The International Monetary Fund (IMF) has approved the seventh review of Guinea-Bissau’s Extended Credit Facility (ECF) program, clearing the way for an immediate disbursement of $7.1 million, equivalent to over 4 billion CFA francs.
The decision, announced on Tuesday, December 17, confirms technical recommendations made in November.
“The IMF Executive Board today completed the seventh review under the Extended Credit Facility arrangement for Guinea-Bissau, enabling an immediate disbursement of 5.43 million Special Drawing Rights (approximately $7.1 million or €6.7 million) to help address the country’s financing needs,” the IMF stated in its release.
This approval reflects a strong performance under the program, with the country meeting all nine quantitative performance criteria and three structural benchmarks by the end of June 2024.
The IMF commended Guinea-Bissau’s progress, particularly in energy sector reforms, highlighting the government’s efforts to meet its economic commitments.
The IMF maintains its economic growth forecast for Guinea-Bissau at 5% for 2024, with an average inflation rate of 4.2%.
However, it flagged fiscal risks, projecting a budget deficit of 5% that the government aims to reduce to 3% in the coming years.
“Achieving fiscal consolidation targets for 2024 and 2025 is critical to meeting program objectives and reducing public debt vulnerabilities,” the IMF emphasized, adding that strict control over public sector spending and strengthened expenditure oversight would be essential to avoid budget overruns.
The IMF also acknowledged ongoing structural reforms led by the Guinea-Bissau government, which it described as crucial for the program’s success.
However, it called for intensified efforts in governance, economic diversification, and transparency reforms to ensure sustainable and inclusive growth.
Guinea-Bissau’s three-year ECF program, initially approved by the IMF in January 2024, aims to bolster debt sustainability, enhance governance, and curb corruption while creating fiscal space for inclusive growth.
Initially valued at $38.4 million, the program was expanded by 40% in late 2023 to support additional economic needs.
The IMF’s latest disbursement marks a significant step forward for Guinea-Bissau, reinforcing international confidence in its economic trajectory while highlighting the need for continued reforms to address vulnerabilities and foster long-term growth.
