IMF team reached a staff-level agreement with the authorities on the economic policies needed to complete the third review of the ECF which is subject to approval by the IMF Executive Board.

The rebound in economic activity that started in 2015 has continued and become more entrenched and growth has been supported by high cashew prices, increased construction activity, and continued improvements in the supply of electricity and water.

To maintain the positive economic trajectory, continued efforts will be needed to maintain and strengthen fiscal discipline and advance structural reforms.

An International Monetary Fund (IMF) team led by Tobias Rasmussen visited Guinea-Bissau from May 10 to 19, 2017, to conduct discussions on the third review of Guinea Bissau’s IMF-supported program under the Extended Credit Facility (ECF). [1]

At the end of the visit, Mr. Rasmussen issued the following statement:

“The IMF team reached a staff-level agreement with the authorities on the economic policies needed to complete the third review of the ECF. The staff-level agreement is subject to approval by the IMF Executive Board, which is slated to consider the third ECF review in mid-July 2017. Upon approval, drawings of SDR 3.030 million (about US$4.1 million) would become available to Guinea-Bissau.

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“The authorities have reiterated their commitment to the ECF-supported program. Discussions focused on the key fiscal actions to maintain a disciplined path based on enhancing revenue mobilization and strengthening expenditure controls.

“The rebound in economic activity that started in 2015 has continued and become more entrenched. Growth has been supported by high cashew prices, increased construction activity, and continued improvements in the supply of electricity and water.

“The authorities have made significant progress in improving public financial management. The institutionalization of an operational treasury committee has enabled better expenditure control and, notably, the elimination since the start of this year of non-regularized spending. Moreover, improvements in tax and customs administration are helping boost revenue collection.

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“To maintain the positive economic trajectory, continued efforts will be needed to maintain and strengthen fiscal discipline and advance structural reforms. Key measures include ensuring a firmly established budget approval process, enhancing debt management, addressing financial pressures stemming from the power sector, and allowing fluctuations of domestic fuel prices in line with international prices. Finally, it will be important to ensure a healthy competitive environment in the cashew sector by clearing out uncertainty about the regulatory regime for trading.”

The mission met with President José Mário Vaz, Prime Minister Umaro Sissoco Embaló, Attorney General António Sedja Mam, Minister of Finance João Fadia, Central Bank of West African States (BCEAO) National Director Helena Nosolini Embaló, other high level officials, as well as representatives of civil society, the private sector, and the donor community.

The IMF team wishes to express its gratitude to the authorities for the constructive discussions and for their hospitality.

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Distributed by APO on behalf of International Monetary Fund (IMF).

[1] The ECF is a lending arrangement that provides sustained program engagement over the medium to long-term in case of protracted balance of payments problems. The arrangement for Guinea-Bissau, in an amount equivalent to SDR 17.04 million (about US$23.5 million, or 60 percent of quota) was approved on July 10, 2015 (see Press Release No.15/331).

End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF’s Executive Board for discussion and decision.