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.

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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)