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 country’s media on Thursday quoted Economy and Finance minister Henrique Horta dos Santos, revealing the IMF sanction.
“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.
“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.
Mr dos Santos expressed fears over the dire financial needs of the country, saying, “we are facing difficult times”.
He explained Guinea Bissau was facing a budget deficit of 22.4 billion CFA francs.
To help remedy the situation, he said, the IMF has recommended that taxes be raised while identifying areas where government expenditure could be decreased.
“We are going to tighten our belts and seek to work honestly with our partners to resolve this issue; but it is difficult to bear this in a country that has no roads, no hospitals …, ” he said.
