Guinea Bissau: Guinea Bissau is second economy most affected by “shock” of fuel and food prices – IMF

2 July 2008

Washington, United States, 2 July – The Guinea Bissau economy is the second most affected in the world by the “shock” of international fuel and food prices which, on the other hand, is benefiting Angola, a study published Tuesday by the International Monetary Fund (IMF) showed.

The study entitled, “The Impact of Fuel and Food Price Shocks on the Balance of Payments of Low Income African Countries” from the IMF Africa Department, concluded that the effect of the cost variation on Guinean accounts was negative to an amount equivalent to 8.8 percent of the country’s Gross Domestic Product (GDP) in 2007.

In the list of the 18 most affected countries, only Eritrea is worse off than Guinea Bissau, with a negative impact equivalent to 15.3 percent of its GDP.

Of the Portuguese-speaking countries included in the IMF study, only Angola was found to be benefiting, due to its being an oil producer: The impact on the balance of payments is equivalent to 37.2 percent of GDP and 118.6 percent of international reserves.

In the case of Guinea Bissau the main impact is due to high fuel prices – accounting for spending of the equivalent of an extra 7.6 percent of GDP.

The list of the 18 countries most affected also includes Liberia, Eritrea, Togo, the Comoros islands, Guinea Conakry, the Gambia, Sierra Leone, Madagascar, Ethiopia, Burkina Faso, Central African Republic, Benin, Mali, Zimbabwe and the Democratic Republic of Congo.

Amongst the countries also affected by this inflation scenario, but with a more stable balance of payments, are Mozambique (losses equivalent to 3.8 percent of GDPP) and Sao Tome and Principe (loss of 2.2 percent of GDP). (macauhub)