IMF Executive Board Completes First Review Under Extended Credit Facility for Guinea-Bissau and Approves US$3.71 Million DisbursementPress Release No. 10/492
December 14, 2010
The Executive Board of the International Monetary Fund (IMF) has completed the first review of Guinea-Bissau’s economic performance under its program supported by the Extended Credit Facility (ECF) arrangement. Completion of the review, on December 13, 2010, enables the immediate disbursement of SDR 2.414 million (about US$3.71 million), bringing total disbursements under the arrangement to SDR 10.295 million (about US$15.83 million).
The Executive Board approved a three-year, SDR 22.365 million (about US$33.4 million) ECF arrangement for Guinea-Bissau on May 7, 2010 (see Press Release No. 10/185). Guinea-Bissau became a member of the IMF on March 24, 1977 and has a Fund quota of SDR 14.2 million.
The Executive Board also agreed, in principle, that Guinea-Bissau has taken the steps necessary to reach its completion point under the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative. This decision on the HIPC completion point is contingent upon the Executive Board of the World Bank’s International Development Association (IDA) reaching a similar decision at a meeting scheduled for December 16, 2010, after which a joint press release will be issued.
Following the Executive Board’s discussion of Guinea-Bissau, Mr. Murilo Portugal, Deputy Managing Director and Acting Chair, said:
“The authorities’ commitment to sound policies has been crucial in maintaining macroeconomic stability in Guinea-Bissau amid challenging political and financial circumstances. Performance under the ECF-supported program has been satisfactory and substantial progress with structural reforms has been achieved. Benefitting from a rebound in the price of cashew, growth is expected to accelerate slightly in 2010, while inflation is projected to be within the West African Economic and Monetary Union (WAEMU) target.
“The government had to adjust its 2010 fiscal plans to make up for a shortfall in budget support. The 2011 fiscal framework is realistic and consistent with available financing. The budget contains strong revenue increasing and spending control measures. Continued discipline on budget execution will be critical to achieving the authorities’ fiscal objectives.
“Fiscal reforms in 2011 will aim at mobilizing more revenues and strengthening public financial management, including debt management. These reforms should help create more fiscal space for priority spending to support economic growth and poverty reduction. To make decisive progress toward the Millennium Developments Goals, further concerted efforts will be needed to secure sufficient concessional financing in the coming years, including budget support from development partners.
“Guinea-Bissau has qualified for debt relief, including topping up assistance, but its debt ratios remain high, and the authorities are committed to meeting their external financing needs through grants and highly concessional loans. Going forward, the authorities intend to build on their recent efforts to normalize relations with all external creditors and to maintain their commitment to the successful implementation of economic reforms.”