Recent Developments & Prospects

Macroeconomic Policy

Fiscal Policy

Monetary Policy

Economic Cooperation, Regional Integration & Trade

Debt Policy

Economic & Political Governance

Private Sector

Financial Sector

Public Sector Management, Institutions & Reform

Natural Resource Management & Environment

Political Context

Social Context & Human Development

Building Human Resources

Poverty Reduction, Social Protection & Labour

Gender Equality

Thematic analysis: Structural transformation and natural resources

Author: Yannis Arvanitis

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  • Guinea-Bissau returned to positive growth of 0.3% in 2013, compared to -1.5% in 2012, but the economic consequences of the military coup in April 2012 persist. Growth is expected to rise to 2.8% in 2014 and 2.6% in 2015. These forecasts depend strongly on the socio-political climate and on how the general elections turn out in 2014.
  • The budget balance fell by 4.7% of GDP in 2013. In the short term, renewed cooperation with donors should contribute to an improvement in public finances.
  • The social and human context has deteriorated, in particular due to a general lack of state resources and physical difficulties of accessing health care services.

The April 2012 military coup caused a certain amount of economic turbulence. In 2013, the growth rate was 0.3%, an improvement over 2012. This return to growth, however, hides serious structural problems, which have only worsened with the interruption of most of the reforms introduced before the coup. In 2014, the growth of gross domestic product (GDP) is expected to reach 2.8%, thanks to an anticipated economic recovery following the scheduled elections.

At the fiscal level, the suspension of operations by most technical and financial partners slowed reforms and interrupted financing. Budget cuts were felt in 2013 in expenditure on provision of public goods. This led to a halt in investments and to an increase in arrears. At the end of 2013, internal arrears had reached XOF 7.7 billion (CFA Franc BCEAO), including XOF 4 billion in wages. The fiscal deficit widened to 4.7% of GDP in 2013 from 2.7% in 2012. For 2014 and 2015, the socio- political climate is expected to return to normal and international co-operation to resume, thus allowing public finances to improve and arrears to be paid. Inflation fell from 2.1% in 2012 to 1.0% in 2013, mainly due to a slump in domestic demand.

The social situation remains precarious, with one of the lowest scores on the Human Development Index (HDI) in Africa. Given the fragility and low level of government resources, health care provision is far from satisfying needs. The number of technical staff members working for the Ministry of Health fell by 16% between 2007 and 2012. The cholera epidemic declared in 2012 continued in 2013 due to a lack of resources to stem the tide. Food insecurity also spiked, with more than one-third of the population undernourished. Generally speaking, Guinea-Bissau is only weakly integrated into global value chains, in particular due to an unfavourable business environment and a lack of infrastructure to support production.

Table 1: Macroeconomic indicators

Real GDP growth-
Real GDP per capita growth-3.9-
CPI inflation2.111.51.8
Budget balance % GDP-2.7-4.7-3.6-4.9
Current account balance % GDP-9.5-6.6-5.8-5.7

Source: Data from domestic authorities; estimates (e) and projections (p) based on authors’ calculations.