afrol News, 29 September - The economy of Guinea-Bissau just does not want to take off. For years to come, per capita GDP growth is projected to be minimal, a new analysis shows.
The International Monetary Fund (IMF) during the last two weeks has had a mission in Bissau to review the economic performance of the impoverished and chronically unstable West African nation. The conclusions were more optimistic than before, but still chilling.
IMF mission leader Paulo Drummond noted that the renewed political instability in Guinea-Bissau in the first half of 2010 again had led to economic setbacks. In particular, donor budget support had again fallen back, limiting growth potentials.
However, on the positive side, "higher prices for cashews, the predominant export, and stable remittances helped sustain incomes and alleviated fiscal and balance of payments pressures. Construction activity has been buoyant despite a delay in the government investment programme," Mr Drummond said.
Therefore, and despite the setbacks, Guinea-Bissau at least could count on a 3.5 percent growth in real GDP during 2010, the IMF analysts estimated. Corrected with population growth - estimated at 2.2 percent annually - GPD per capita however only was set to grow at a modest 0.5 percent, according to the IMF.
Unfortunately, the Fund is not much more optimistic for the years to come. For 2011 and 2012, the IMF analysts foresee GDP growth rates of 4.3 and 4.5 percent. This translates to GDP per capita growth rates of 1.3 and 1.5 percent - far too low to address Guinea-Bissau's pervasive poverty problem.
And even these slightly optimistic growth prognoses are uncertain, the Fund holds. "Continued political stability and improved security continue to be critical to economic prospects," Mr Drummond emphasised.
Some relief however was in sight, according to the IMF analyst.
If Bissau authorities were able to keep on their current paste in the economic reform programme, the country could be eligible for massive debt cancellation already by the end of this year. So far, creditors have been hesitant on reducing Guinea-Bissau's debt burden, also in reference to the country's political instability.
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