from reliance on non-concessional lending from BOAD, local commercial banks, and treasury issuances in the regional market. In addition, the authorities plan to clear during the program period all audited and recognized domestic arrears and are addressing the legacy external arrears. Guinea-Bissau has legacy external arrears, totaling US$5.7 million at end-2022, to Brazil, Russia, and Pakistan. The authorities reached an agreement with Russia (US$1.5 million) and are negotiating with Pakistan (US$2.2 million). Negotiations with Brazil (US$1.9 million) are pending final approval from the Brazilian parliament.

15. Guinea-Bissau is at a high risk of external and overall debt distress but debt is assessed sustainable (see DSA). The external debt reached 40 percent of GDP at end-2021. The risk of external debt distress is high because the indicators based on the debt-service ratios breach their indicative thresholds under the baseline. The overall risk of debt distress is also high because the PV of public debt relative to GDP remains well above its indicative benchmark throughout the projection period. Debt is assessed as sustainable based on the authorities' commitment to sound policies supported by strong donor engagement. Guinea-Bissau's supportive regional membership of the WAEMU reduces medium-term rollover risks associated with domestic debt, and staff projects a gradual decline of the PV of public debt relative to GDP over the medium term. The debt outlook remains vulnerable to a weaker economic recovery, a further tightening of global financial conditions, and authorities' failure to adhere to prudent fiscal policies. Debt sustainability prospects are expected to improve through better transparency and compliance with a QPC of the zero ceiling on new non-concessional borrowing (with exception for certain projects financed from the BOAD's Development and Cohesion Fund).14 IMF TA support for debt management will be provided to develop this capacity.

Strengthening Financial Stability

16. Addressing NPLs and a successful disengagement strategy from a large, undercapitalized bank would support financial stability and intermediation. Since 2012, NPLs have decreased but remain high, because of a large undercapitalized bank. This bank plays an important role in the provision of credit to the private sector, through financing the cashew campaign and bringing financial services to rural areas. The government approved an offer of a strategic investor to buy its stake and capitalize the institution to comply with WAEMU regulatory standards. The authorities settled arrears owed by the govenrment to borrowers from the bank and is monitoring the due diligence process, which will be submitted to the WAEMU Regional Banking Comission. If the operation does not materialize, the authorities will implement an additional SB in line the 2022 Article IV recommendations by end-December 2023 (MEFP ¶24). The recommendations include (i) providing the financial information requested by the IMF including an assessment of the bank's financial position and a full independent audit of all loan portfolio including NPLs from a third-party auditing firm to be performed by end-December 2023 (LOI, ¶10); (ii) preparing a report with a reconsidered viable new government plan for disengaging from the undercapitalized bank by 2024; and (iii) implementing the recommendations of the Banking Commission.

B. Structural Reforms

17. The ECF arrangement prioritizes implementing and completing reforms initiated and discussed under the SMP to strengthen fiscal consolidation and governance. SBs (Table 9) are built around a limited set of priorities presented by the CES (Annex I). Given Guinea-Bissau's fragility and weak institutional capacity, the proposed SBs are parsimonious, carefully prioritized and sequenced, and anchored in capacity development support (Annex VI).

18. The PFM reforms will strengthen wage bill controls and cash management (MEFP ¶18). The authorities will conduct quarterly reconciliation between the personnel and payroll records and deploy the IMF-supported blockchain project15 in order to safeguard the integirty of payroll data and employment contracts and flag any irregular hiring. To strengthen the cash management, the authorities have prepared an action plan for the TSA implementation and coordination with revenue generating entities (Annex V).

19. The authorities are committed to strengthening audits and public procurement, building on the SMP achievements (MEFP ¶19-20). To complement the audit of spending of the High Commissioner for COVID-19 published in June 202216, the authorities have published the report of independent third-party audit of all COVID-19 related spending17, which was carried out with support of the internal auditor (the Inspector-General for Finance). Subsequently, the Audit Court will undertake external audits of all COVID-19 related spending. The Audit Court also plans to complete by end-2023 an audit of the irregular hiring process in 2021-22, which has been requested by the MoF. The authorities have continued to publish all crisis-related contracts including beneficial ownership information.18 They will issue the guidelines for implementation of the 2022 decree on beneficial ownership, which expands beneficial ownership disclosure to all public contracts.

20. The authorities will step up efforts to improve the AML/CFT effectiveness and the anti-corruption framework. Addressing the priority recommendations in the 2022 Mutual Evaluation Report (MER) is needed to avoid a negative impact on correspondent banking relationships. These efforts will be complemented by (i) preparing the national AML/CFT policy and action plan, (ii) requiring all legal persons resigtering at the Registry to submit a beneficial owner identification form similar to the one submitted as part of the tender process, and (iii) preparing an action plan to strengthen risk-based AML/CFT supervision (Annex V). As a short-term priority for the anti-corruption reforms, the authorities will resubmit the law reforming the asset declaration regime as soon as new Parliament is operational. A broader range of measures will also be needed to improve the rule of law and market regulations as recommended by the 2020 Governance Diagnostic report (MEFP ¶26-27).

Program Modalities

21. The authorities request a three-year ECF arrangement with the access of SDR 28.4 million (100 percent quota). The program would address near-term BOP needs to support the recovery from the pandemic and surge in food and fuel prices while aiming to reduce protracted BOP vulnerabilities through fiscal consolidation, prudent borrowing and structural reforms to secure debt sustainabilty (Table 2b). All disbursements will be on-lent to the government (budget support). Phasing would be a third of the access per year (Table 10).

22. Program performance will be monitored via two quarterly reviews followed by five biannual reviews.19

  • Quantitative Performance Criteria/Indicative Targets (QPCs/ITs). Staff proposes adding to the QTs in the SMP a ceiling on the wage bill expenditures as a QPC (Table 6 and Appendix I ¶4).20

  • Prior actions (Table 8) include (i) the approval by the Council of Ministers of the 2023 budget in line with program paramenters and (ii) additional measures to enforce the executive order to end irregular hiring of employees by (a) requesting to the Audit Court to initiate an audit on the irregular hiring of employees, and (b) the publication of the thrid-party complementary audit of COVID spending.

  • Structural benchmarks (SBs, Table 9). Key areas include implementation of PFM reforms21 and strengthening the tax framework by reforming the exemption regime and stamp duties; revising the income tax law and enhancing transparency and efficiency in the tax regime for the management of natural resources. In addition, the structural reforms will include improving the anti-corruption framework by resubmitting parliament the law reforming the Asset Declaration Regime; facilitating the implementation of the 2022 decree regarding beneficial ownership (BO) information of entities awarded public contracts; and improving tranparency in charges and fees (including courts and registry fees).

23. The program is fully financed in the first twelve months and there are good prospects that the program will be adequately financed throughout its duration. The re-engagement of the country with the IMF since 2021 has led to higher budget support grants with bilateral donors in 2021 and 2022. In 2023, the catalytic role of the ECF-supported program will generate budget support grants, with at least CFAF 3.8 billion included in the budget. Moreover, once a sound program performance starts to provide sufficient assurances, staff expected other donors will engage with highly concessional project loans, additional budget support and project grants during the program period. The IMF support over the program period would amount to 12 percent of the total grants and project loans to address external financing needs (Text Table 4).

Text Table 4.

Guinea-Bissau: Grants and Loans from Multilateral Partners and Donors

(In CFAF billion)

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Source: IMF staff projections

24. Guinea-Bissau's capacity to repay is adequate but subject to significant risks (Table 7). Under the baseline, outstanding obligations to the Fund based on existing and prospective drawings would peak in 2025 at 3.0 percent of GDP, above the median of past UCT-quality arrangements for LICs, or 16.3 percent of gross official reserves, while debt service would peak at 2.3 percent of revenues (excluding grants) or 2.1 percent of exports in 2030 (Figure 1). In the medium-term, debt servicing capacity may become strained as financing terms become less generous. Capacity to repay the Fund is subject to significant downside risks (Annex I and ¶9 bullet 3). Risks are mitigated by the authorities' strong track record of servicing their debt obligations to the Fund, policy measures envisaged in the program, and membership of the currency union. Guinea Bissau should continue to pursue highly concessional financing and fiscal adjustments to ensure adequate capacity to repay.

25. Safeguards Assessment. The BCEAO has implemented all recommendations provided in the 2018 safeguards assessment. The assessment found that the BCEAO had broadly appropriate governance arrangements and a robust control environment. An update assessment of the BCEAO is planned for 2023.

Staff Appraisal

26. Guinea-Bissau has preserved economic and political stability, despite extremely challenging domestic and external environments. In recent years, Guinea-Bissau has coped with significant shocks and political stability was challenged by a coup attempt in February 2022. However, the moderate recovery in 2022 has been sustained by higher agricultural production and higher private sector investment, which has benefited from a relatively stable political environment.

27. Staff commends the authorities for their strong commitment to implement reform policies, demonstrated through the successful completion of the SMP and the adoption of corrective actions to curb the recent budget overrun. In 2022, the wage bill and other expenditure overruns as well as transitory measures to mitigate cost-of-living pressures to the most vulnerable increased spending pressures. However, the authorities have taken strong corrective actions to end irregular hirings including enhancing oversight by requesting an audit by the Audit Court and eliminating more than two-thirds of advisor positions at the Presidency, the Prime Minister's Office, the Presidency of the Parliament, and the Presidencies of the Constitutional and Audit Courts.

28. Despite upcoming parliamentary elections, there is the broad ownership of the Fund-supported reform agenda accross all main political parties. The broad political support to the ECF-supported program should build national consensus on critical reforms to secure fiscal consolidation, ensure debt sustainability, and improve governance and transparency. This will reduce the reform implementation risks regardless of the election results.

29. The proposed 2023 budget is consistent with the objectives and parameters of ECF-supported program. The program targets will be supported by measures for wage bill containment, revenue mobilization, and expenditure control. With these measures, the 2023 budget should narrow the domestic primary deficit to an almost balanced position. The 2023 budget also limits new infrastructure projects to those financed with concessional borrowing.

30. There has been progress in orderly restructuring of the undercapitalized bank. The government has accepted an offer from a strategic investor to buy the government stake and recapitalize the bank. If this operation does not materialize, the authorities should prepare a viable alternative plan to complete the divestment by 2024 based on IMF recommendations. The undercapitalized bank should achieve the recapitalization or otherwise be liquidated or resolved by the end of the ECF-supported program period (December 2025).

31. The authorities should bolster efforts to contain risks from EAGB, the public utility company, and reduce its financial vulnerabilities. A time-bound business strategy will be essential to improve EAGB's operational efficiency and restore the financial situation. Staff urges the authorites to work closely with the World Bank and other international financial institutions to mobilize financing for reducing its dependence on commercial bank borrowing and preventing the arrears accumulation.

