IMF Staff Concludes Visit to Guinea-Bissau
IMF News, January 23, 2018
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- Published: January 23, 2018
Visit purpose and participants
- IMF team led by Tobias Rasmussen visited Guinea-Bissau from January 17-23, 2018.
- Objectives:
- Evaluate the draft 2018 budget.
- Assess the fiscal and debt implications of an intended scaling up of infrastructure investments.
- Discuss recent developments in the banking sector.
- The team met with President José Mário Vaz, Public Prosecutor General Bacar Biai, Minister of Finance João Fadia, Central Bank of West African States (BCEAO) National Director Helena Nosolini Embaló, other high level officials, and representatives of the private sector and the donor community.
Macroeconomic assessment and key statistics
- Economic activity remains buoyant, supported by effective fiscal management.
- Inflation has remained low.
- Tax revenue is rising robustly.
- Real GDP growth appears continuing near the 2017 pace of around 5.5 percent.
- Pickups in public and private investment are providing new growth impetus, compensating for a likely levelling off in cashew prices following last year’s sharp increases.
2018 budget and fiscal outlook
- The draft 2018 budget reflects increased revenue mobilization and targets higher-priority spending.
- The 2018 budget approved by the Council of Ministers:
- Contains the overall deficit below 3 percent of GDP.
- Would enable a roughly 3 percentage point of GDP increase in spending, mainly on infrastructure investment.
- A number of investment projects are yet to be fully integrated into budget planning.
Investment scaling-up: benefits and risks
- Findings:
- The scaling up of investment is welcome and could help address critical gaps in the country’s infrastructure.
- Risks and management requirements:
- The process needs to be carefully managed.
- Achieving intended developmental effects depends on proper planning and execution, with due regard to capacity and debt carrying constraints.
Financial sector issues and recommendations
- Vigilance is needed to ensure a sound financial sector that supports sustainable economic growth.
- This includes:
- Effective banking supervision.
- Monitoring of prudential norms.
Next steps
- The team expects to return to Bissau in March to initiate discussions with the authorities for the fifth review of the ECF-supported program.
Press Release No. PR18/21, January 23, 2018.