IMF Staff Completes Virtual Mission for the First Review of a Staff-Monitored Program to Guinea Bissau

IMF News, October 11, 2021

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Canonical URL: IMF Staff Completes Virtual Mission for the First Review of a Staff-Monitored Program to Guinea Bissau

IMF staff team, led by Mr. Jose Gijon, held virtual meetings with the authorities from September 28 to October 11, 2021, to conduct the first review of the 9-monthStaff-Monitored Program(SMP).
The review assesses efforts to build a policy track record towards a possible Extended Credit Facility(ECF) arrangement in 2022.
A staff-level agreement was reached on the completion of this first review, subject to IMF management approval.
Statement emphasizes that views are those of IMF staff and do not necessarily represent the IMF’s Executive Board; the mission will not result in a Board discussion.

Progress on the Staff-Monitored Program (SMP) reform agenda has been satisfactory despite difficult socio-economic conditions compounded by the COVID-19 pandemic.
Structural benchmarks and most quantitative targets have been met.
Authorities achieved relatively high levels of vaccination compared to other Sub-Saharan African countries, despite very constrained resources.

Economic recovery continued in 2021 and the medium-term outlook remains strong.
Inflation should remain subdued and below the 3 percent regional threshold of the Western Africa Economic and Monetary Union (WAEMU).
Fiscal budget deficit is expected to be contained to 5.2 percent of GDP in 2021, in line with the program objectives.
The IMF team and authorities agreed on policy measures for the 2022 budget intended to bring the projected fiscal deficit down to about 4 ½ percent of GDP in 2022.
Fiscal deficit is projected to gradually converge to the WAEMU regional deficit norm of 3 percent of GDP by 2025.

Recommendation to avoid arrears accumulation and the use of expensive non-concessional borrowing in 2021 budget execution and 2022 budget design, given public debt already above the WAEMU convergence pact limit.
Emphasis on focusing on revenue mobilization and expenditure containment measures, including more efficient management to contain any increase of the wage bill and lower debt interest payment.
Debt interest payment represented 20.5 percent of tax revenue in 2020; wage bill represented 80 percent of tax revenue in 2020.
Attracting external grants will be key to cover government current expenses.
Authorities decided to use most of the recent SDR 27.2 million allocation to Guinea Bissau (about US$ 38.4 million) to buttress debt sustainability by repaying non concessional debt, notably to BOAD, and allocate the remaining amount to supporting COVID-related spending, including vaccination and improvement in health services.

Success of the IMF program hinges on meeting strong governance commitments to enhance public finance transparency, accountability and efficiency.
Measures aim to guarantee that expenditure decisions impacting the budget are exclusively authorized by the Ministry of Finance in accordance with existing legislation.
Specific governance and transparency measures related to COVID-19 spending include:
- Completion of an independent audit of crisis-mitigation spending.
- Publication of the related report along with regular expenditure reports.
- Publication of procurement contracts mentioning awarded companies and beneficial owners.
- Publication of ex-post reports on validation of delivery of goods and services.
IMF will support implementation through provision of adequate capacity development.
IMF staff will continue supporting authorities’ efforts to reach out to other international partners to mobilize concessional financing for the reform program.

The IMF team met with:
- H.E. President Sissoco Embaló
- Vice-Prime Minister Sambú
- Finance Minister Fadiá
- BCEAO National Director Embaló
- President of the Court of Auditors Baldé
- High Commissioner for COVID-19 Robalo
- Officials from the Ministries of Finance, Economy, Public Administration, the National Directorate of the BCEAO, the National Institute of Statistics, the FIU and other officials
- Representatives from development partners
The team thanked the authorities for openness and constructive discussions and looks forward to continuing close cooperation.

IMF Communications Department — End-of-Mission press release, October 11, 2021.