IMF, Guinea-Bissau agree on $36.3 million, three-year loan program

WASHINGTON (Reuters) -The International Monetary Fund said it reached a staff-level agreement with Guinea-Bissau for a three-year, $36.3 million extended credit facility to create fiscal space to support an inclusive economic recovery and secure debt sustainability.

The agreement for the loan program, announced at the end of a Nov. 15-21 IMF mission to Bissau, needs approval from the Fund’s executive board.

“Guinea Bissau’s economy is gradually recovering from the negative effects of the COVID-19 pandemic but spillovers from the war in Ukraine are stalling the recovery,” the head of the IMF team, Jose Gijon, said in a statement after the mission.

The economy is expected to grow by around 3.5% in 2022, he said.

Average inflation is projected to be above 7% due to the global rise in oil and food prices.

Under the new Fund supported program, authorities will focus on securing debt sustainability and on creating fiscal space in the medium-term, with an emphasis on strengthening fiscal management and improving public governance.

Annual overall fiscal deficit is projected at 5% of GDP for this year. Public debt remains at more than 80% of GDP.

(Reporting by David Lawder and Sofia Christensen; Editing by James Macharia Chege)