Country Report Guinea-Bissau January 2009

Outlook for 2009-10

With the results of the November 2008 legislative election suspended until the Supreme Court rules on a legal challenge, the interim government will remain in power. The government, which has implemented measures to address the economic crisis and curb corruption, has been successful in encouraging donors, led by the World Bank and the IMF, to resume support, although a full resumption of aid will only come after a definitive return to political stability. This will be crucial if Guinea-Bissau is to address its chronic fiscal deficit and low economic growth. Real GDP growth is forecast to rise from an estimated 3.2% in 2008 to 3.6% in 2009 and 3.8% in 2010, following a recovery in agricultural output and rising donor inflows. After rising in 2008, inflation is forecast to fall to 3.8% in 2009 and 2.8% in 2010, owing to a recovery in food production and the tight monetary policy of the regional central bank. Weakening export revenue and rising deficits on the invisibles account will lead to current-account deficits of 2.6% of GDP in 2009 and 3.2% of GDP in 2010.

The political scene

The legislative election has taken place peacefully. According to official results the former ruling party, Partido Africano da Independencia da Guine e Cabo Verde (PAIGC), won 67 seats in the 100-seat National Assembly. In contrast, the previously largest party, Partido da Renovacao Social (PRS), saw its representation fall from 35 to 28 seats. The outcome has been contested by the PRS, which has filed complaints of electoral fraud with the Supreme Court, which has suspended the election results until it has considered these complaints. In the meantime the caretaker government will continue to govern. Two days after the announcement of the results an attack on the presidential palace was repelled, leading to the arrest of a nephew of the former president, Kumba Yala, and several soldiers accused of attempting a coup. An outbreak of cholera has affected more than 14,000 people and caused over 220 deaths.

Economic policy

After the attack on the presidential residence in the capital, Bissau, an IMF mission was relocated to Dakar, where it held talks with a technical mission of the Guinea-Bissau government, led by the finance minister, Issufo Sanha.

The domestic economy

The Chinese government has announced that it will fund a US$48.5m programme to modernise Guinea-Bissau's fixed-line telephone network.

Foreign trade and payments

According to the government, cashew nut exports are estimated to have risen to 110,000tonnes in 2008, exceeding earlier projections of 106,000 tonnes.

This report covers the following industry codes:
SIC Code: 1;60
NAICS Code: 11;52