GUINEA-BISSAU
Table 1

Key conditions andchallenges

2023

Population, million

2.2GDP, current US$ billion

2.0

GDP per capita, current US$918.1

International poverty rate ($2.15)

a26.0
a60.2

a89.1

Lower middle-income poverty rate ($3.65)
Upper middle-income poverty rate ($6.85)
Gini index

a33.4

School enrollment, primary (% gross)b113.3b59.7

Total GHG emissions (mtCO2e)4.4Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2021), 2017 PPPs.
b/ WDI for School enrollment (2010); Life expectancy(2021).

Weak cashew export performance andhigh inflation kept growth at 4.2 percent
in 2023, undermining poverty reduction.
Budget slippages and lower revenues derailed fiscal consolidation efforts while infrastructure investment, rice subsidies,and energy arrears increased debt.
Growth should improve as energy andtransport infrastructure come online, but
its sustainability depends on institutionalreforms. The outlook is subject to downside risks from political instability, shocks
to the cashew sector, and climatic shocks.

Exports of raw cashew nuts, approximately 90 percent of merchandise exports, determine economic performance.
Cashew production is dispersed amongsmallholder farmers, whose income supports overall economic activity. Poverty
remains widespread – particularly in rural areas. Human development indicators
are among the lowest in the world, andlow access to basic services contributeto exclusion and marginalization. Political instability is chronic in Guinea-Bissau, the world’s most coup prone country, and recent regional and international
geopolitical uncertainty only threaten to
stoke domestic tensions further.
Access to credit is limited and the enabling
environment for private sector-led growthis weak due to poor infrastructure, low levels of human capital, and limited publicservices. Recently, there have been investments to improve infrastructure, thoughmostly donor financed as fiscal space islimited by low domestic revenue mobilization and the relatively high wage bill.
Transparency and governance of stateowned enterprises is limited, especially thenational utility company, EAGB, which accrues substantial public debt in the energy
sector through government guaranteedletters of credit that only partially covermounting arrears. Identifying contingent
fiscal liabilities is difficult, increasing fiscal
risks and amplifying the high risk of debt

distress and limiting capacity to absorb
shocks. Non-performing loans continue tomake the banking sector another possible
source of contingent liabilities.

Recent developments
Economic activity grew by 4.2 percent in
2023 (2.1 percent in per capita terms), unchanged from 2022. On the supply side,
growth was driven by agriculture and government infrastructure investment stimulating the construction sector. On the demand side, inflationary pressures caused
private consumption to fall.
Inflation remained high at 8 percent (y/y) in 2023, from 7.9 percent in 2022, driven by food and energy inflation. This
followed an average of 1 percent between
2015 and 2020.
A cashew campaign marred by problems,
including shipping container shortages,smuggling, disruptions from legislativeelections, and low international demand,put exports at just 168,000tn in 2023 despite production of 260,000tn. This, alongwith high import costs, kept the current
account deficit (CAD) high at 9.4 percent.
Fiscal consolidation efforts were derailed
as higher-than-planned discretionary
spending and lower customs receipts
widened the fiscal deficit to 7.6 percent in2023, from 6.1 percent in 2022. Legislativeelections, energy sector arrears accumulation, rice subsidies costing 0.2 percent ofGDP, and urban road infrastructure investments kept debt above the convergence criterion at 77.8 percent of GDP.

FIGURE 1 Guinea-Bissau / Evolution of main
macroeconomic indicators

FIGURE 2 Guinea-Bissau / Actual and projected poverty
rates and real GDP per capita

Percent, percent of GDP
8Poverty rate (%)

Real GDP per capita (constant LCU)

100

690

480

270060-250-440-630-820-10106000005000004000003000002000001000000-12GDP growthFiscal balance

02010 2012 2014 2016 2018 2020 2022 2024 2026

2016 2017 2018 2019 2020 2021 2022 2023e2024f 2025f 2026f
Current account balance

Sources: Ministry of Finance and World Bank.

International poverty rate

Lower middle-income pov. rate

Upper middle-income pov. rate

Real GDP pc

Source: World Bank. Notes: see Table 2.

MPO

1Apr 24To counter inflation across WAEMU countries, the Central Bank of West AfricanStates (BCEAO) raised policy interest rates
by a cumulative 150 basis points since
mid-2022 to 3.5 percent for liquidity callsand 5.5 percent for the marginal lending
facility. However, inflation in the region(3.7 percent in 2023) was still above the1-3 percent target range and foreign exchange reserves have been on a downward trend, estimated at 3.5 months ofimports at end-2023, down from
4.3 months at end-2022.
The combination of agricultural growthand high food prices is expected to haveleft poverty unchanged between 2022 and2023 at about 26 percent, with population
growth implying over 10,000 additional
poor people.

