## IMF Survey: IMF, World Bank Back $1.2 Billion Debt Relief for Guinea-Bissau

_IMF News, December 17, 2010_

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## Bibliographic details
- Authors: Paulo Drummond IMF African Department December
- Published: December 17, 2010

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### Overview
- Publication date: December 17, 2010
- The IMF and the World Bank decided, on December 13 and 16, respectively, to support $1.2 billion in debt relief for Guinea-Bissau.
- The move will cut the country’s external debt by 87 percent and help normalize relations with external creditors, while sending a positive signal to donors and potential investors.

### Debt relief for Africa — details and amounts
- Total debt service savings generated: $1.2 billion.
- Composition of debt relief:
  - $703 million in HIPC debt relief
  - $107.9 million in additional debt relief from the Paris Club group of creditors
  - $230.3 million in debt relief under topping-up assistance
  - $139.2 million in debt relief under the MDRI
- Contributions from multilateral institutions:
  - Debt relief from the IMF: $15 million
  - Debt relief from the World Bank: $347.2 million
- Timing and impact:
  - Present value of Guinea-Bissau’s external debt at end-2009 will be reduced by 87 percent.
  - Reached the final stage, or completion point, of the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative; also qualifies for debt relief under the Multilateral Debt Relief Initiative (MDRI).

### Economic and policy context — road to HIPC completion
- History and program support:
  - Reached the interim HIPC decision point in 2000.
  - IMF staff-monitored programs in 2006 and 2007.
  - Emergency Post-Conflict Assistance (EPCA) in 2008 and 2009.
  - Approval, in May 2010, of a three-year Extended Credit Facility arrangement with the IMF.
- Macroeconomic performance and reforms:
  - Solid performance under the 2009 EPCA-supported economic program stabilized the economy.
  - Under the Extended Credit Facility arrangement, the government maintained sound macroeconomic policies and accelerated reforms.
  - GDP growth has been resilient, inflation is low, fiscal revenues have exceeded the program targets, and spending has been kept under control.
  - Structural measures taken: strengthen budget planning and execution, increase revenue collection, and improve the business environment.

### Key accomplishments tied to HIPC completion point
- Achievements linked to poverty reduction, macroeconomic stability, social sectors, and demobilization:
  - Implementing a poverty reduction strategy prepared in a participatory process involving all segments of society
  - Overhauling of the public procurement system in line with West African Economic Monetary Union (WAEMU) guidelines
  - Bringing the public expenditure management system in line with WAEMU standards, and resuming quarterly budget execution reports
  - Introducing free primary education in public schools, and raising enrollment rates
  - Providing vaccination to more than 90 percent of children
  - Raising awareness of HIV/AIDS: about 91 percent of women aged 15–49 have heard of HIV/AIDS, and 64 percent know that it can be transmitted from mother to child

### Next steps and policy recommendations
- Short- and medium-term financing guidance:
  - Guinea-Bissau should continue to rely on grants and nonconcessional borrowing to meet its financing needs for the foreseeable future.
- Conditions for lasting debt sustainability and development progress:
  - Political stability
  - Further progress on economic reforms, including security sector reform
  - Diversifying the export base
  - Mobilizing more domestic revenue
- Objective:
  - Secure debt sustainability and sustain growth and poverty reduction, including progress toward the antipoverty Millennium Development Goals.

*Source: IMF Survey: IMF, World Bank Back $1.2 Billion Debt Relief for Guinea-Bissau (December 17, 2010).*

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## References

- [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)
- [PRESS CENTER](http://presscenter.imf.org/)
- [IMF Country Focus](https://www.imf.org/en/news/country-focus)
- [Press release](https://www.imf.org/external/np/sec/pr/2010/pr10498.htm)
- [Guinea-Bissau and the IMF](https://www.imf.org/external/country/gnb/index.htm)
- [Africa set for growth](https://www.imf.org/external/pubs/ft/survey/so/2010/CAR102510A.htm)
- [Boost from intraAfrica trade](https://www.imf.org/external/pubs/ft/survey/so/2010/CAR100910A.htm)
- [Recovery under way in Africa](https://www.imf.org/external/pubs/ft/survey/so/2010/CAR100710A.htm)
- [Private sector gains in Africa](https://www.imf.org/external/pubs/ft/survey/so/2010/int030410a.htm)
- [Africa after global crisis](https://www.imf.org/external/pubs/ft/survey/so/2010/new030410a.htm)
- [Africa’s growth set to rebound](https://www.imf.org/external/pubs/ft/survey/so/2010/CAR042310A.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/socar121710a_