ADVERTISEMENT

IMF weighs lifting freeze on country funding

The IMF visit comes days after an agreement to form a new government, ending a year-long political crisis that has paralysed state institutions.

Visitors are silhouetted against the logo of the International Monetary Fund at the main venue for the IMF and World Bank annual meeting in Tokyo October 10, 2012.

The International Monetary Fund could lift a suspension on payments aimed at helping Guinea-Bissau emerge from years of political turmoil following an evaluation mission this week, the institution's country representative said on Monday.

The IMF agreed a programme with Guinea-Bissau last year after 2014 elections drew a line under a coup two years earlier - one of a succession that have spawned chronic instability and helped make the West African country a haven for South American cocaine traffickers.

Disbursements were suspended in June, however, after the government took on 34 billion CFA francs ($58.3 million) in bad loans from two private banks. Donors followed suit and suspended budget support for 2016 equal to around 2.1 percent of GDP.

IMF representative Oscar Melhado told Reuters by email that the Fund welcomed a government decision to cancel the bailouts, whose value amounted to around 5.5 percent of GDP.

ADVERTISEMENT

"The only remaining obstacle is the refusal of the banks to accept the bad portfolio back into their books," he said.

The IMF had argued the bailouts benefited the wealthiest citizens and foreign investors. Authorities had said they were needed to shield the private sector from bankruptcy.

Monday was a public holiday and the banks, Banco da Africa Ocidental and Banco da União, were not available for comment.

Melhado said the government should also commit to implementing prudent macroeconomic policies and key structural reforms during the visit due to begin on Tuesday, which constitutes the first and second reviews of the IMF programme.

Disbursements worth 4.1 billion CFA could still be made this year if the reviews are approved by the IMF's board in December.

ADVERTISEMENT

Total donor contributions, including direct budget support and financing for targeted sectors and projects, typically make up around 80 percent of Guinea-Bissau's budget. After the IMF freeze, Finance Minister Henrique Horta described the economic situation, including a budget deficit amounting to about 3.5 percent of GDP, as "catastrophic".

The government of Guinea, which is helping to mediate in its smaller Portuguese-speaking neighbour, said earlier this month that Guinea-Bissau would not be able to pay the salaries of civil servants and the security forces from October.

"We hope that donors will resume support following the IMF. It would depend on each donor's policy," Melhado said.

($1 = 582.9600 CFA francs)

JOIN OUR PULSE COMMUNITY!

Unblock notifications in browser settings.
ADVERTISEMENT

Eyewitness? Submit your stories now via social or:

Email: eyewitness@pulse.ng

Recommended articles

6 Labour Party lawmakers defect to PDP in Enugu State

6 Labour Party lawmakers defect to PDP in Enugu State

Tinubu's special assistant donates food items to 1,700 residents in FCT

Tinubu's special assistant donates food items to 1,700 residents in FCT

Anambra PASAN begins strike over Soludo's failure to grant financial autonomy

Anambra PASAN begins strike over Soludo's failure to grant financial autonomy

Governor Sanwo-Olu pays ₦4.48 billion to 1,455 retirees in accrued pensions

Governor Sanwo-Olu pays ₦4.48 billion to 1,455 retirees in accrued pensions

Court discharges ex-AGF Adoke, 6 others in Malabu oil scam case

Court discharges ex-AGF Adoke, 6 others in Malabu oil scam case

Nigerians are expected to pay for TV licences — here’s what the law says

Nigerians are expected to pay for TV licences — here’s what the law says

BEDC management denies rumours of dissolution, increases revenue

BEDC management denies rumours of dissolution, increases revenue

Federal Govt set to sue Binance ltd, officials for tax evasion on April 4

Federal Govt set to sue Binance ltd, officials for tax evasion on April 4

What Nigerian law says about treatment of people with disabilities

What Nigerian law says about treatment of people with disabilities

Pulse Sports

Nigeria vs Mali: Has Finidi George done enough to land Super Eagles job permanently?

Nigeria vs Mali: Has Finidi George done enough to land Super Eagles job permanently?

I want to emulate Keshi and win the AFCON - Finidi George shares ambitious Super Eagles dream

I want to emulate Keshi and win the AFCON - Finidi George shares ambitious Super Eagles dream

Michelle Alozie: I had to do it because of African referees

Michelle Alozie: I had to do it because of African referees

AC Milan star reveals he was named after Super Eagles legend Tijani Babangida

AC Milan star reveals he was named after Super Eagles legend Tijani Babangida

Give him the job! Super Eagles fans beg NFF to make Finidi George permanent coach after Nigeria's win over Ghana

Give him the job! Super Eagles fans beg NFF to make Finidi George permanent coach after Nigeria's win over Ghana

Super Eagles 2-1 Black Stars: Nigerians praise Iwobi, Lookman, Finidi George after friendly victory against Ghana

Super Eagles 2-1 Black Stars: Nigerians praise Iwobi, Lookman, Finidi George after friendly victory against Ghana

ADVERTISEMENT
ADVERTISEMENT