Outlook
Economic activity is likely to expand by 4.7
percent in 2024 (2.2 percent per capita) following a strong cashew campaign. Agriculture will drive growth with cheaper energy from regional energy project OMVG

stimulating the real sector. Easing of inflationary pressures and a strong cashew season will encourage private consumption.
Favorable weather conditions and dividends from government investments into
agricultural inputs over the last few years
should support strong cashew production.
Exports should markedly improve as nine
overland border routes are authorized forexports, curtailing smuggling. Historically, only cashew exports via the port of Bissau were authorized. This opening could
contribute to higher demand from possible
processing activity in neighboring countries. Additionally, Chinese firms should
enter the market for processing in Asia,
competing with India and Vietnam. Consequently, the CAD is projected to narrow
to 5.7 percent of GDP, mostly financed byconcessional loans and grants. Higher revenue collection and greater spending discipline could lower the fiscal deficit to 4.8
percent of GDP in 2024, or 5.6 percent including planned arrears clearance, withpublic debt falling to 75.6 percent of GDP.
The pace of the fiscal adjustment is highly
dependent on greater revenue mobilization, strengthened expenditure controls,
and increased grant financing, and thus

TABLE 2 Guinea-Bissau / Macro poverty outlook indicators

subject to considerable uncertainty given
the country’s ongoing political volatility.
The BCEAO may need to continue monetary tightening in 2024 to bring inflation
under control and in the context of rising
uncertainties over the withdrawal of
Niger, Mali, and Burkina Faso fromECOWAS and potential spillovers to WAEMU. These uncertainties are likely to increase investors’ risk perceptions leading
to tighter financing conditions and putting
additional strain on already low foreignexchange reserves.
A rebound in the agriculture sector will
partly drive the poverty rate to decline to25.4 percent in 2024. Further progress isexpected to be supported by lower foodprices reducing poverty to 24.1 percent in
2025, lifting over 15,000 out of poverty, andreaching 22.6 percent by 2026. Household
purchasing power will improve with higher cashew prices and lower food prices,
benefiting the poorest who spend a higher
share of their income on food.
The outlook is subject to substantial downside risks stemming from political instability, climate and agricultural shocks, uncertainty of EAGB operations, and financial
sector non-performing loans.

(annual percent change unless indicated otherwise)

Real GDP growth, at constant market prices
Private consumption
Government consumption
Gross fixed capital investment
Exports, goods and services
Imports, goods and services

2021
6.4
16.0
16.0
-5.0
15.0
4.0

2022
4.2
3.0
7.0
15.7
-6.5
2.5

2023e
4.2
-1.2
5.5
23.0
-3.1
0.8

2024f
4.7
5.1
-8.5
5.6
12.2
3.0

2025f
4.8
4.4
-5.6
7.6
9.6
4.0

2026f
4.9
4.2
3.9
2.6
7.6
3.0

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

6.3
5.4
5.6
7.3

4.7
6.1
4.8
3.7

4.2
7.5
4.0
1.84.7
5.1
4.4
4.4

4.8
5.1
4.5
4.7

4.9
5.1
4.6
4.8

Inflation (consumer price index)
Current account balance (% of GDP)

3.3
-0.8

7.9
-9.6

8.0
-9.4

4.5
-5.7

2.0-4.7

2.0-4.4

Fiscal balance (% of GDP)
Revenues (% of GDP)
Debt (% of GDP)
Primary balance (% of GDP)

-5.9
19.1
78.8
-4.3

-6.1
15.2
80.4
-4.7

-7.6
13.9
77.8
-5.0

-4.8
16.0
75.6
-2.2

-4.0
15.3
72.8
-1.6

-4.0
15.2
70.4
-1.6

26.0
60.2
89.126.0
59.9
89.2

25.9
60.4
89.5

25.4
60.2
89.6

24.1
58.8
89.0

22.6
57.7
88.3

1.4
8.0

1.4
8.2

1.4
8.3

1.5
8.6

1.5
8.8

1.6
9.0

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower middle-income poverty rate ($3.65 in 2017 PPP)a,b
Upper middle-income poverty rate ($6.85 in 2017 PPP)
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD.
Notes: e = estimate, f = forecast.
a/ Calculations based on 2021-EHCVM. Actual data: 2021. Nowcast: 2022-2023. Forecasts are from 2024 to 2026.
b/ Projections using microsimulation methodology.

MPO2

Apr 24