Guinea-Bissau - Joint Bank-Fund Debt Sustainability Analysis - External and Overall Debt Distress Risk Assessment

Jul 19, 2026

Guinea-Bissau’s external and overall debt distress risk remains high despite the January 2023 Debt Sustainability Analysis baseline context. Projections show a prolonged breach of indicative benchmarks for the present value of public and publicly guaranteed debt relative to GDP, alongside significant breaches for external debt-to-exports and external debt service-to-exports thresholds. With WAEMU safeguards, a downward PV trend since 2023, and external indicators declining over the medium term, public debt is assessed as sustainable with high risk. Key risks include adverse political conditions, export weakness, tighter financial conditions, higher food and oil prices, and climate-related disasters, plus potential contingent liabilities from state-owned enterprise stress and high NPLs.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages23

Reading Time58 min

AccessFree to download

Risk of External Debt Distress

Overall Risk of Debt Distress

Granularity in the Risk Rating

Application of Judgment

Public Disclosure Pub lic Disc losure Authorized Approved by: Abebe Adugna and Manuela Francisco (IDA) and Montfort Mlachila and Allison Holland (IMF) . Prepared by the staff of the International Development Association (IDA) and the International Monetary Fund (IMF) 1 , 2 | GUINEA-BISSAU: JOINT BANK-FUND DEBT SUSTAINABILITY ANALYSIS | | | --- | --- | | Risk of external debt distress | High3 | | Overall risk of debt distress | High | | Granularity in the risk rating | Sustainable | | Application of judgment | No | Guinea-Bissau’s risks of external and overall debt distress remain high, as in the January 2023 Debt Sustainability Analysis (DSA) . The present value (PV) of public and publicly guaranteed (PPG) debt relative to GDP exhibits a prolonged and substantial breach of its indicative benchmark while there are also significant breaches of the thresholds for the PV of external debt-to exports and external debt service-to-exports ratios. However, considering that (i) the country benefits from WAEMU currency union safeguards that provide for financial and technical support from the regional debt market institutions and larger regional members with strong debt carrying capacity; (ii) the PV of public debt shows a consistent downward trend from 2023 onwards under the baseline scenario; and (iii) the external DSA indicators are trending downwards consistent with sustainability over the medium-term, public debt is assessed as sustainable with high risk of debt distress. This conclusion is contingent on the authorities’ continued commitment to 1 The previous DSA was dated January 13, 2023 (IMF Country Report No. 22/87) and accompanied the Request for a ThreeYear Arrangement under the Extended Credit Facility (ECF) . 2 The DSA compares the evolution of debt-burden indicators against thresholds and benchmarks pre-determined by the country’s debt-carrying capacity. Guinea-Bissau’s Composite Indicator (CI) index, based on October 2023 WEO update and the World Bank’s 2022 World Bank’s Country Policy and Institutional Assessment (CPIA), indicates that the country’s debt carrying capacity remains weak (Para. 15) . 3 This DSA follows the Guidance Note of the Joint Bank-Fund Debt Sustainability Framework for Low Income Countries , February 2018. an ambitious, yet feasible, fiscal adjustment that aims to bring the fiscal deficit within the 3 percent of GDP WAEMU convergence criterion by 2025. This fiscal adjustment is supported by the Extended Credit Facility (ECF) arrangement. Risks include an adverse political scenario, limited capacity, weaker cashew nut exports, tighter global and regional financial conditions, higher global food and oil prices, and climate change-related natural disasters. Financial stress in state-owned enterprises and high NPLs could generate contingent liabilities and pose macro financial risks. The downward trend of the baseline debt indicators would further improve with full multilateral donor re-engagement and a further shift towards debt obligations on concessional terms. The authorities are also following IMF/WB advice on improving debt management and dedicating efforts to resolve legacy external arrears. 1. The perimeter of public debt is limited to the central government, the central bank and government-guaranteed debt.4 Data limitations preclude the inclusion of other units of general government and state-owned enterprises (SOEs) (Text Table 1) . The main source of risk from SOEs comes from the electricity and water utility Eletricidade e Águas da Guiné-Bissau (EAGB),5 which has guaranteed debt included in the DSA and its non-publicly guaranteed debts, estimated at 1.2 percent of GDP in 2022, included in the contingent liabilities shock.6 Beyond EAGB, other SOEs have relatively small non-guaranteed debt, based on the limited available information, and are not expected to represent a significant contingent liability. 2. Debt classification follows a hybrid approach in which debt to the

FAQs

How is Guinea-Bissau’s debt distress risk assessed in this analysis?

The analysis finds external and overall debt distress risks remain high. Despite indicator trends, the final assessment concludes public debt is sustainable with high risk of debt distress.

Which debt indicators show breaches against benchmarks?

The present value of public and publicly guaranteed debt relative to GDP shows a prolonged and substantial breach. There are also significant breaches of thresholds for the PV of external debt-to-exports and external debt service-to-exports ratios.

What factors support the conclusion of sustainable public debt despite high risk?

WAEMU currency union safeguards provide financial and technical support, the PV of public debt trends downward from 2023 under the baseline scenario, and external DSA indicators trend down over the medium term consistent with sustainability.

Jul 19, 2026

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