32. Continued efforts to implement the governance and transparency reforms are critical for program success. Staff welcomes the authorities' progress in implementing safeguards for COVID-19 spending. Staff recommends the authorities to complete and publish an external audit of all COVID-19 spending by the Audit Court, following the independent third-party audit. The timely online publication of contract information of entities awarded public procurement contracts and their beneficial owners should continue. The authorities should promptly implement reforms for improving the AML/CFT effectiveness, the anti-corruption framework, and the the revenue administratopm and PFM.

33. Staff supports the authorities' request for the ECF arrangement. The recommendation is based on the strong progress made under the SMP program. To overcome capacity constraints, the IMF is supporting the authorities' efforts in all policy areas covered in the program through tailored TA in cooperation with international partners. It is expected that the next Article IV consultation with Guinea-Bissau be held on the 24-month cycle, according to Decision No. 14747-(10/96) on consultation cycles.

Figure 1.
Figure 1.

Guinea-Bissau: Capacity to Repay Indicators Compared to UCT Arrangements for PRGT Countries

(In percent of the indicated variable)

Citation: IMF Staff Country Reports 2023, 087; 10.5089/9798400234361.002.A001

Notes:1) T = date of arrangement approval. PPG = public and publicly guaranteed.2) Red lines/bars indicate the CtR indicator for the arrngement of interest.3) The median, interquartile range, and comparator bars reflect all UCT arrangements (including blends) approved for PRGT countries between 2010 and 2020.4) PRGT countries in the control group with multiple arrangements are entered as separate events in the databae.5) Comparator series is for PRGT arrangments only and runs up to T + 10.6) Debt service obligations to the Fund reflect prospective payments, including for the current year.7) In the case of blenders, the red lines/bars refer to PRGT + GRA. In the case of RST, the red lines/bars refer to PRGT + GRA + RST.8) In section C charts, the red bar for the country being reviewed appears only if it falls among the 35 largest peaks.
Figure 2.
Figure 2.

Guinea-Bissau: Growth and Living Standards

Citation: IMF Staff Country Reports 2023, 087; 10.5089/9798400234361.002.A001

Sources: World Bank, Worldwide Development Indicators; EM-DAT, CRED database; NASA Giovanni database; Guinea-Bissau authorities; and IMF staff calculations.
Figure 3.
Figure 3.

Guinea-Bissau: Global Economic Developments

Citation: IMF Staff Country Reports 2023, 087; 10.5089/9798400234361.002.A001

Sources: Guinea-Bissau authorities; BCEAO; and IMF staff calculations.
Figure 4.
Figure 4.

Guinea-Bissau: COVID-19 Pandemic, Activity and Prices

Citation: IMF Staff Country Reports 2023, 087; 10.5089/9798400234361.002.A001

Sources: Google Mobility database, Our World in Data, Guinea-Bissau authorities and IMF staff calculations.
Figure 5.
Figure 5.

Guinea-Bissau: Fiscal, External and Monetary Developments

Citation: IMF Staff Country Reports 2023, 087; 10.5089/9798400234361.002.A001

Sources: Guinea-Bissau authorities; BCEAO; and IMF staff calculations.
Table 1.

Guinea-Bissau: Selected Economic and Financial Indicators, 2019–27

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Sources: Guinea-Bissau authorities; and IMF staff estimates and projections. 1 Coverage expanded to include legacy arrears.
Table 2a.

Guinea-Bissau: Balance of Payments, 2019–27

(CFAF billions)

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Sources: BCEAO; and IMF staff estimates and projections.
Table 2b.

Guinea-Bissau: External Financing Needs and Sources, 2020-27

(CFAF billions)

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Source: BCEAO, IMF staff estimates and projections. 1 Includes net private capital transfers, changes in NFA of commercial banks and non-financial private sector, SDR allocations, and errors and omissions
Table 3a.

Guinea-Bissau: Consolidated Operations of the Central Government, 2019–27

(CFAF billions)

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

Recorded as arrears when payments were not made for more than 30 days for wages and more than 90 days for other expenditures.

Financing is on currency basis.

WARCIP project from 2018 onwards; in 2019 equity investment and bank recapitalization; in 2020 on-lending support to banks.

Excludes grants, foreign and BOAD financed capital spending, and interest.

Table 3b.

Guinea-Bissau: Consolidated Operations of the Central Government, 2019–27

(Percent of GDP)

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Sources: Guinea-Bissau authorities; and IMF staff estimates and projections. 1 Recorded as arrears when payments were not made for more than 30 days for wages and more than 90 days for other expenditures. 2 Financing is on currency basis. 3 WARCIP project from 2018 onwards; in 2019 equity investment and bank recapitalization; in 2020 on-lending support to banks. 4 Excludes grants, foreign and BOAD financed capital spending, and interest.
Table 4.

Guinea-Bissau: Monetary Survey, 2019–251

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Sources: BCEAO; and IMF staff estimates and projections. 1 End of period.
Table 5.

Guinea-Bissau: Selected Financial Soundness Indicators, 2017–221

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Source: BCEAO.

Excluding tax on banking operations.

Table 6.

Guinea-Bissau: Proposed Quantitative Targets Under the Extended Credit Facility 2022–23

(Cumulative from beginning of calendar year to end of month indicated, CFAF billion)

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These apply on a continuous basis.

The ceiling will be adjusted upward by the amount of financing from the BOAD Development and Cohesion Fund in accordance with TMU ¶7.

Defined as spending by the Ministries of Health, Education and the Ministry of Women, Family and Social Cohesion.

Excludes grants, foreign and BOAD financed capital spending, and interest.

Excludes IMF disbursements.

Table 7.

Guinea-Bissau: Indicators of Capacity to Repay the Fund1, 2022-42

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Source: IMF staff estimates and projections. 1 Considers CCRT grant to cover obligations up to April, 2021, approved by the Executive Board on April 13 and October 5, 2020. Prospective CCRT oranl to cover obliaations up to April. 2022 is not considered.
Table 8.

Guinea-Bissau: Prior Actions

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Table 9.

Guinea-Bissau: Structural Benchmarks

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1 Annual and quarterly reports sta rting in June 2023 and December 2024 respectively.
Table 10.

Guinea-Bissau: Proposed Schedule of Disbursements Under the ECF Arrangement, 2023-25

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Source: IMF staff estimates and projections.

Annex I. Country Engagement Strategy

A. Background and Context

1. Guinea-Bissau has a high level of political, institutional, and economic fragility. Economic growth has been low and volatile for decades, and poverty remains widespread. The newly independent state inherited weak public institutions that severely constrain governance. The country lacks some basic functions of public financial management (PFM) systems. The security sector absorbs a large share of expenditure but faces no external threats or internal conflict. The delivery of public goods limited. Public spending is almost exclusively devoted to salaries, with little resources allocated to investment.

2. Guinea-Bissau has received a Rapid Credit Facility (RCF) disbursement in January 2021 and completed a Staff-Monitored Program (SMP) in May 2022. The RCF provided financing for critical health spending. An SMP with three quarterly reviews was approved in July 2021 to support the reform program aimed at stabilizing the economy, strengthening governance, and building a strong track record to underpin the authorities' request for an Extended Credit Facility (ECF) arrangement.

B. Sources of Fragility

3. There are many drivers of Guinea-Bissau's fragility:

  • An indebted state with low capacity to provide public services necessary for development. The country ranks among the world's lowest in terms of government effectiveness, controlling corruption, regulatory quality, and the rule of law. Social spending is insufficient, and the country faces large infrastructure gaps. Additional financing is limited since the country is at a high risk of debt distress. Moreover, the largest share of the debt is external, and the main holders are multilateral organizations, which could complicate the debt restructuring process if it becomes necessary.

  • Conflict among elites over state power and public resources. Elites' competition for economic and political control has contributed to state capture risk by vested interests causing low willingness to invest in institutions. State capture has produced corruption, unproductive public investment, an elevated wage bill and low tax compliance. These dynamics hamper state legitimacy and revenue mobilization, constraint private development and job creation, and cause political instability. Illicit activities including drug trafficking also contribute to state capture and political instability.

  • Poor macroeconomic fundamentals hamper investment in human capital and the private sector. Domestic and foreign investment are among the lowest in the region, hampered by a difficult business environment and political instability. Poor infrastructure is an impediment to investment. Only a quarter of the population has access to electricity. The country lacks skilled workers and literacy rates are below the regional average. Financial intermediation is low, and the banking sector is constrained by high levels of non-performing loans (NPLs).

  • An economy over-reliant on the export of one commodity. The economy is almost entirely dependent on cashew production. Raw cashew nuts account for over 90 percent of merchandise exports. More than 50 percent of households are thought to be employed in the sector.

  • High vulnerability to climate shocks and public health crises. In recent decades, floods and droughts have damaged infrastructure, caused a loss of food crops, and forced internal migration. In the next decades, climate change is expected to exacerbate these problems. The country is also vulnerable to health hazards, having been struck by cholera outbreaks and the COVID-19 pandemic.

C. Strategy to Escape Fragility

4. There are several dimensions to improving state capacity in Guinea-Bissau:

  • Macroeconomic stability. It is key to provide a stable macroeconomic environment by implementing a credible fiscal consolidation strategy and converging deficit and debt levels to the WAEMU convergence criteria. This stability will create space to build economic resilience and increase the confidence of international donors and private investors.

  • Protect and enhance social and priority spending. Protecting social spending supports social inclusion and enables a steady build-up of fiscal, legal, and civil service capacities. By shouldering a greater share of the social and priority spending, the authorities could crowd in donor support.

  • Fiscal management and institutional reforms. An overarching reform effort is needed to enhance state power in the areas of revenue mobilization, PFM and expenditure control. Increasing tax collection capacity is critical for enhancing state capacity. Enhancing PFM will strengthen fiscal transparency and mitigate SOE fiscal risk. Strengthening expenditure control, particularly on the wage bill will help to generate fiscal space for social and priority spending, and developmental needs.

  • Debt management. The country should improve its capacity for debt recording, monitoring and overall management to avoid recent problems on payments and accumulation of arrears. The government needs to increase transparency by publishing annual reports which cover debt service, disbursements, and agreements. It also needs to continue reporting to debt statistics databases.

  • Improve quality and timeliness of economic data. Poor quality and timeliness of economic data due to capacity constraints are significant obstacles to good policymaking. Data have serious shortcomings that hamper surveillance, and the problems are most serious in the national accounts and balance of payments. The statistics agency needs more resources.

