Press Release No. 11/226

Press Release No. 11/226
June 9, 2011

An International Monetary Fund (IMF) mission led by Mr. Paulo Drummond visited Bissau June 6–10, 2011. The mission met with President Malam Bacaí Sanhá, Prime Minister Carlos Gomes Junior, Minister of Finance José Mario Vaz, Minister of Public Services Fernando Gomes, other government ministers and representatives of the private sector, the donor community, and other development partners.

At the conclusion of the visit, the mission issued the following statement:

“The near term economic growth outlook remains generally positive. The economy is benefitting from a good cashew harvest and high prices for cashew exports, and real GDP growth is projected at 4.3 percent in 2011. Although prices for imported fuel and food have risen, core inflation remained subdued, and headline inflation should come back within the West African Economic and Monetary Union (WAEMU) target range in 2012 once the one-off effect of rising import prices subsides.

“Performance under the Fund-supported program has been broadly satisfactory, and economic reforms have advanced as expected. Strong fiscal revenues should help the government restore its investments and other priority spending while keeping domestic financing of the budget within agreed limits. In the second half of the year, it will be critical that the authorities contain spending within available resources and sustain efforts to raise government’s own revenue.

“The authorities are advancing in completing the remaining debt relief process. Following the recent agreement with Paris Club creditors, the authorities are moving to finalize the relevant bilateral agreements and reaching out to non-Paris Club creditors seeking comparable treatment.

“An IMF mission will return to Bissau later in the year to evaluate performance under the ECF through the first half of the year and to agree with the authorities on the budget and other macroeconomic policies for 2012. Mr. Alfredo Torrez, the new IMF Resident Representative in Guinea-Bissau, will ensure our continued presence on the ground.

“The IMF Executive Board completed on May 24 the second review under Guinea-Bissau’s Extended Credit Facility (ECF)¹ arrangement. The Board's decision enabled the authorities to draw an additional SDR 2.414 million (about US$ 3.85 million), bringing total disbursements under the arrangement to an amount equivalent to SDR 12.709 million (about US$ 20.27 million).”

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¹ The ECF is a concessional IMF facility for low-income countries. ECF-supported programs are based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners and articulated in the country's Poverty Reduction Strategy Paper. ECF loans carry a zero interest rate until end-2011 and an annual interest rate of no more than 0.5 percent thereafter. The loans are repayable over 10 years with a 5½ -year grace period on principal payments.