AfDB Approves a USD 8.7 Emergency Grant to Guinea Bissau to Support Fiscal Reform
Tunis, 24 March 2010 - The Board of Directors of the African Development Bank Group in Tunis approved a USD 8.7 million grant for Guinea Bissau, comprising USD 6.1 million from the Fragile States Facility and USD 2.6 million from the African Development Fund. The grant will help the country reduce its budget deficit and mitigate the shocks from the global economic crisis and its own difficult political situation. It will also help strengthen the budgetary reform begun in 2007, and will make budgetary operations more credible and transparent. The government will also be able to pursue its economic programme and other significant institutional reforms.
Since 2007, the country has undertaken a fiscal consolidation programme whose action plan was validated recently by the government and its development partners. According to Gabriel Negatu, Director of the Economic and Financial Governance Department, “these efforts have made it possible improve fiscal and macroeconomic performance, even if the results remain tentative. The Bank’s Emergency Fiscal Reform Support Programme and its complementary support to strengthen institutional capacity will be closely monitored and coordinated with other partners, and make it possible to underpin the effectiveness of economic policy and to stabilize the economy after many years of conflict.”
Guinea Bissau is one of the poorest countries in Africa. The political situation is unstable and the economy unfavorable. In 2009, the international crisis and the political context seriously affected the country’s overall economy, which was hurt by a more than 30% drop in international prices for cashews, its major export. In addition, an uncertain business climate slowed economic growth, resulting in lower national revenues.