IMF approves US$20.47 million for Guinea-Bissau

The International Monetary Fund (IMF) has approved the disbursement of US$20.47 million under the Rapid Credit Facility (RCF) to help Guinea-Bissau meet urgent balance of payments and fiscal needs stemming from the COVID-19 pandemic.

The IMF assistance will help support critical spending in health, social protection and investment to underpin the recovery as well as catalyze additional donor resources.

The pandemic has had a significant impact on Guinea-Bissau’s economy. It has disrupted economic activity and led to a deterioration in the external and fiscal position as a result of the lower external demand for cashew nuts and the domestic measures to contain the spread of the disease. The effects of these shocks are expected to persist in 2021, reflecting the need to sustain imports for essential consumption and investment to strengthen health sector capacities and infrastructure, which was further weakened by severe floods in September.

To alleviate the impact of the pandemic and preserve macroeconomic stability, the government has taken several actions to increase health spending, strengthen social protection to the most vulnerable and support the economically relevant cashew sector.

Following the Executive Board discussion, Mr. Tao Zhang, IMF Deputy Managing Director and Acting Chair, said:

“Guinea-Bissau has been significantly affected by the COVID-19 pandemic, which has disrupted economic activity and led to a deterioration in the external and fiscal positions. The authorities’ immediate priority has been to limit the impact of the pandemic and preserve macroeconomic and financial stability. Health spending was increased, and measures to protect the most vulnerable and support the agricultural sector are being implemented.

“…Given Guinea-Bissau’s limited fiscal space and debt vulnerabilities, emergency assistance should be mostly in the form of grants and highly concessional loans. As the pandemic eases, the authorities are committed to put in place a fiscal consolidation program to ensure debt sustainability while addressing the country’s vast developmental needs.”

Amaka E. Nliam