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Guinea-Bissau: Guinea-bissau Finance Profile

2015/10/02

 

Guinea-Bissau: Financial Sector Profile

CPIA financial sector rating (1=low to 6=high) in Guinea Bissau was last measured at 2.50 in 2013, according to the World Bank. Financial sector assesses the structure of the financial sector and the policies and regulations that affect it.This page has the new values, historical data, forecasts, charts, statistics, an economic schedule and news for CPIA financial sector rating (1=low to 6=high) in Guinea Bissau.

Next a period of transition, marked by a slowing of the economy, the return to constitutional order led to increase estimated at 2.6% in 2014, against 0.9% in 2013 and -1.5% in 2012. Supported by the return to political normalisation and the re-engagement of technical and financial partners, increase was as well driven by cashew-nut exports, in contrast to 2013. However, this upturn in increase remains fragile because of the a lot of structural problems, deficiencies in infrastructure and human resources and weak economic governance.

Increase could reach 3.9% in 2015 and 3.7% in 2016, depending on the socio-political climate, the outcome of the push for food production, the promotion of cashew-nut farming, inclunding improvements in economic and fiscal governance. With one of the lowest tax burdens in the West African Economic and Monetary Union (WAEMU) zone and a high gain-to-payroll ratio, the national’s ability to manage its fiscal resources and payroll will be crucial. Food security is still threatened by the unpredictability of the harvest; rice production is predicted to meet only three months’ needs in 2015. Moreover, the spread of the Ebola virus to Guinea-Bissau from neighbouring Guinea is a real threat that could halt development, with both economic and human consequences.

The fiscal situation has been helped by the return of technical and financial partners – who had withdrawn next the coup d’état – and the installation of a constitutional government. The resurrection of the fisheries agreements with the European Union and the disbursement of the initial tranche of budgetary support in December 2014 improved the fiscal situation and had a positive impact on increase. The primary balance in 2014 should be around -2.0% of GDP, while inflation is expected to rise against a background of increasing request, reaching 2.6% in 2015 and 2.4% in 2016.

The social situation remains precarious and the country has one of the lowest human development indicators. Health-care provision falls short of needs because of the national’s lack of funds and educational performance is below the regional average. In addition, a lot of fiscal problems over the last few years have left a backlog of late payments and multiple strikes affected the 2013/14 school year.

With a increase rate estimated at 2.6% in 2014 (0.9% in 2013) and projected to be 3.9% in 2015, the economic upturn is continuing but remains heavily dependent on the socio-political climate, the performance of the cashew-nut sector and the absence of contagion by the Ebola virus from neighbouring nations.
Social and political normalisation allowed technical and financial partners to return and improved tax gain, although the national’s ability to broaden its tax base, to manage its wage bill and to improve tax collection will remain determining factors in economic recovery over the medium term.
The social and human situation is worsening and social provision fails to meet needs because of the weakness of public resources.