ADVERTISEMENT

Country faces budget shortfall after IMF stops payments

Felix Fischer, who is heading a mission visiting Guinea-Bissau, repeated on Thursday the IMF's position that a resumption of payments would depend upon a cancellation of the bailouts.

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.

Guinea-Bissau is facing a "catastrophic" economic situation, with a gaping budget deficit, after the International Monetary Fund suspended its support over two private bank bailouts, the finance minister said on Thursday.

The IMF said on June 3 it was halting payments after the tiny nation's government went against its advice and took on around 35 billion CFA francs ($59 million) in underperforming debt from Banco da Africa Ocidental and Banco da União.

"The economic situation of the country is catastrophic. The state has a deficit of 22.4 billion CFA francs," Finance Minister Henrique Horta told reporters. The deficit amounts to about 3.5 percent of GDP.

While inflation remained steady at 3 percent and the state had earned 113 billion CFA francs from sales of cashews, Guinea-Bissau's primary cash crop, he said the IMF's suspension of support was crippling.

ADVERTISEMENT

"If the country does not have the IMF programme, the other lenders will not have confidence in us," he said. The IMF had planned to allocate 6.1 billion CFA francs ($10.34 million) to Guinea Bissau in 2016.

Other partners have also suspended budget support amounting to 15.2 billion CFA, according to the IMF. Donor financing typically makes up about 80 percent of Guinea-Bissau's budget.

The IMF claims the bailouts, whose value amounted to around 5.5 percent of GDP, benefited the country's wealthiest citizens and foreign investors.

Horta, appointed to the current government in June, said they occurred under previous governments amid a general atmosphere of mismanagement.

"The courts will determine the punishment. Those responsible will be prosecuted," he said.

ADVERTISEMENT

Former Prime Minister Domingos Simoes Pereira, whose government approved the first of the two bailouts, has argued they were necessary to shield the private sector from bankruptcy.

He said current Prime Minister Baciro Dja had pledged to abide by the IMF programme, which was agreed last July to help the frequently unstable state get back on its feet after 2014 polls that followed a military coup two years earlier.

The former Portuguese colony has had nine coups or attempted coups since 1980. Political turmoil has helped make it a major transit point for South American cocaine heading to Europe.

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