Guinea-Bissau’s economy slows due to weak cashew marketing campaign

4 October 2018

Guinea-Bissau’s economic growth rate is expected to fall to 3.8% this year due to a weak cashew marketing campaign, according to the findings of an International Monetary Fund (IMF) mission.

The mission led by Tobias Rasmussen, which visited Bissau between 19 September and 2 October 2018 for the sixth assessment under the Extended Credit Facility (ECF) agreement, reported that the weak marketing campaign caused a slowdown in economic activity, “crushing production, exports and consumption.”

“The mission expects real growth of 3.8% of GDP in 2018 against rates of about 6% between 2015 and 2017, and also foresees an external current account deficit rise to 3.6% of GDP, in 2018, compared with an estimated 1.9% in 2017,” said the statement issued in Washington.

The statement added that government revenue has been weighed down by weaker economic growth as well as the slow progress of the reforms underpinning the 2018 budget, with tax collection in the first half of the year 9.7% below the programme’s target.

The poor performance of tax revenue was, however, partially offset by higher non-tax revenue, including non-recurring revenues from the sale of seized timber.

As regards policies for the banking and financial sector, the authorities, among other measures are encouraging banks with high levels of bad debt to become more actively involved in debt restructuring that is sustainable for borrowers and to assess the possibilities for accelerated implementation of guarantees.

The ECF is a credit agreement that ensures a sustained programmatic commitment, in the medium and long term, in case of long-standing problems in the balance of payments.

The three-year agreement for Guinea-Bissau, approved on 10 July 2015, was extended for one year on 1 July 2018, increasing total access to about US$32.2 million. (macauhub)