IMF: Guinea-Bissau Needs Improved Cash Management
The West African nation of Guinea-Bissau needs tighter spending controls and should strengthen its cash management system to reduce the continued build up of salary arrears in its vital cashew trade, the International Monetary Fund (IMF) has urged.
Guinea-Bissau is one of the world’s ten poorest countries. As the fifth-largest cashew producer, its exports of the nuts are a top earner for the country and 84% of the rural population depends on the cashew industry for its livelihood, according to World Food Programme.
An IMF team, under fiscal affairs chief Mauricio Villafuerte, visited Bissau last week for four days and concluded that: “Growth and fiscal prospects for 2014 hinge on the success of the cashew campaign and external support.
“The [IMF] mission highlighted the importance of setting clear policy guidelines as soon as possible to avoid the uncertainty that undermined last year’s cashew campaign. In this context, the mission suggested to suspend contributions toward the industrialisation programme.”
The IMF continued: “Low fiscal revenue and weak international financial support have led to an accumulation of salary arrears in recent months.
“Despite a fall in government expenditure the overall fiscal deficit on a commitment basis was 2.2% of gross domestic product [GDP] in 2013, while arrears amounted to about 1.2% of GDP.”
Given the limited revenue prospects in coming months, particularly before the start of the cashew campaign, the IMF called ‘for strict spending controls and prudent cash management to minimise further accumulation of arrears’.