On July 6, 2017, the Executive Board of the International Monetary Fund (IMF) completed the third review of Guinea-Bissau’s economic performance under the program supported by an Extended Credit Facility (ECF) arrangement. The completion enables the release of SDR3.03 million (about US$4.1 million), bringing total disbursements under the arrangement to SDR10.98 million (about US$15.2 million). The Executive Board’s decision was taken on a lapse-of-time basis. [1]

Guinea-Bissau’s three-year ECF arrangement for SDR 17.04 million (60 percent of quota) was approved by the Executive Board on July 10, 2015 (see Press Release No. 15/331 ). The ECF-supported program aims to restore macroeconomic stability and improve efficiency in public service delivery to foster inclusive growth while protecting social spending.

Program implementation for the third review has been satisfactory. Four of five performance criteria, three of four indicative targets, and six of eight structural benchmarks were met. Corrective measures have been taken in the remaining areas, with several steps already completed.

Economic activity has remained robust and there has been good progress in improving public financial management. Supported by favorable terms of trade developments and increased construction, real GDP grew by an estimated 5.1 percent in 2016 while consumer price inflation averaged 1.5 percent. Solid growth along with improvements in administration have helped boost tax revenue, and expenditure controls have been strengthened. The outlook is broadly favorable, with growth projected at 5 percent in 2017–18, but subject to significant risks stemming primarily from political fragility and an undiversified export base.

Maintaining the positive economic momentum will require further strengthening of public financial management to reduce the fiscal deficit and support macroeconomic stability. Firm action is also needed to address weaknesses in the banking system, and fundamental reform of the power sector is necessary to stem losses and improve supply. To boost investment and improve public service delivery, it will further be important to strengthen anti-corruption efforts, improve statistics and enhance transparency, and promote healthy competition in the private sector.