5. Priority actions to foster private sector development should include:

  • Fostering financial intermediation. Addressing NPLs and a successful disengagement from the large, undercapitalized bank will support financial stability and intermediation. Digital financial infrastructure can enable households to use more efficient means of transferring money and serve as a source of microcredit. Mobile money services could also encourage remittances and foster business creation. The country can foster financial intermediation by strengthening the credit information bureau.

  • Economic diversification. The country is abundant in natural endowments for mining and fishing, and the coastline offers attractive tourist destinations. It is critical to address the constraints that have hindered diversification by prioritizing human capital investment, improving the regulatory system and natural resources tax regimes, and expanding infrastructure projects.

  • Agricultural productivity. Infrastructural deficiencies will need to be addressed. Bottlenecks include an outdated land management system, limited access to inputs, and limited market information. The government, working with FAO, IFAP and WFP can develop policies to improve yields.

6. Guinea-Bissau also needs reforms that enhance the accountability of public servants:

  • Strengthen horizontal and bottom-up accountability. Every year the budget execution should be audited by the Supreme Audit Court. Development partners and the government can foster participation by working with civil society on project evaluation and implementation. It is also important to promote transparency, information and oversight of projects involving communities, producing documents in Creole, and integrating outreach programs and anticorruption measures.

  • Enable political competition. Stronger functional democratic institutions and political parties are missing that could bring the people and the state closer to democracy. Political and institutional arrangements need to provide checks and balances between the three branches of government.

  • Improve the rule of law, tackle corruption risks, and reduce barriers to justice. Enhancing transparency in the judicial process warrants low-cost dissemination of laws, orders, and court decisions as well as low-cost access to courts and registries. It is essential to establish clear rules and practices for implementing the strengthened legal framework on anticorruption, including expanding the competencies of institutions responsible for the asset declaration system and anticorruption efforts. To enhance governance and oversight, the government must strengthen budgetary autonomy, and support staffing and financial resources of key institutions. It must also improve the protection of witnesses and whistleblowers.

D. Fund Engagement

7. Future Fund engagement should focus on reforms initiated under the SMP to implement credible fiscal consolidation, foster financial intermediation, and support governance, AML/CFT, and transparency reforms. To strengthen debt management and improve the efficiency of government spending, the authorities initiated the establishment of a TSA. The debt management framework, the wage bill policy, public investment management and SOE supervision are under review. Authorities have amended the procurement legal framework to enable the collection and publication of beneficial ownership information, and a submission to parliament to reform the asset declaration regime.

8. The IMF will continue providing technical assistance to the authorities through a tailored capacity building program that prioritizes key areas. A major shortcoming of the SMP implementation has been the lack of proper budget execution as authorities have not been able to control the wage bill. Implementation is crucial for successful engagement. Absorptive capacity is constrained by insufficiently trained staff, undefined work procedures and changing policy priorities. Thus, an incremental approach to TA delivery would better serve the authorities. Support will target revenue administration, tax policy, PFM, governance, debt management, bank restructuring, statistics and financial intermediation.

9. There are significant risks to develop a closer engagement with Guinea-Bissau. Political instability, disappointing cashew nuts exports and the risk of a security crisis in Europe could further impact financing needs. Guinea-Bissau is also subject to severe climate change-related disasters. Financial stress in SOEs and banking could generate contingent liabilities, fiscal pressures, and spillovers to the financial sector. If further Fund financing does not promote budget execution and economic development, a program could burden the country with senior debt. The ECF arrangement must be designed to maximize the potential upside of the engagement, while mitigating these risks.

Annex II. Risk Assessment Matrix1

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Annex III. Update on Fiscal Risks in EAGB1

1. Electricidade e Aguas da Guinee Bissau (EAGB), the state-owned utility company, is facing a dire financial situation deteriorated by a price hike of the power ship. It has been facing financial and operational challenges for the last decade. As a temporary solution for the electricity supply crisis, the company switched the power source from the small diesel generators to a power ship (Karpower) off the coast of Bissau in 2019. The power ship increased the generation capacity from 17 MW to 24 MW in 2021 and 30 MW in 2022 as per the power purchase agreement (PPA) amended in 2020. Because the electricity price of the power ship is driven mainly by the capacity, rather than the actual usage of electricity, it has caused an increase in EAGB's electricity purchase costs and, in absence of corresponding revenue increase, had significant toll on its financial situation. In 2021, the EAGB incurred about 0.3 billion CFAF of deficits every month (Figure 1). In 2022, the monthly deficits have tripled to 1.1 billion CFAF on average between January and September (Figure 2) with revenue covering only 60 percent of expenditure. These deficits are met by accumulation of unpaid invoices owed to the Karpower and borrowing from commercial banks, which increased EAGB's already high level of liabilities from 3.4 percent of GDP in December 2021 to 4.0 percent of GDP in September 2022.

Figure 1.
Figure 1.

EAGB Revenue and Expenditure, 2021 January-September

(Billion CFAF)

Citation: IMF Staff Country Reports 2023, 087; 10.5089/9798400234361.002.A001

Sources: IMF staff calculations, authorities and EAGB
Figure 2.
Figure 2.

EAGB Revenue and Expenditure, 2022 January-September

(Billion CFAF)

Citation: IMF Staff Country Reports 2023, 087; 10.5089/9798400234361.002.A001

Sources: IMF staff calculations, authorities and EAGB

2. EAGB needs to take the immediate measures to enforce tariff collection. Currently, the monthly tariff collection (1.5 billion CFAF on average between January and September 2022) suffers from a low collection rate (around 68 percent). By improving the collection rate, it should be able to collect more than 2 billion CFAF of tariff per month without changing the existing tariff structure. Installing meters to users is the key to enforce tariff collection. In absence of meters, several users have experienced a months-long delay in receiving electricity invoices. EAGB also sends about 0.7 billion CFAF of electricity invoices per month to the government, which however pays only 0.5 billion CFAF per month, arguing that they were invoiced more than what they consumed. The company has recently acquired 35,000 pre and post-paid analog meters and is aiming to install them by the first quarter of 2023. Installing these meters to both private and public users as soon as possible is crucial to achieve the revenue targets.

3. EAGB should speed up the reforms needed to improve the management and operation and rationalize the personnel and administrative costs. While the headcount has slightly decreased between January and September 2022, wages have increased by 10 percent from the same period in 2021. In absence of a functioning finance department or an IT system, the company has been outsourcing the accounting functions. This makes it very difficult to implement the budget and financial controls. Therefore, containing personnel and administrative costs calls for significant improvements to EAGB's management and operation. This requires facilitating the implementation of the World Bank Emergency Water and Electricity Services Upgrading Project, which is providing critical support. As the first step, it is important to facilitate the development of EAGB's new Enterprise Resource Planning (ERP) system, which is expected to be operationalized in early 2023.

4. Restoring EAGB's financial health hinges on reducing electricity purchase costs. Even if the company fully implements revenue and expenditure measures discussed above, it would be challenging to eliminate monthly deficits without reducing electricity purchase costs, which amount to 70 percent of expenditure. The implementation of the OMVG regional project, which will allow the connection to hydropower plants in Guinea-Conakry, is crucial to restore the company's financial situation. By transitioning from the power ship to the hydropower electricity purchase costs are expected to be reduced to the two-thirds. While there has been significant progress in project implementation, there are significant risks of delay. For example, construction of the transmission lines from the Guinea-Conakry border to Bissau, which is planned to be completed in the first half of 2023, is facing challenges due to soft grounds in swamp areas.

5. Mobilizing funds from international financial institutions is essential both in the short and medium-term. In the short run, EAGB needs to identify affordable financing to meet gaps that cannot be filled by revenue and expenditure measures. Accumulating further arrears poses a risk of power supply disruption, while relying only on commercial bank borrowing may cause macro-financial risks. In the medium-term, the company needs donor support for development of critical infrastructure, such as rehabilitation of distribution lines to eliminate very high technical losses. Reducing financing costs also requires concessional financing to refinance/restructure expensive debt accumulated in the past. The World Bank is playing an essential role in supporting the power sector development through (i) the improvements to EAGB's management and operation, (ii) the OMVG project implementation, (iii) extension and densification of national grids, and (iv) development of solar off-grid solutions.2 The African Development Bank and the BOAD are also supporting the development of distribution lines to ensure connectivity to the OMVG project. The time-bound business strategy of EAGB (SB, end-September 2023) should articulate how the government will support critical efforts to mobilize donor funds in close coordination with the World Bank and other development partners.

Annex IV. Implementation of Past IMF Recommendations

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Annex V. Action Plans for Governance-Related Reforms

1. This Annex sets out action plans for governance related reforms, building on achievements under the SMP. These action plans intend to complement SBs in a governance area by providing the intermediate steps or the measures that will enhance the effectiveness of reforms. Many measures included in the action plans are the continuation of reforms that have been implemented or initiated during the SMP (Table 1). The action plans are focusing on reforms in the following areas where the Fund has significant Capacity Development (CD) engagement in Guinea-Bissau1; (i) the revenue administration; (ii) the PFM; and (iii) the AML/CFT and public procurement. The main reform objectives and priorities in each area are discussed in the following paragraphs.

2. Revenue administration. The authorities will strengthen tax and customs administration based on action plans informed by the recent FAD CD (see Table 2 for summary). Drawing on efforts to simplify and modernize the tax system during the SMP, the action plans aim to address the following challenges faced by the Directorate-General for Taxes and Duties (DGCI) and the Directorate-General for Customs (DGA): (i) extensive administrative discretion; (ii) political interference in hiring decisions; (iii) inadequate exchange of information among public entities; and (iv) outdated information technology systems. Addressing these challenges will improve transparency and efficiency in revenue administration, taxpayer compliance, and professionalism of revenue officers.

3. PFM. The authorities have developed action plans for the TSA implementation and public investment management informed by the recent FAD CD (see Table 2 for summary). The TSA implementation is crucial to advance the cash management reforms initiated under the SMP and establish transparency in, and controls of, extrabudgetary fees and charges. The action plan has the objectives to (i) streamline public bank accounts in line with the TSA structure, (ii) improve financial management information systems to develop the TSA functionality, (iii) improve cash management institutions including coordination with revenue generating entities, and (iv) expand the scope of the TSA to all revenue and expenditure including extrabudgetary transactions. For the public investment management, the Ministry of Economy and the MoF have limited roles in the planning, selection, and monitoring of major investment projects. The action plan aims to develop the strong roles of the central agencies in assessing project feasibility and affordability and preventing cost overruns and implementation delays, in order to maximize efficiency in public investments within the very limited fiscal space. Annexes II and III of this Staff Report separately discuss reforms for the wage bill controls and state-owned utility company, which are also important PFM priorities.

