Press Release: IMF Executive Board Completes Second Review Under the ECF Arrangement with Guinea-Bissau and Approves US$3.85 Million Disbursement
May 24, 2011Press Release No. 11/193
May 24, 2011
The Executive Board of the International Monetary Fund (IMF) has completed the second review of Guinea-Bissau’s economic performance under a three-year Extended Credit Facility (ECF) arrangement.1 The Board's decision, which was taken on a lapse-of-time basis,2 enables the authorities to draw an additional SDR 2.414 million (about US$3.85 million), bringing total disbursements under the arrangement to an amount equivalent to SDR 12.709 million (about US$20.27 million).
Satisfactory policy implementation continues in the Fund-supported program under challenging conditions. The authorities have met all performance criteria through end-December 2010 and all structural reforms for the second review.
Sound macroeconomic policies, strengthened institutions, and debt relief have stabilized the economy and supported confidence building. While medium-term growth prospects are bright, huge developmental challenges remain. It is critical that the government maintain the reform momentum and continue to build on the satisfactory performance under the ECF.
The three-year ECF arrangement for Guinea-Bissau was approved on May 7, 2010 (see Press Release No. 10/185) in an amount equivalent to SDR 22.365 million (about US$33.3 million, or 157.5 percent of the country’s quota in the Fund). On December 16, 2010 the Executive Boards of the IMF and the World Bank’s International Development Association decided to support US$1.2 billion in debt relief for Guinea-Bissau under the Heavily Indebted Poor Countries (HIPC) Enhanced Initiative and the Multilateral Debt Relief Initiative (MDRI—see Press Release No. 10/498).
1 The Extended Credit Facility (ECF) has replaced the Poverty Reduction and Growth Facility (PRGF) as the Fund’s main tool for medium-term financial support to low-income countries by providing a higher level of access to financing, more concessional terms, enhanced flexibility in program design features, and more focused streamlined conditionality. Financing under the ECF carries a zero interest rate, with a grace period of 5½ years, and a final maturity of 10 years (http://www.imf.org/external/np/exr/facts/ecf.htm). The Fund reviews the level of interest rates for all concessional facilities every two years.
2 The Executive Board takes decisions under its lapse-of-time procedure when it is agreed by the Board that a proposal can be considered without convening formal discussions.