IMF Executive Board Completes the Sixth Review under the Extended Credit Facility Arrangement for Guinea-Bissau and Approves US$7.3 Million Disbursement

IMF News, August 28, 2024

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Canonical URL: IMF Executive Board Completes the Sixth Review under the Extended Credit Facility Arrangement for Guinea-Bissau and Approves US$7.3 Million Disbursement

The Executive Board completed the sixth review under Guinea-Bissau’s Extended Credit Facility (ECF) arrangement (three-year arrangement, approved on January 30, 2023).
Immediate disbursement: SDR5.44 million (about US$7.3 million) to help meet the country’s financing needs.
Total disbursement under the arrangement to date: SDR 24.88 million (about US$ 33.44 million).
The Executive Board granted an augmentation of access (140 percent of quota or SDR 39.76 million) on November 29, 2023.
The Board granted a waiver of nonobservance of:
- the end-April 2024 quantitative performance criterion on the floor on social and priority spending; and
- the continuous quantitative performance criterion on the ceiling on the accumulation of new external payment arrears.
The Executive Board completed the financing assurances review.

Program performance in the sixth review: Seven out of nine Quantitative Performance Criteria (QPC) and both Indicative Targets were met for April 2024.
Missed targets:
- QPC on external payment arrears missed due to technical arrears in external debt service.
- Continuous structural benchmark (SB) on debt service missed due to technical arrears.
- QPC on social priority spending missed due to delayed external project grants (expected to materialize in coming months).
Recommendation to avoid recurrence of external arrears: strictly adhere to the revised continuous SB which incorporates a corrective action.

Economic growth projection for 2024: 5 percent.
Inflation projection for 2024: 4.2 percent (compared to 7.2 percent in 2023).
Current account deficit expected to narrow to 6.1 percent of GDP.
Authorities’ target: achieve the domestic primary deficit target of 1.2 percent of GDP in 2024 to put public debt on a firm downward trajectory.
Near-term risks highlighted: challenging socio-political climate, terms-of-trade shocks, high inflation persistence, and tightening of regional financial conditions raising borrowing costs.

Continue ambitious structural reform agenda to:
- improve domestic revenue mobilization;
- strengthen expenditure controls; and
- enhance governance, including transparency in public procurement and beneficial ownership information.
Fiscal consolidation measures emphasized:
- strict rationalization of non-priority expenditure;
- strengthen expenditure controls through the Technical Committee of Arbitration of Budgetary Expenditure (COTADO);
- containment of wage bill spending;
- focus revenue mobilization on reducing tax expenditures and strengthening revenue administration;
- continue engaging donors for additional budget support and grants to finance social priority spending.
Financial sector and public enterprise recommendations:
- take urgent actions to mitigate fiscal risks from the public utility company;
- continue advancing the disengagement of the undercapitalized bank, including through contingency planning;
- strengthen debt management procedures to avoid incurrence of technical arrears.
Anti-corruption and AML/CFT recommendations:
- improve governance, especially transparency in public procurement and beneficial ownership information, as essential steps to improve anti-corruption and AML/CFT effectiveness.

Source: IMF press release (Press Release No. 24/312).