4. AML/CFT and public procurement. Further action to strengthen AML/CFT effectiveness is needed. In the February 2022 Mutual Evaluation Report (MER), the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) gave the country low effectiveness ratings in all 11 criteria. Substantial progress is required to address the priority actions. The action plan (Table 3) intends to enhance AML/CFT effectiveness in the three priority areas: (i) finalizing the national AML/CFT policy and action plan that addresses the risks identified in the national risk assessment (NRA) and the MER key findings by March 2023; (ii) establishing a registry to ensure beneficial ownership (BO) information is available and accessible to all legal persons registered at the Centre for Formalization of Enterprises (CFE) and at the Directorate General of Civil Identification, Registry and Notary (DGICRN) by end-June 2024; and (iii) present an action plan to strengthen risk-based AML/CFT supervision for financial institutions and designated non-financial businesses and professions (DNFBPs) by June 2023. The same action plan also aims to facilitate implementation of the new BO decree including issuance of guidance to foster an understanding of BO information requirements for all those involved in the public procurement process, which could be complemented with IMF LEG TA.

Table 1.

Guinea-Bissau: Adopted Measures on Governance and Anti-Corruption

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Source: Guinea-Bissau Authorities. 1 The information is available on the website of the High Commissioner: https://www.accovid-gw.org/re1at%C3%B3rios
Table 2.

Guinea-Bissau: Fiscal Reforms: Summary Action Plan 2023-25

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Table 3.

Guinea-Bissau: AML/CFT and Public Procurement: Action Plan 2023–25

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Annex VI. Capacity Development Strategy

1. The recovery from the COVID-19 pandemic has underscored the need for continued CD assistance on ongoing workstreams to improve fiscal governance and debt sustainability. The specific objectives address weaknesses in core functions and meet the authorities' demands for assistance. In FY2022, increased political stability opens a window of opportunity for sustained buy-in. While hybrid missions are the new norm, medium-term CD will be delivered by long-term resident advisors fluent in Portuguese and by hands-on training, to better address capacity constraints. To ensure effectiveness of CD initiatives, coordination within the Fund and with outside partners will remain a priority.

Key Overall CD Priorities Going Forward

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Engagement Strategy

3. Engagement with the authorities. Absorptive capacity is constrained by insufficiently trained staff, undefined work procedures and changing policy priorities. The authorities thus prefer TA delivered by long-term resident advisors fluent in Portuguese as well as hands-on training. The current period of political stability and the progress during the SMP create opportunities for sustained buy-in. To enhance traction, a set of practical and actionable recommendations from CD missions will be proposed to the authorities. Other medium-term priorities (natural resource taxation, climate change) require raising awareness.

4. Coordination within the Fund. The country team will continue to reach out to functional departments and AFW to identify CD priorities, learn about reform implementation, devise policy benchmarks, review mission reports, organize joint missions, participate in regional CD seminars and facilitate take-up by the authorities.

5. Engagement with outside partners. Continued efforts to sequence and complement CD initiatives will be undertaken with the WB (PFM, tax policy and SOE's oversight, public sector reform, and debt management), the EU (fiscal governance, external audit function), UNCTAD (debt management), the AfDB (justice), WFP (food security and agricultural development) and possibly the UNDP and other UN agencies.

Authorities' Views

6. The authorities recognize the need to build institutional capacity and advance structural reforms in the country. In this sense they concurred with the CD priorities listed above, which are aligned with their reform agenda, and expressed satisfaction with the technical assistance that has been provided by the IMF. They are aware of the challenges represented by low absorption capacity and the high staff turnover and argued that better coordination between development partners would help mitigate them by appointing long-term advisors.

Appendix I. Letter of Intent

Bissau, January 12, 2023

Ms. Kristalina Georgieva

Managing Director

International Monetary Fund

Washington, D.C. 20431

U.S.A.

Dear Managing Director,

Guinea-Bissau has made great progress in building economic and political stability, despite an extremely challenging domestic and external environment. In recent years, the country has been struck by several shocks, beginning with the large drop in cashew prices in 2019, followed by floods and the Covid-19 pandemic in 2020 and 2021, and the increase in food and fuel prices stemming from the war in Ukraine this year. Our economy is highly dependent on cashew nut exports and especially vulnerable to these external shocks. This government took office in February 2020 after a transparent and fair election and attained a peaceful and smooth transition of power. Sustained political stability has opened a window of opportunity to embark on long-awaited reforms. Our policies and political efforts have allowed the moderate but sustained growth recovery and mitigated the devastating effects of the ongoing global crisis.

The government of Guinea-Bissau has demonstrated its determination and capability to implement fundamental reforms that tackle long-standing structural challenges. We successfully completed an ambitious reform agenda of the IMF staff monitored program (SMP) in June 2022. Under the SMP, the government implemented significant fiscal consolidation, which was essential to contain the rising level of public debt, ensuring debt sustainability and creating much needed fiscal space. It allowed the government to increase public investment and social and priority spending to protect vulnerable households and meet its pressing infrastructure needs. We also implemented a series of structural reforms to strengthen governance and transparency in the public sector and accountability for crisis-related spending. Achieving these reforms just in nine months, has built our confidence to implement an ambitious reform program over the next year.

Despite the progress achieved, the challenges ahead are significant and further support from the international community is crucial. The economy is facing significant downside risks from volatile cashew production, persistent inflation and tight financial conditions, a global economic slowdown, and climate shocks. Without further policy actions, additional external shocks will exacerbate development challenges and undermine our capacity to support the most vulnerable. The IMF Extended Credit Facility (ECF) arrangement will provide crucial financial support to meet our balance of payment needs and government priority spending, just like financial assistance from the IMF Rapid Credit Facility did amid the COVID-19 pandemic.

Staying on track with a fiscal consolidation path will create a fiscal space and catalyze much-needed financing from development partners, freeing up resources to meet significant economic and social development needs while ensuring debt sustainability. Our government will ensure engagement with local stakeholders and develop strong national consensus and ownership over the reforms and policies under the program. Continuing an intensive engagement with the IMF and other development partners will also enable us to advance governance and transparency reforms, which are essential to reach our economic potential and break away from fragility. The government of Guinea-Bissau remains strongly committed to the economic and structural reform process, which will benefit current and future generations.

We believe that the implementation of the governance commitments of the ECF arrangement will contribute to addressing state fragility, enhancing revenue mobilization and expenditure control capacities while also increasing public finance transparency, accountability, and efficiency.

In December 2022, the Council of Ministers approved the 2023 budget proposal in line with the ECF supported-program's objectives. We will submit the budget to Parliament when it reconvenes in 2023 after the elections. We will work with political parties and Parliament to secure the national consensus necessary for budget approval and legislative reforms during the program. We are committed to narrow the domestic primary deficit through strong revenue mobilization, strengthened expenditure control, and prudent debt management. Our goal is to secure a fiscal consolidation path to secure the convergence of the deficit and the public debt level to the WAEMU regional criteria over the medium-term.

In 2023 we aim to strengthen fiscal policy and ensure the effective implementation of the reforms under the ECF supported program.

  • Fiscal policy. The approved budget for 2023 is anchored in line with the parameters of the ECF supported program in terms of overall and domestic primary deficits. Measures include enhancing revenue mobilization, adhering to strict limits for wages and salaries, rationalization of goods and services and other expenditures, and re-allocating resources to support priority spending. We are committed to enforce tax collections, exercise strict control on budgetary execution to avoid accumulation of arrears, and not contract non-concessional borrowing to ensure debt sustainability. To strengthen debt management and improve spending efficiency, we will enhance debt management practices, wage bill policy, public investment management and SOEs supervision and continue the gradual implementation of the Treasury Single Account with technical assistance from the World Bank and the IMF.

  • Governance reforms. We are committed to fighting corruption and improving AML/CFT effectiveness, governance and transparency by completing the implementation of the RCF's governance safeguards on COVID-19 spending and the recommendations of the 2020 Governance Diagnostic report. We will continue improving beneficial ownership transparency and accelerating the asset declaration regime reforms. IMF technical assistance will continue to support our work in both areas.

We are requesting the approval of a new three-year ECF arrangement in the total amount equivalent to SDR 28.4 million for the period January 2023-January 2026. The ECF arrangement will support our macroeconomic and structural reform program. The government is also requesting the immediate disbursement of the first tranche, totaling SDR 2.37 million. To support this request, the attached Memorandum of Economic and Financial Policies outlines the government's objectives and sets out the policies that the authorities intend to implement under the ECF arrangement. Our policies aim to create fiscal space for social and priority spending and revamp public infrastructure while strengthening macroeconomic stability and securing debt sustainability. We are confident that these policies will support inclusive growth and catalyze resources from international donors to back up our national development plan and will continue to build institutions and human capacities, address governance and transparency concerns and enhance the capacity to manage public resources efficiently.

The implementation of our program will be monitored through quantitative performance criteria and indicative targets, as described in the attached Technical Memorandum of Understanding (TMU).

There will be seven reviews under the ECF arrangement, scheduled to be completed on a quarterly basis until June 2023 and afterwards on semi-annual basis. The reviews will assess program implementation progress and reach understandings on additional measures needed to achieve the program objectives.

The policies and actions set out in the attached Memorandum of Economic and Financial Policies (MEFP) convey the understandings reached with IMF Staff during the November 8-22 mission, which we consider adequate to achieve the objectives of the ECF-supported program. We stand ready to undertake any further measures to achieve the program objectives, if necessary, in close consultation with the IMF staff. We will provide timely information for monitoring economic developments and the implementation of policies defined in the program, as agreed under the attached Technical Memorandum of Understanding (TMU), or upon staff request.

In line with our commitment to transparency, we authorize the IMF to publish this letter, together with the attached MEFP and the TMU, as well as the IMF staff report on the request for an ECF arrangement, subject to Executive Board approval. These documents will also be posted on the official website of the Bissau-Guinean government.

Yours sincerely,

/s/

Ilídio VIEIRA TÉ

Minister of Finance Guinea-Bissau

Attached: - Memorandum of Economic and Financial Policies.

- Technical Memorandum of Understanding.

Attachment I. Memorandum of Economic and Financial Policies

A. Context

1. Following a peaceful transition of power in the beginning of 2020, our country has gone through the COVID-19 global pandemic with the support of the international community, and it now faces the adverse impact from the war in Ukraine. After years of political turmoil and delayed reforms, in 2021 the government started implementing an ambitious fiscal consolidation program in the middle of the pandemic to ensure debt sustainability while creating fiscal space to address developmental needs with the IMF's support. The Rapid Credit Facility (RCF) disbursement of SDR 14.2 million (50 percent of quota) approved in January 2021 provided urgent financing to support critical spending on health. The satisfactory performance of the nine-month SMP approved in June 2021 with three quarterly reviews was key to support the government's reform program aimed at stabilizing the economy, strengthening governance, and building a sound track record of policy implementation toward the Extended Credit Facility (ECF) arrangement. In addition, the August 2021 SDR 27.2 million allocation and the reforms underpinned by the SMP addressed the adverse impact of the pandemic, improved government spending transparency, and mitigated debt vulnerabilities.

