Washington, DC:
The authorities have requested a 9-month
Staff-Monitored Program
(SMP) to support their efforts to restore macroeconomic stability, cope
with the impact of COVID-19, lay the foundation for stronger and more
inclusive growth, and mobilize external concessional financing. The SMP
aims at building a track record toward a possible
Extended Credit Facility
(ECF) arrangement. An IMF mission led by Mr. Jose Gijon held virtual
meetings with the authorities from April 28-May 12, 2021 to discuss their
reform package.
At the end of the mission, Mr. Gijon issued the following statement:
“The Bissau Guinean authorities and International Monetary Fund (IMF) staff
have reached a staff-level agreement on policies and reforms that can
underpin an SMP, subject to approval by the IMF’s management. The program
aims at gradually narrowing large macroeconomic imbalances that have been
intensified by the impact of the COVID-19 pandemic, strengthening
governance and social safety nets, and making progress towards more
inclusive growth.
“The Bissau Guinean economy is facing severe social and economic
challenges. The economy contracted by an estimated 1½ percent in 2020 and
is projected to grow by about 3½ percent in 2021 as the COVID-19 pandemic
still weighs significantly on the economy. The pandemic has given rise to
balance of payments (BOP) needs. The fiscal deficit widened in 2020
reflecting weaker tax revenue and the authorities’ spending measures to
deal with the pandemic; and public debt has increased.
“The IMF staff team recognizes the efforts taken by the authorities to
skillfully manage the COVID-19 crisis in coordination with international
partners in a context of very scarce resources.
“The team reached understandings on a reform agenda for 2021 and fiscal
measures needed to ensure consistency of 2021 budget implementation with
the SMP, avoid arrears accumulation and expensive non-concessional
borrowing.
“The program includes revenue mobilization and expenditure containment
measures—including the wage bill (projected to be about 65 percent of tax
revenue in 2021)—to generate fiscal space for priority spending while
ensuring debt sustainability.
“The SMP will assist the authorities in the improvement of the fiscal
framework, through the development of a realistic public financial
management strategy to enhance fiscal governance, transparency and
accountability, including measures to strengthen expenditure control, tax
and custom frameworks. It will also support the fight against corruption
and mitigation of state-owned enterprises’ risks, all supported by IMF
technical assistance.
“The team supports the authorities’ ongoing efforts to lower debt burden
and welcomes their decision to join the Debt Service Suspension Initiative
(DSSI). The authorities are encouraged to enhance control over external
debt contracting.
“IMF staff will aim to continue playing a catalytic role and will also
support the authorities’ efforts to reach out to other international
partners to mobilize adequate concessional financing for the reform
program.
“The IMF team met with H.E. President Sissoko Embaló, Prime Minister
Nabiam, Vice-Prime Minister Sambú, Finance Minister Fadia, BCEAO National
Director Embalo, Minister of Economy Mandinga, Minister of Public
Administration Balde, High Commissioner for COVID-19 Robalo, and Mr. Djaló,
President of the Commission for Economic Affairs of the National Assembly.
The team also met with officials from the Ministries of Finance, Economy,
Public Administration, the National Direction of the BCEAO, the National
Institute of Statistics, the FIU and other officials. In addition, the team
met representatives from development partners.
“The team thanks the authorities for their openness, and constructive
discussions and looks forward to continuing close cooperation in the period
ahead.”
