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WASHINGTON D.C., United States of America, January 24, 2018/ — An International Monetary Fund (IMF) team led by Tobias Rasmussen visited Guinea-Bissau from January 17-23, 2018, to evaluate the draft 2018 budget, assess the fiscal and debt implications of an intended scaling up of infrastructure investments, and discuss recent developments in the banking sector.

At the end of the visit, Mr. Rasmussen issued the following statement:

“Economic activity remains buoyant, supported by effective fiscal management. Inflation has remained low, tax revenue is rising robustly, and real GDP growth appears continuing near the 2017 pace of around 5.5 percent. Pickups in public and private investment are providing new growth impetus, compensating for a likely levelling off in cashew prices following last year’s sharp increases.”

“The 2018 budget approved by the Council of Ministers reflects the authorities’ efforts to enhance revenue mobilization and create fiscal space for priority spending, in line with the objectives of the IMF-supported program. With the budgeted overall deficit contained below 3 percent of GDP, the increased revenue would enable a roughly 3 percentage point of GDP increase in spending, mainly on infrastructure investment.”

“The scaling up of investment is welcome, as it could help address critical gaps in the country’s infrastructure, but the process needs to be carefully managed. Achieving the intended developmental effects depends on proper planning and execution, with due regard to capacity and debt carrying constraints. A number of investment projects are, however, yet to be fully integrated into budget planning.”

“Vigilance is also needed to ensure a sound financial sector that supports sustainable economic growth. This includes effective banking supervision and monitoring of prudential norms.”

“The team expects to return to Bissau in March to initiate discussions with the authorities for the fifth review of the ECF-supported program.”

The team met with President José Mário Vaz, Public Prosecutor General Bacar Biai, Minister of Finance João Fadia, Central Bank of West African States (BCEAO) National Director Helena Nosolini Embaló, other high level officials, as well as representatives of the private sector and the donor community.

The IMF team wishes to express its gratitude to the authorities for the constructive discussions and for their hospitality.

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