World Bank threatens to cancel aid to Guinea Bissau for lack of transparency

6 December 2006

Bissau, Guinea Bissau, 06 Dec – The World Bank has threatened to cancel its aid to Guinea Bissau if the government headed by Aristides Gomes continues to act on the edge of “transparency and good governance,” which are conditions for unblocking funding, the bank has said.

The threat came in a letter sent on November 21 to the Guinean Minister of the Economy, Issufo Sanhá and Finance, Vítor Mandinga, by the director of Operations for Guinea Bissau at the World Bank, Mandani Fall.

If the suspension is confirmed, Guinea Bissau will also be left without financing from the West Africa Development Bank (BOAD) and it main cooperation partner, the European Union (EU), which would leave some US$10 million in budget aid for this year in the balance.

In the letter, made public by Portuguese news agency Lusa, Fall noted that at the round table meeting of donors, held in Geneva on November 7 and 8, the development partners pledged to unblock funds under the condition of “good governance and increased reforms.”

The issue is related to a decision made on October 31 by the Guinean Council of Ministers, which cancelled the process that was underway for “leasing” a power production plant via an international “competitive” tender.

“(The government) moved ahead with a contract negotiated in a non-competitive way for acquisition of a power production plant with a 10 megawatt capacity,” said Fall.

Fall “regretted” that the Guinean government had made the decisions, “despite their contradiction of the policies previously announced,” by the government and “existing agreements with international partners.”

“We are also disappointed that there was no discussion with us, although we are actively supporting reforms that the government is implementing in this area. In these circumstances, we have few options other than to cancel the Multi Sector Project for Rehabilitation of Infrastructures,” which was recently approved.

If the suspension of the PMRI is confirmed, it will also affect the corresponding co-financing of other projects by BOAD and the EU.

According to Fall, everything now depends on an assessment of the consequences of these decisions on the program that supports the project as well as it fiscal sustainability, which will also lead to a reassessment of the support by the World Bank for the Project for Rehabilitation and Development of the Private Sector (PRDSP). (macauhub)