2. The government is determined to pursue a sustainable growth path and build resilience for the future amid renewed and significant challenges. These challenges include the protracted effects of the COVID -19 pandemic, the February 2022 coup attempt, more frequent and intense weather events driven by climate change, and global shocks that push up shipping costs, energy and food prices and tighten financial conditions, and disrupting global supply chains. These combined shocks have affected the most vulnerable, disrupted the provision of essential public goods, and pushed up the overall cost of economic activity through higher import prices of essential goods. A further deterioration of the global environment is a key risk, leading to a fall in the international price of cashews and a tightening of domestic financing conditions. Acting decisively is therefore needed to build resilience and tackle the ongoing crisis.

3. Guinea-Bissau took decisive actions to address the social and economic impact of COVID-19 and the global inflation surge. The pandemic affected directly over 8,900 people with over 170 deaths. The economy was partially shut down and scarce public resources were allocated to protect the most vulnerable and support health services through a vaccination campaign. The cashew nut export volume decreased by 21.0 percent in 2020 but increased to the level exceeding its pre-crisis level in 2021. By end-December 2022, about 58 percent of the adult population had been fully vaccinated. In 2022, higher prices of food, basic staples, fuel are slowing down economic growth, adding to inflationary pressures, widening the current account deficit, and weighing on the fiscal position. Protecting the livelihood of the most vulnerable has required additional policy actions through targeted transfers and temporary cuts of gasoline taxes. Our policies aim to mitigate these effects while creating conditions to recover from the pandemic with the support from the Fund and other international partners.

4. The government is fully committed to pursuing our reform agenda which tackles longstanding structural vulnerabilities that constrain inclusive growth for which we have requested financial support. The government's commitments include securing macroeconomic stability, ensuring fiscal and debt sustainability, strengthening social protection, fighting against corruption, and improving governance and transparency. The success of the ECF arrangement hinges on meeting strong governance commitments aimed at enhancing public finance transparency, accountability, and efficiency. In this regard, our policies aim to ensure further fiscal consolidation towards WAEMU standards and address debt vulnerabilities. These objectives are incorporated in this program.

B. Macroeconomic Developments and Outlook

5. Growth is expected to slow to 3.5 percent, while average inflation is expected to increase to 7.8 percent in 2022. Growth accelerated from 1.5 percent in 2020 to 6.4 percent in 2021 due to record high exports of cashew nuts, a high level of public investments, and the gradual lifting of COVID-19 containment measures. In 2022, growth has been negatively affected by lower-than-expected cashew exports. The surge in commodity prices associated with the war in Ukraine has added renewed pressures on prices, especially in food and fuel. However, moderate growth in 2022 will be supported by higher agricultural production, private sector investments and relative political stability, which partially offset the impact of inflation on the cost-of-living and the current account.

6. The increase in economic activity improved revenue mobilization in 2021 but spending pressures have increased in 2022. Greater revenue mobilization and expenditure controls reduced the overall fiscal deficit from 9.6 percent in 2020 to 5.6 percent of GDP in 2021. However, the overall fiscal deficit in 2022 is expected to equal 5.5 percent of GDP, higher than the 2022 Article IV staff report by 1.1 percentage points of GDP mainly due to higher-than-expected expenditures. The wage spending overrun was caused mainly by the irregular hiring of workers and has already been addressed. In addition, other current expenditure is higher mainly due to spending on the upcoming election as well as higher spending related to security and defense, social and diplomatic services. We are also rationalizing non-priority spending. While non-tax revenue is expected to be lower-than-expected, we are implementing new fees on bunking services for industrial fishing to enhance revenue mobilization.1 On the other hand, tax revenue is slightly higher while transfers expenditure is lower. Budget support is also higher amid prospective ECF supported program.2 Moreover, we are taking actions to improve the financial sustainability and mitigate the fiscal risks of the national utility company EAGB.

7. Pandemic-related measures implemented by the BCEAO, the regional central bank, have supported credit. The accommodative stance of the BCEAO improved liquidity in the banking system and credit to the economy. Credit grew by 7.3 percent in 2021 and is expected to grow at the same rate in 2022. Except for one large undercapitalized bank, the banking sector has adequate capital levels, meeting the regional prudential criteria. Although gross Non-Performing Loans (NPL) to total loans remain high due to the situation of the undercapitalized bank, banks are well provisioned.

8. The external position is expected to deteriorate in 2022. The current account deficit improved to 0.8 percent of GDP in 2021 from 2.6 percent of GDP in 2020 due mainly to record high cashew exports. The August 2021 SDR allocation enabled us to pay debt service of the BOAD, the regional development bank due in 2021 and 2022. In 2022, the current account deficit is projected to worsen to 5.9 percent of GDP due mainly to the lower cashew nuts exports and higher import prices. The external financing need is met by smaller growth of net foreign assets and lower debt service.

9. In the medium-term, growth is expected to increase to around 5 percent, supported by political stability, structural reforms, and higher investments. The medium-term growth will be sustained by stronger fiscal management, greater political stability, and donor support catalyzed under the ECF supported program. The fiscal consolidation strategy will improve the allocation of public expenditures towards pro-growth expenditures on infrastructure investments and social programs. Implementation of governance and structural reforms will further accelerate medium-term growth in the private sector through improvements in the business environments, better access to credit, and an increase in investments. Although the country's long-term growth potential conservatively estimated to be around 4 percent per year, harnessing the economic potential in agriculture, tourism, natural resources, and fisheries has the potential to create significant upward momentum in growth. As the security crisis in Europe subsides, inflation is expected to gradually converge to 2 percent in the medium-term. Sustained fiscal consolidation and more favorable terms-of-trade will also reduce the current account deficit to around 4 percent of GDP in the medium-term.

C. Objectives of the Program

10. The government's National Development Plan 2020-23 (PND), supported by the ECF arrangement, aims to secure macroeconomic stability, and foster sustainable and inclusive growth. The successive PND will ensure that the fiscal consolidation is executed without the accumulation of arrears. The PND will help voiding expensive non-concessional borrowing while protecting social and priority spending. These goals will be achieved through (i) stronger revenue mobilization and expenditure containment, including in the wage bill, generating fiscal space to protect social spending and undertake key infrastructure investments to sustain the recovery; and (ii) seeking additional grants and highly concessional financing from development partners. The Council of Ministers also approved the 2023 budget in 2022 with a spending envelope that reflects available resources without recourse to non-concessional financing. This budget will be submitted to Parliament when it reconvenes after parliamentary elections in early 2023. Over the medium-term, the government is committed to bringing the fiscal deficit and debt ratio within 3 percent of GDP by 2025 and 70 percent of GDP respectively by 2027, in line with the WAEMU convergence criteria.

11. Building on the SMP achievements, the government aims to further strengthen expenditure control, revenue mobilization and the fight against corruption, including through governance and transparency reforms. We published the 2019 IMF Report on Governance and Anti-corruption and implemented several of its recommendations during the SMP.3 Our program will continue implementing sequenced governance reforms with multilateral and bilateral technical assistance. We expect to gradually improve state capacities to control expenditures, moderate fiscal risks from SOEs, enforce the tax and custom framework, and mitigate corruption risks. We will develop a strategy to prevent arrears accumulation and clear the stock of audited and approved domestic expenditure arrears.

D. Creating Fiscal Space for Priority Spending while Securing Public Debt Sustainability and Mitigating Fiscal Risks

Measures to Address Fiscal Consolidation

12. The government is committed to the following measures to mobilize domestic revenues, rationalize expenditures, and avoid expensive non-concessional financing:

  • Tax and non-tax measures. Under the SMP, Parliament approved a series of the new tax legislation, including the revised general tax code and tax penalty regime and the new VAT bill. In addition, we submitted the revised custom code, which is pending approval by Parliament. In 2022, we promulgated a tax package to simplify and enhance transparency of the tax system and fully implemented the Kontaktu system for electronic filing of tax returns. All these measures are expected to support our revenue mobilization targets. To further accelerate revenue mobilization and modernize the tax regime, we will submit to Parliament the revised law on the general exemption regime (SB, end-December 2023) and the revised income tax and stamp duties bills (SB, end-June 2025). We will also implement the new VAT law and the action plans for improving the custom and tax administrations with support from continued technical assistance of the IMF. To improve revenue generation from natural resources and its transparency, we will prepare an action plan to develop a register of resource rights holders and undertake diagnosis of the fiscal regime for natural resources (SB, end-June 2024).

  • Wage bill and expenditure controls. The government is committed to rationalize public expenditures, particularly in controlling of public salaries and incentives. To address the wage bill overrun in 2022, the government has taken a series of corrective actions, including total freezing of hirings, capping salary expenses for key ministries, the full inventory-taking of health and education facilities to assess the personal needs and identify irregular workers. In addition, we steamlined advisor positions by two-thirds (i.e., 51 people) at the Presidency, the Prime Minister's Office, the Presidency of the Parliament, the Presidencies of the Supreme and Audit Courts, and Prosecutor's Office. Furthermore, we dismissed health and education workers who were also working in the private sector. We will also take measures to strengthen payroll integrity, including through deployment of the blockchain solution as discussed in ¶18. The Council of Ministers approved the 2023 budget proposal consistent with the program parameters (Prior Action). The budget includes measures for the rationalization of the wage bill, containment of non-priority expenditures, tax expenditures controls, and suspensions of new infrastructure projects financed by non-concessional borrowing. We are strongly committed not to incur overspending except in the case of force majeure as mentioned in the WAEMU Directive N°06/2009/CM/UEMOA on Finance Laws.

  • Safeguarding priority spending and public investments. While the government is rationalizing wages and non-priority expenditures, we are committed to safeguarding priority spending on health, education and social sectors and public investments. Over the medium-term, social priority spending is projected to increase by 0.7 percentage points of GDP compared to the average of pre-Covid-19 period, as reflected in the program floor on social and priority spending. To enhance efficiency in public investments and ensure their consistency with the medium-term fiscal strategies and budgets, we will accelerate reforms of public investment management, including the creation of an excel-based medium-term Public Investment Project (PIP) database and centralization of all quantitative information included in the Fichas de Projecto (SB, end-December 2023).

