International donors move closer to Guinea Bissau

18 June 2007

Bissau, Guinea Bissau, 18 June – International donors, with China and the World Bank at the head, seem to once again be moving closer to Guinea Bissau, after a long period of distance due to the country’s political instability, with the government’s attempts to restore the credibility of the country paying off.

This month, Guinea Bissau has already received pledges of aid totaling over US$21 million euros, from five different sources, and also saw the International Monetary Fund (IMF) promising it would try to mobilize US$30 million from the international community, in order to meet the country’s immediate reconstruction needs.

China Friday signed a protocol with Guinea Bissau to provide the west African country with financial support of US$4 million.

The funding is intended to be used to pay Guinean state workers, a key factor in the stabilization of a country whose formal economy is practically paralyzed and which is facing serious budgetary difficulties, while a further US$400,000 were donated for Guinean refugees located at the northern border of the country, due to conflicts with rebels in the Senegalese province of Casamaça.

Less than 24 hours after this protocol was signed another financing agreement was signed in Dakar, Senegal, for the World Bank to supply US$15 million for rebuilding power, water, road and sanitation infrastructures in Guinea Bissau.

More important than the amount of funding involved, for the government of Martinho N’Dafa Cabi is the re-launch of relations with the World Bank, which underwent a tense period during the time of the government of Aristides Gomes.

The World Bank currently has projects approved in Guinea Bissau totaling US$66.7 million, in the health, coastal management, rehabilitation and development of the private sector, as well as the infrastructure sectors.

The government had been focusing on “cleaning up” the country’s reputation in relation to its international donors, which was affected by high levels of political and military instability, Particularly between 1998 and 2004, which practically paralyzed the country’s fragile economy and institutions.

According to a recent report in the Africa Monitor newsletter, Guinea Bissau requested technical and financial support from the World Bank to carry out an audit of its state-owned companies, autonomous institutes and public administration bodies, in which irregularities had been detected, mainly in relation to last year’s management.

These include, the Guinea Bissau port administration (APGB) and electricity and water companies (EAGB), TGB (Guinea Bissau Television) and the funds for Tourism, Fishing, and Migration services, amongst others.

The audit of public accounts will be carried out by an international auditor, to be chosen from five entities – three Guinean (Amaico, Audiconta and Caf), one from Burkina Faso (Africare) and one from Senegal 9Cooper) – which are candidates in a tender launched by the government, as part of the financial clean up program.

As part of the same program, the government signed an agreement with Ecobank for the African financial institution to receive payments made at the country’s customs posts, which account for some 75 percent of all tax revenue.

the aim is for the new partnership system to allow an increase in collected taxes and introduce greater transparency, rigour and discipline to the process.

These measures meet the recommendations made by the World Bank in its latest report on Guinea Bissau, on the need to “intensify the mobilization of tax resources,” along with “keeping control of current spending.”

“An improvement is expected in the medium term [for the Guinean economy], but its strength and duration depend on how the authorities manage to deal with political, fiscal and structural problems responsible for economic stagnation,” the Bank said its report of June, 2006.

According to the latest projections from the International Monetary Fund (IMF) the Guinean economy is this year expected to reach the highest level of growth of the last few years, of 5 percent, almost doubling the performance for last year.

Given the aid recently announced, it is expected that, if it is made available quickly and distributed efficiently, current projections will be raised.

Last week, France pledged 300,000 euros in direct budgetary aid, having praised Cabi’s government, particularly for its management of public funds.

According to Finance Minister, Issuf Sanhá, this was “an extremely important gestures that has a big multiplying effect, especially in terms of other partners,” for the country.

The previous week the European Commission had announced budgetary aid for Guinea Bissau of 6.2 million euros. (macauhub)