IMF Staff Country Reports

This paper analyzes Guinea-Bissau’s Third Review under the Extended Credit Facility (ECF) Arrangement and Requests for Augmentation of Access, Waiver of Nonobservance of Performance Criteria, Modification of a Performance Criterion, and Financing Assurances Review. Guinea Bissau’s socio-political context remained stable during the transition to an opposition-led new government, but the country is facing an adverse external shock. Performance under the ECF supported program was weaker than expected. Four out of eight Quantitative Performance Criteria (QPC) were missed for June 2023. The QPC on the domestic primary balance was missed because of the significant discretionary spending overrun during the election period. However, the new government has demonstrated its strong commitment to fiscal consolidation and securing debt sustainability. Program performance was weaker than expected, but the authorities have adopted corrective actions and a draft 2024 budget in line with program parameters. They are strictly rationalizing nonpriority expenditure, mobilizing additional revenue, and tightly controlling the wage bill. Continued efforts in these areas and sustained fiscal consolidation are needed to ensure debt sustainability.