Mitigating Fiscal Risks

13. To mitigate fiscal risk, government will enhance the SOE oversight and strengthen the management and operations of the Electricidade e Aguas da Guinea-Bissau (EAGB). As the first step, we will create by a ministerial order and implement the Technical Unit for Monitoring SOEs (UTAM) under the MoF to monitor and supervise SOEs (SB, end-March 2023). To increase transparency in the SOE sector, we will prepare and publish quarterly and annual reports on SOEs performance, starting with the most relevant SOEs (SB, end-June 2023 and end-December 2024). EAGB, which is facing financial and operational challenges, forms the most significant fiscal risk. We will prepare a report with strategies and action plans to reestablish the financial situation of EAGB. Its accounting department needs to internalize accounting and record-keeping functions and avoid outsourcing (SB, end-September 2023). We are also receiving assistance from the World Bank to revamp EAGB's management and operations and enhance the performance of the electricity sector.

Measures to Mitigate Debt Vulnerabilities

14. The government will mitigate debt vulnerabilities through a sustained fiscal consolidation and prudent borrowing policy. In 2021, total public debt of Guinea-Bissau is estimated to be 79 percent of GDP. The share of credits from the Fund, World Bank, and African Development Bank in total external public debt (40 percent of GDP in 2021) is limited to 40 percent in 2021. Although the share of all multilateral creditors in total external public debt is relatively high (79 percent in 2021), past reliance on non-concessional borrowing from the BOAD, which is the largest holder of external public debt, will be reduced significantly during the program. Through our commitments to the fiscal consolidation path and the zero ceiling on new non-concessional borrowing (except for the BOAD Development and Cohesion Fund), total public debt and external debt will decline steadily to 68 percent and 30 percent of GDP, respectively, by 2027.

15. The government is committed to clear part of outstanding domestic arrears and to avoid accumulating new ones. The government plans to start clearing the remaining stock of domestic arrears accumulated between 1974 and 1999 amounting to CFAF 12.2 billion in the coming years. With external technical support, the government intends to determine the true amount of any outstanding domestic arrears through further auditing, verifying full tax compliance of all creditors, and determining net government arrears after correcting for any tax obligations. This will allow the government to decide on a strategy towards clearing all outstanding domestic arrears over the medium term.

16. The government remains committed to solving all legacy external arrears and to avoid further accumulation. Agreements or settlements have been reached with Libya, Taiwan Province of China, Angola, and [Russia]. Negotiations with Brazil are also pending final approval from the Brazilian authorities. In November 2021, requests were sent to Pakistan to attempt resolving remaining external arrears. In addition, the government has joined the Debt Service Suspension Initiative (DSSI) and intend to explore debt reprofiling and restructuring with development partners if downside risks materialize.

17. The government will strengthen debt management. It will seek long-term technical assistance from international partners to improve its capacity for debt recording, monitoring and overall debt management including those of arrears and extrabudgetary and social security funds. The government has started publishing annual reports on debt (both external and domestic) covering debt service, disbursements and agreements. It also continues reporting to international debt statistics databases. To enhance public debt transparency, we will expand the coverage of the published annual debt bulletin to cover debt from the two largest SOEs that pose the largest fiscal risks (EAGB and the civil aviation authority) and publish quarterly debt bulletins that include central government debt and guarantees. To strengthen debt management and project prioritization, the government has been holding weekly coordination meetings between the Directorate Generals of Treasury and Debt and will implement the decree that reinforces their organizations.

18. The government will carefully plan new investments and contract future debt only on highly concessional terms. To ensure that the risk of debt stress remains manageable, the government will carefully rank investments based on cost-benefit analysis, including social considerations, and its impact on macroeconomic stability. Furthermore, the government will work in consultation with the IMF regarding the evaluation of the financial terms of new proposed loans. To avoid high interest payments in a situation of scarce government resources and weak debt management capacity, the government is also committed not to contract non-concessional loans. In line with this commitment, the government buttressed debt sustainability by using the 2021 IMF SDR allocation to repay non-concessional debt.

E. Governance and Management of Public Resources

19. The government will bolster efforts to reform Public Financial Management (PFM), which will strengthen accountability in the use of public resources.

20. Strengthening the cash management and implementation of the Treasury Single Account (TSA) will continue to be the key priority for fiscal governance reforms. Significant progress on cash management reforms has been achieved under the SMP, including the resumption of weekly Treasury Committee meetings, issuance of an order to define cash payment priorities, stock-taking of all public bank accounts, and requirements of the MoF authorization for opening a bank account. To further advance implementation of the TSA, we will establish an interface between the systems of the Treasury, BCEAO, and commercial banks and classify public bank accounts into those to be closed, maintained, or integrated into the TSA (SB, end-September 2023) These measures will lay the foundation for the MoF to pay all budgetary expenditure, particularly wages, from the TSA (SB, end-June 2024). To enhance the cash management functions, we will create a Cash Management Unit (CMU) and revise the Treasury Committee's mission to approve cash forecasts with a quarterly or longer horizon (SB, end-December 2023). Cash forecasting methodologies and process will be further revised by incorporating lessons learnt from the CMU's experience (SB, end-June 2025).

21. Ensuring the budget credibility and implementing the TSA hinge on better coordination and information flow between the MoF and revenue generating entities. As the first step, we will issue a ministerial order on the revised membership of the Treasury Committee including the active participation of the Ministry of Fisheries, which is one of the largest revenue generating ministries, to monitor the forecasted and actual revenue collection (SB, end-March 2023). We plan to roll out this coordination mechanism to all revenue generating entities in a sequenced manner. As a first step for ensuring transparency in fees and charges, we will issue a ministerial order to require all government entities to submit a tariff schedule of their fees and charges (including court and registry fees) (SB, end-March 2023). Based on the information submitted, we will publish a list of rates, scales and tariffs of all fees and charges collected by ministries and government agencies including the Judiciary and registers as part of the 2024 budget (SB, end-December 2023). Based on these results, we will require ministries and government agencies to publish the same list in their own websites and report the actual collection of their fees and charges during 2024. We will eventually require all fees and charges to be approved in the General State Budget and deposited into the TSA to ensure their complete transparency and efficient management.

22. Improving the payroll integrity will be a cornerstone for expenditure controls and fiscal governance. To support fiscal consolidation and wage bill controls mentioned above, we will speed up reforms to enhance the integrity of data on payroll spending, which comprises a majority of public spending. As the first step, we have approved additional measures to enforce the executive order to end irregular hiring of employees through requirements of authorization by the Ministries of Public administration and Finance for all hiring (Prior Action). We will approve a multiannual staffing plan for 2023-25 in line with program parameters and publish a report with the results of the full census of public servants and implementation of remedial actions on irregular workers (SB, end-June 2023). To ensure the payroll integrity, we will conduct quarterly reconciliation between the personnel and payroll records held by the Ministries of Finance and Public Administration (SB, end-March 2023). Deploying the IMF-supported blockchain project will ensure the integrity of the reconciliation process through an innovative digitalization technology. The integration of personnel and payroll records will be ultimately attained by development of the integrated human resource management system, which we aim to operationalize in the medium-term for implementing the public sector administration reform. To enhance transparency in wage spending, we will revise the chart of accounts to classify compensation of employees, which are currently included in wages and salaries, transfers, and other current expenditure, in accordance with the Government Finance Statistics Manual 2014. For non-wage spending, there has been recent progress in strengthening financial controls, including the approval of the new Manual on Public Expenditure Procedures and the pilot of a new process to certify delivery of goods and service before issuing payment orders. We will roll out this certification process to all ministries and government agencies to ensure accountability for public spending.

23. We will continue public procurement reforms to improve transparency, building upon our achievements under the SMP. During the pandemic, the government undertook major reforms for public procurement, including publication of beneficial ownership and other key information of all crisis-related contracts in the websites of the General Directorate for Public Tenders (DGCP) and the High Commission for COVID-19 and the approval of the decree on beneficial ownership of bidders of public procurement in April 2022. Our next focus will be implementation of this new decree, which expands publication of beneficial ownership information to all public contracts on the website of the DGCP. We will issue the guidelines for implementing this new decree, including formats for beneficial ownership information to be submitted in the bidding process (SB, end-March 2023). We will also hold a series of training sessions to sensitize the new decree to suppliers and procurement officers in ministries. To ensure the comprehensiveness of beneficial ownership publication, we will develop mechanisms to ensure the DGCP's access to all signed public contracts, including those for emergency procurement and direct purchases.

24. The government is committed to advancing external audits, which act as an essential check on public finances. To safeguard proper use of COVID-19 related funds, the government took a significant step towards revamping the roles of external audits. The High Commissioner for COVID-19 requested an audit of its COVID-19 related spending between June 2020 and August 2021, completed by the Audit Court, which published the audit report in June 2022. The independent third-party auditor has also completed an audit of all COVID-19 related spending between June 2020 and December 2021 with support of the Inspector-General of Finance, which published the audit report on the website (Prior Action). Subsequently, the Audit Court will undertake an external audit of all COVID-19 related spending where the results of the independent third-party audit are used as technical inputs in accordance with the Organic Law on the Audit Court. The Ministry of Finance has requested an audit of the irregular hiring process in 2021-22 (Prior Action), which the Audit Court will plan to complete in 2023. Building on these achievements, the Audit Court will undertake priority audits with full support of the government. The Audit Court will undertake a follow-up audit of EAGB by updating the results of the previous audit and publish the audit report by the end 2023. In addition, the MoF will finalize and submit the consolidated financial statements for 2017-2022 to the Audit Court, which will complete their audits in the medium-term.

25. We will take further actions to strengthen the AML/CFT effectiveness. In the February 2022 Mutual Evaluation Report (MER), the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) gave Guinea-Bissau low effectiveness ratings in all 11 criteria. With the goal of building broader access to BO information and addressing the concerns of the February 2022 GIABA MER, we will take the following priority actions; (i) preparing the national AML/CFT policy and action plan that addresses the risks identified in the national risk assessment (NRA) and the MER key findings by March 2023; (ii) requiring all legal persons registering at the Centre for Formalization of Enterprises (CFE) and at the Directorate General of Civil Identification, Registry and Notary (DGICRN) to submit a BO identification form similar to the one submitted as part of the tender process by end-June 2024; and (iii) preparing an action plan to strengthen risk-based AML/CFT supervision for financial institutions and designated non-financial businesses and professions (DNFBPs) by June 2023.

26. The government will accelerate reforms to strengthen the anti-corruption framework. Our short-term priorities include revamping the asset declaration regime, which will facilitate the identification of potential corruption cases. As the first step, we will resubmit to Parliament the law that reforms the asset declaration regime with the broader coverage and strengthened enforcement (SB, end-September 2023). To facilitate implementation, we will issue the guidelines for submission and publication of asset declarations, including their formats, by end-2023. Enhancing the independence and capacity of the anti-corruption institutions, including the Judicial Police, the Supreme Anti-Corruption Inspectorate, Prosecutor's Office will be essential to ensure the effectiveness of the anti-corruption framework. In 2024, we will prepare a national anti-corruption strategy based on updating the diagnosis of corruption risks. This strategy will prioritize legal and other reforms and inform medium-term resource planning of these institutions.

