Washington, April 11, 2025 (Lusa) - The International Monetary Fund (IMF) on Friday warned of "significant risks" to Guinea-Bissau's economy, both external and internal, in an election year, but maintained favourable economic forecasts, with GDP growing by 5% this year.
Following a visit to the country between 2 and 10 April, the results of which it released today, the IMF says that the economy faces "significant short-term risks in an election year and in the context of a difficult external environment, characterised by worsening geopolitical fragmentation and world trade".
Even so, it expects Guinea-Bissau's Gross Domestic Product (GDP) to grow by around 5% this year, "thanks to more favourable terms of trade and strong private investment", after a slowdown in 2024.
This slowdown (from 5.2% in 2023 to 4.7% in 2024) partly reflected lower cashew nut exports and climatic shocks to agricultural production," says the Fund team that visited the country under Article IV, which requires an annual economic review of member countries, insisting on the need to diversify the economy.
"The recent reforms carried out in the energy sector are essential to support economic growth and should be sustained," the IMF recommends in its annual assessment of Guinea-Bissau's economy.
The team that visited the country, led by Nico Hobdari, focused this assessment on policies aimed at "supporting economic diversification to reduce dependence on cashew nuts", maintaining "fiscal sustainability with domestic revenue mobilisation", and also " strengthening human capital and reinforcing social protection, including an assessment of expenditure levels and outcomes".
The visit also served to discuss economic policies for the eighth evaluation of the Extended Credit Facility (ECF) programme granted to Guinea-Bissau, saying that talks will continue during the next IMF/World Bank Group spring meetings in April, "in order to agree on the policies that underpin the conclusion" of that evaluation.
The IMF emphasised the importance of Bissau respecting the allocations in the 2025 budget in order to support macroeconomic stability, "a necessary condition for laying the foundations for inclusive growth that is resilient to external shocks", even while assessing that "Guinea-Bissau's economy remains resilient".
The initial agreement with Bissau was approved by the IMF's Executive Board on January 30, 2023 for a total amount of around US$37.8 million (over €33 million) and on November 29, 2023, the IMF's Executive Board authorised an increase in access to 40% of the quota.
The IMF appreciates the forecast of a budget deficit falling to 3% of GDP, "in line with the target of the ECF programme", but insists that "although the economic forecasts remain favourable, they are subject to significant internal and external risks".
"The IMF team reiterated the need to continue implementing the reforms agreed under the Extended Credit Facility programme that underpin fiscal consolidation efforts and keep public debt on a steady downward path.
During this visit, there were meetings with the President, Umaro Sissoco Embaló, the prime minister, Rui Barros, and the ministers of finance, Ilídio Té, of economy, planning and regional integration, Soares Sambu, of energy, José Carlos Casimiro, and other members of the government, but also with representatives of public sector companies, as well as with key bilateral and international partners.
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