27. We will take actions to improve the rule of law and market regulations. The aforementioned PFM reform for extrabudgetary revenue will lay a foundation for improving access to the judicial services and public registries. As their fees are mostly extrabudgetary, bringing them onto the budget will be needed to control the level of fees to balance access to services and their costs. Furthermore, the government has established the Center for Access to Justice (CAJ), which has programs for supporting public access to the judicial system. To ensure the equal access particularly by population in the rural area, the government will roll out the CAJ's offices to two main provinces by the end 2023. We will also improve access to legislation and judicial decisions and enhance population's understanding of the law through development of an online platform and sensitization programs. To develop property registration, which is essential to protect economic rights, the government will prepare a medium-term action plan that improves cadaster coverage by surveying broader land areas, and digitalization of property registers to improve public access. In addition, to improve the public access and support beneficial ownership disclosures, we will prepare an action plan to complete digitalization of the companies' register maintained by the CFE.

F. Measures to Strengthen the Financial Sector

28. The government will continue to make efforts that preserve the stability of the financial sector and is committed to a successful disengagement strategy for a large, undercapitalized bank. The council of ministers approved an offer of a strategic investor to buy the government stake and capitalize the institution to comply with regulatory standards. The government is monitoring the due diligence process on the offer and the timeline of the recapitalization by the investor, which will subsequently be submitted to the Regional Banking Comission for the evaluation. We settled arrears owed by the govenrment to borrowers from the undercapitalized bank. In case the operation does not materialize, the government is commited to an additional SB to implement the 2022 Article IV recommendations by end-December 2023: (i) providing the financial information requested by the IMF including to request an assessment of the bank's financial position and a full independent audit of all loan portfolio including NPLs from a third-party auditing firm; (ii) preparing a report that reconsiders a viable government's plan for disengaging from the undercapitalized bank by 2024 and (iii) implementing the recommendations of the Banking Commission.

G. Risks and Contingencies

29. The government stands ready to adjust policies if risks materialize. Downside risks to the program include growth and inflation setbacks from domestic political risks and weak state capacity, disappointing cashew nut exports, materialization of climate and health hazards, extreme tightening financial conditions in the regional market, and geopolitical tensions which could further impact food and oil prices and donor support. A further tightening of global financial conditions and worsening of debt risks would further constrain access to financing. Financial stress in SOEs and fragility in the situation of the undercapitalized bank could also generate contingent liabilities. If these risks materialize, we stand ready to adjust our policies, in close consultation with IMF staff, to ensure the achievement of the program's objectives. These policies could include further rationalization of non-priority expenditures, domestically financed investment and requests for additional support from development partners.

H. Improving Economic Statistics

30. The government is committed to improve the National Statistical Institute (INE) and improve national accounts and government finance statistics. To strengthen the institutional capacity of the INE, we will approve the bylaw that implements the new statistics law and enhances the organizational structure and human and technological resources of the INE. Following recommendations from IMF technical assistance, the government aims to improve the quality and timeliness of economic data.

31. We will implement the Enhanced General Data Dissemination System (e-GDDS) to strengthen transparency. The participation in this initiative will support our efforts to publish, in a timely manner, key macroeconomic and financial data which are aligned with the common indicators required for IMF surveillance. In addition, the e-GDDS will contribute to enhancing interagency coordination and statistical development in support of our program objectives.

I. Program Design, Financing and Monitoring

32. The ultimate responsibility of program monitoring and coordination will rest with the Ministry of Finance (MF). To ensure coordinated implementation of the program, the MF will consult with the other public institutions involved in meeting program objectives to track progress on various targets and reforms under the program. Similarly, the MF will provide oversight responsibility to ensure that public spending complies with budget limits.

33. The program will be monitored by the IMF Executive Board. Assessment will be on a quarterly basis until June 2023 and thereafter on a semi-annual basis using bi-annual performance criteria (end-June and end-December) and continuous performance criteria for end-January 2023, end-March 2023, end-June 2023, and end-December 2023, and indicative targets for end-December 2022 and end-September 2023 as presented in Table 1. To monitor progress on the structural reforms previously described, structural benchmarks are presented in Table 2. Detailed definitions and reporting requirements for all performance criteria and indicative targets are presented in the Technical Memorandum of Understanding (TMU). The TMU also defines the scope and frequency of data to be reported for program monitoring purposes and presents the projected assumptions that form the basis for some of the performance assessments. The first three reviews will take place on or after April 17, 2023; July 17, 2023; and October 17, 2023. To this end, the government plans to:

  • i. Refrain entering new external borrowing contracts at non-concessional rates, except for disbursements from the Development and Cohesion Fund of the West African Development Bank as mentioned in TMU ¶5;

  • ii. Adhere to the quantitative performance criteria (QPC) on the floors on domestic tax revenues, the domestic primary budget balance and social and priority spending, the ceiling on wages and salaries, and the zero ceilings on new non-concessional external debt contracted or guaranteed by the public sector (continuous criterion), new external payments arrears (continuous criterion), new domestic payments arrears, and non-regularized expenditures;

  • iii. The government will prepare an external borrowing plan to facilitate assessment of the QPCs on external debt;

  • iv. Agree not to: (1) introduce or intensify restrictions on payments and transfers for current international transactions; (2) introduce or modify multiple currency practices; (3) enter into bilateral payment agreements that are inconsistent with Article VIII of the IMF Articles of Agreement; and (4) introduce or intensify import restrictions for balance of payments purposes; and

  • v. Adopt any new financial or structural measures that may be necessary for the success of its policies, in consultation with the IMF.

34. Financing needs for the 2023 are fully covered, and the government expects that the ECF-supported program will catalyze additional sources during the rest of the program. We expect additional budget support from other development partners including from the World Bank and the African Development Bank over the program period.

35. The government believes the policies specified in this MEFP provide a foundation for sustaining growth, lower inflation, and a reduction in poverty, and we stand ready to take additional measures if required. The government will provide IMF staff with the information needed to assess progress in implementing our program as specified in the TMU and will consult with IMF staff on any measures that may be appropriate at the initiative of the government or whenever the IMF requests a consultation. The government intends to make this MEFP and the TMU available to the public. In this context, it authorizes the IMF to post the MEFP and the TMU on the IMF website, after Executive Board approval.

36. Accordingly, the government is requesting Board approval of the policies set forth in the MEFP, and disbursement of the first loan installment, totaling SDR 2.37 million, out of a total three-year arrangement of SDR 28.4 million.

Table 1.

Guinea-Bissau: Quantitative Performance Criteria (QPCs) Under the Extended Credit Facility, 2022-23

(Cumulative from beginning of calendar year to end of month indicated, CFAF billion, unless otherwise indicated)

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These apply on a continuous basis.

The ceiling will be adjusted upward by the amount of financing from the BOAD Development and Cohesion Fund in accordance with TMU ¶7.

Defined as spending by the Ministries of Health, Education and the Ministry of Women, Family and Social Cohesion.

Excludes grants, foreign and BOAD financed capital spending, and interest.

Excludes IMF disbursements.

Table 2.

Guinea-Bissau: Prior Actions and Structural Benchmarks

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1 Annual and quarterly reports starting in June 2023 and December 2024 respectively.

Attachment II. Technical Memorandum of Understanding

Introduction

1. This memorandum sets out the understandings between the Bissau-Guinean authorities and the International Monetary Fund (IMF), regarding the definitions of the Quantitative Performance Criteria (QPCs), Indicative Targets (ITs) and structural benchmarks (SBs) supported by the Extended Credit Facility (ECF) arrangement, as well as the related reporting requirements. Unless otherwise specified, all quantitative targets will be evaluated in terms of cumulative flows from the beginning of the period, as specified in Table 1 of the Memorandum of Economic and Financial Policies (MEFP).

2. Program exchange rates1. For the purpose of the program, foreign currency denominated values for 2022 and 2023 will be converted into local currency (CFAF) using program exchange rates of, respectively, CFAF 554.2 and 659.0/US$ and cross rates as of end-December 2022 and 2023.

Quantitative Performance Criteria/Indicative Target

A. Total Domestic Tax Revenue

3. Definition. Tax revenue is defined to include direct and indirect taxes as presented in the central government financial operations table.

B. Wage Bill

4. Definition. For the purpose of program monitoring, the wage bill is defined to include (i) personnel expenditure (“despesas de pessoal”), such as staff salaries and benefits, subsidies, and gratuities, and (ii) 50 percent of transfers to embassies. These definitions are as presented in the central government financial operations table.

C. New Non-Concessional External Debt Contracted or Guaranteed by the Central Government

5. Definition of Central Government. Central government is defined for the purposes of this memorandum to comprise the central administration of the Republic of Guinea-Bissau and does not include any local administration, the central bank nor any other public or government-owned entity with autonomous legal personality not included in the government flow-of-funds table (TOFE).

6. Definition. Those are defined as all forms and maturities of new non-CFAF denominated debt contracted or guaranteed by the central government and CFAF denominated debt contracted with BOAD. For program purposes, a debt is considered to be contracted when all conditions for its entry into effect have been met, including approval by the Minister of Finance.2 For this purpose, new non-concessional external debt will exclude normal trade credit for imports and other debt denominated in CFAF, but will include domestically held foreign exchange (non-CFAF) debts. This QPC applies not only to debt as defined in the Guidelines on Public Debt Conditionality in Fund Arrangements attached to Decision No.16919-(20/103), adopted October 28, 2020, point 8 but also to commitments contracted or guaranteed for which value has not been received. Excluded from this QPC are disbursements from the IMF and those debts subject to rescheduling or for which verbal agreement has been reached. This QPC will apply on a continuous basis. For program purposes, a 'guaranteed debt' is an explicit promise by the public sector to pay or service a third-party obligation (involving payments in cash or in kind).

7. Adjustor. The ceiling on new non-concessional external debt contracted or guaranteed by the central government will be adjusted upward by the amount of financing of the following projects from the Development and Cohesion Fund (“Le Fonds de Développement et de Cohésion”) of the West African Development Bank (BOAD) up to the amounts respectively mentioned;

  • a. The establishment of the National Financing Fund for Small and Medium-size Enterprises – up to CFAF 10 billion cumulative during the program period;

  • b. The construction of the Bissau General Hospital – up to CFAF 10 billion cumulative during the program period;

  • c. The development of urban roads in the City of Bissau – up to CFAF 10 billion cumulative during the program period;3 provided that the ceiling may be adjusted upward only up to CFAF 10 billion per year.

8. Concessionality. For program purposes, a debt is concessional if it includes a grant element of at least 35 percent, calculated as follows: the grant element of a debt 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. For debts with a grant element equal or below zero, the PV will be set equal to the nominal value of the debt. The discount rate used for this purpose is the unified discount rate of 5 percent set forth in Executive Board Decision No. 15248-(13/97). For debts carrying a variable interest rate in the form of a benchmark interest rate plus a fixed spread, the PV of the debt would be calculated using a program reference rate plus the fixed spread (in basis points) specified in the debt contract. The program reference rate for the six-month USD Secured Overnight Financing Rate (SOFR) is 1.56 percent and will remain fixed for the duration of the program. Where the variable rate is linked to a benchmark interest rate other than the six-month USD SOFR, a spread reflecting the difference between the benchmark rate and the six-month USD SOFR will be added.

9. Reporting requirement. 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.

D. New External Payment Arrears of the Central Government

10. Definition. For the purposes of this quantitative target, external payment arrears, based on the currency test, are debt service payments that have not been paid on due dates (taking into account the contractual grace periods, if any) and that have remained unpaid 30 days after the due dates. Arrears not to be considered arrears for the quantitative target, or “non-program” arrears, are defined as: (i) arrears accumulated on the service of legacy HIPC external debt for which there is a pre-existing request for rescheduling or restructuring; and/or (ii) the amounts subject to litigation. For the purposes of this QPC, central government is as defined in paragraph 8 above. This QPC will apply on a continuous basis effective on the date of approval of the ECF arrangement.

E. New Domestic Arrears of Central Government

11. Definition. Domestic arrears are defined as CFAF-denominated accounts payable (resto-a-pagar) accumulated during the year, and still unpaid by one month after the quarter for wages and salaries (including pensions), and three months for goods, services and transfers. Domestic arrears also include CFAF-denominated debt service payments that have not been paid on due dates (taking into account the contractual grace periods, if any) and that have remained unpaid 30 days after the due dates. For the purposes of this QPC, central government is as defined in paragraph 8 above.

F. Social and Priority Spending

12. Definition. Social and Priority spending is defined to include spending in the Ministries of Health, Education and the Ministry of Women, Family and Social Cohesion.

G. Domestic Primary Balance (Commitment Basis)

13. The domestic primary fiscal deficit on a commitment basis is calculated as the difference between government revenue and domestic primary expenditure on commitment basis. 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 and capital expenditure financed by project loans or grants. 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.

H. Non-Regularized Expenditure (DNTs)

14. Definition. Any treasury outlay not properly accounted for by the National Budget Directorate and/or not included in the budget.

15. Reporting requirement. The government will report any non-regularized expenditures on a continuous basis within one week of realization.

Program Monitoring

16. Program performance will be monitored via two quarterly reviews followed by five biannual reviews of quantitative targets and structural benchmarks. The first performance criteria will be set for January 31, 2023, and the review is expected to be completed by mid-April 2023. The second test date will be March 31, 2023, and the review is expected to be completed by mid-July 2023. The third test date will be June 30, 2023, and the review is expected to be completed by mid-October 2023. The fourth test date will be December 31, 2023, and the review is expected to be completed by mid-April 2024. The fifth test date will be June 30, 2024, and the review is expected to be completed by mid-October 2024. The sixth test date will be December 31, 2024, and the review is expected to be completed by mid-April 2025. The seventh test date will be June 30, 2025, and the review is expected to be completed by mid-October 2025.

Table 1.

Guinea-Bissau: Summary of Reporting Requirements

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1 Directorate General for Projections and Economic Studies 2 Ministry of Finance 3 Central Bank of West African States
1

The Country Engagement Strategy, summary of which is included in Annex I, is prepared on a basis of the IMF Strategy for Fragile and Conflict-Affected States.

2

See IMF Country Report No. 22/196 for diagnosis on rising food insecurity (Box 1, p. 5).

3

See IMF Country Report No. 21/172 for measures implemented (p.6) by the authorities and the regional central bank to fight the spread of COVID-19 and support the economy.

4

More details in IMF Country Report No. 22/42, Annex IV, pp. 38-39

5

From IMF RCF and the World Bank. More details in the DSA.

6

In 2021, the domestic banking sector held 9 percent of its total assets in central and local government debt while their exposure to SOEs was only 2 percent.

7

The 2022 Article IV staff report estimates the potential growth of GNB to be around 4.5 percent. The medium-term growth of five percent assumes political stability and modest recovery of private sector consumption and investment to fill output gaps gradually by 2027. Governance reforms are estimated to yield an additional 3/4 percentage point in annual transitional growth conditional on Guinea-Bissau reaching the average level of SSA countries in terms of the corruption index. In the long-term horizon 2032-47, potential growth is estimated conservatively to converge to about 4 percent.

8

As a short-term policy responses to food insecurity and climate shocks, the WFP implements a feeding program for 150,000 school children combined with a support to smallholder farmers associations to supply fresh food to schools. See Box 1 and 2022 Article IV Consultation and Third Review of the SMP (Annex IX)

9

A possible delay in restructuring of the undercapitalized bank may have limited impact on the growth as the lending capacity has been constrained by high NPLs and negative capital. In contrast, a possible disruption of power supply in case of materialization of SOE fiscal risks may have substantial impact on the growth, domestic revenue mobilization, and political stability.

10

A revised custom code is pending Parliament approval.

11

The Capacity Development Strategy for Guinea-Bissau is included in Annex VII.

12

The new census will be conducted within the framework of the World Bank project on capacity building in the public sector.

14

In line with the IMF's Debt Limits Policy (DLP) for countries at high risk of external debt distress and with no significant access to international financial markets, the performance criterion on non-concessional borrowing has been set at zero. Given the authorities' lack of technical capacity to monitor a PV limit due to staffing constraints, limited hiring potential, and high turnover, new concessional borrowing is monitored as a memorandum item.

16

Available at the government website.

19

The first two reviews and disbursements will be on a quarterly basis because higher political and economic uncertainty during the period leading to the legislative election calls for more closer monitoring.

20

Staff will consider proposing conversion of QPC on the wage bill into an IT after the first year of program performance in consultation with departments.

21

Reforms initiated during the SMP including further steps to implement a TSA, improve cash management, control the wage bill, and strengthening SOE's risk management. The SBs on wage bill management would be further refined based on the findings of the IMF wage bill management TA mission in September 2022.

1

The Risk Assessment Matrix (RAM) shows events that could materially alter the baseline path (the scenario most likely to materialize in the view of IMF staff). The relative likelihood is the staff's subjective assessment of the risks surrounding the baseline (“low” is meant to indicate a probability below 10 percent, “medium” a probability between 10 and 30 percent, and “high” a probability between 30 and 50 percent). The RAM reflects staff views on the source of risks and overall level of concern as of the time of discussions with the authorities. Non-mutually exclusive risks may interact and materialize jointly. The conjunctural shocks and scenario highlight risks that may materialize over a shorter horizon (between 12 to 18 months) given the current baseline. Structural risks are those that are likely to remain salient over a longer horizon.

1

This Annex provides update of Annex IX in IMF Country Report No. 22/196.

2

World Bank, “Public Expenditure Review for Guinea-Bissau”, November 2022, pp.87-115.

1

See Annex VI for comprehensive information on CD strategies in the context of the Country Engagement Strategy (see Annex I for summary).

1

Impact of this new measure is uncertain at this stage and will be assessed over the course of ECF supported program.

2

Portugal and France provided budget support of CFAF 3.3 billion each in 2022.

3

The report can be found at the Ministry of Finance's website.

1

The source of the cross-exchange rates is International Financial Statistics.

2

Contracting of credit lines (which can be drawn at any time and entered into effect) with no predetermined disbursement schedules or with multiple disbursements will be also considered as contracting of debt.

3

These projects have been included in the National Development Plan 2020-2023. In consultation between key development partners, including the World Bank and BOAD, no alternative concessional financing was found for these projects.

Other IMF Content

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Cover IMF Staff Country Reports
Guinea-Bissau: Request for a Three-Year Arrangement Under the Extended Credit Facility-Press Release; and Staff Report
Author:
International Monetary Fund. African Dept.
Volume/Issue:
Volume 2023: Issue 087
Publisher:
International Monetary Fund
ISBN:
9798400234361
ISSN:
1934-7685
Pages:
105
DOI:
https://doi.org/10.5089/9798400234361.002
  • <sup><xref rid="RA001txfig01" ref-type="fig">Text Figure 1.</xref></sup>
    View in gallery
    Text Figure 1.

    Guinea-Bissau: Domestic Primary Balance with and without Specific Fiscal Measures

    (Percent of GDP)

  • <sup><xref rid="RA001fig01" ref-type="fig">Figure 1.</xref></sup>
    View in gallery
    Figure 1.

    Guinea-Bissau: Capacity to Repay Indicators Compared to UCT Arrangements for PRGT Countries

    (In percent of the indicated variable)

  • Figure 2.
    View in gallery
    Figure 2.

    Guinea-Bissau: Growth and Living Standards

  • Figure 3.
    View in gallery
    Figure 3.

    Guinea-Bissau: Global Economic Developments

  • Figure 4.
    View in gallery
    Figure 4.

    Guinea-Bissau: COVID-19 Pandemic, Activity and Prices

  • Figure 5.
    View in gallery
    Figure 5.

    Guinea-Bissau: Fiscal, External and Monetary Developments

  • <sup><xref rid="RA001app2fig01" ref-type="fig">Figure 1.</xref></sup>
    View in gallery
    Figure 1.

    EAGB Revenue and Expenditure, 2021 January-September

    (Billion CFAF)

  • <sup><xref rid="RA001app2fig02" ref-type="fig">Figure 2.</xref></sup>
    View in gallery
    Figure 2.

    EAGB Revenue and Expenditure, 2022 January-September

    (Billion CFAF)

Text Figure 1.

Guinea-Bissau: Domestic Primary Balance with and without Specific Fiscal Measures

(Percent of GDP)
Figure 1.

Guinea-Bissau: Capacity to Repay Indicators Compared to UCT Arrangements for PRGT Countries

(In percent of the indicated variable)
Figure 2.

Guinea-Bissau: Growth and Living Standards
Figure 3.

Guinea-Bissau: Global Economic Developments
Figure 4.

Guinea-Bissau: COVID-19 Pandemic, Activity and Prices
Figure 5.

Guinea-Bissau: Fiscal, External and Monetary Developments
Figure 1.

EAGB Revenue and Expenditure, 2021 January-September

(Billion CFAF)
Figure 2.

EAGB Revenue and Expenditure, 2022 January-September

(Billion CFAF)