[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"doc-detail-110365-en":3,"doc-seo-110365-105":29,"detail-sidebar-cat-0-en-105":90},{"code":4,"msg":5,"data":6},0,"success",{"doc_id":7,"user_id":8,"nickname":9,"user_avatar":10,"doc_module":4,"category_id":11,"category_name":12,"doc_title":13,"doc_description":14,"doc_content":15,"file_id":16,"file_url":17,"file_type":18,"file_size":19,"view_count":4,"is_deleted":4,"is_public":20,"is_downloadable":20,"audit_status":20,"page_count":21,"language":22,"language_code":23,"site_id":24,"html_lang":23,"table_of_contents":25,"faqs":26,"seo_title":13,"seo_description":14,"update_tm":27,"read_time":28},110365,549758252649,"Ivy","https://ap-avatar.wpscdn.com/avatar/8000253669c5317157?_k=1778319167496531819",8,"Research & Report","GUINEA-BISSAU: JOINT BANK-FUND DEBT SUSTAINABILITY ANALYSIS - High Risk Assessment","Guinea-Bissau’s risks of external and overall debt distress remain high, consistent with the June 2022 Debt Sustainability Analysis. Economic conditions improved in 2021 through faster GDP growth supported by the easing of COVID containment measures and record cashew nut production. The baseline scenario assumes gradual recovery in 2022–24 and sustained medium-term growth backed by better terms of trade, more stable socio-political conditions, and continued governance and structural reforms, including fiscal consolidation toward a 3% of GDP WAEMU deficit criterion by 2025.","Public Disclosure  \nPub lic Disc losure Authorized  \nApproved by:  \nAbebe Adugna and Marcello Estevão (IDA) and Montfort Mlachila and Eugenio Cerutti (IMF)  \nPrepared by the staff of the International Development Association(IDA) and the International Monetary Fund (IMF) 1 , 2  \n\n| GUINEA-BISSAU: JOINT BANK-FUND DEBT SUSTAINABILITY ANALYSIS |  |\n| --- | --- |\n| Risk of external debt distress | High3 |\n| Overall risk of debt distress | High |\n| Granularity in the risk rating | Sustainable |\n| Application of judgment | No |\n\nGuinea-Bissau’s risks of external and overall debt distress remain high, in line with the June 2022 Debt Sustainability Analysis (DSA) . GDP growth accelerated in 2021 on the back of the gradual lifting of COVID containment measures and the record high cashew nut production, with positive spillovers on the fiscal and external accounts. The macroeconomic outlook underpinning the DSA assumes a gradual economic recovery in 2022-24 and sustained growth in the medium-term supported by an improvement of terms of trade, a more stable socio-political environment, and the ongoing governance .and structural reforms. The baseline assumes that the fiscal consolidation efforts will ensure convergence of the fiscal deficit to the West African Economic and Monetary Union’s (WAEMU) convergence criterion of 3 percent of GDP by 2025, which creates fiscal space for higher social spending and growth-enhancing  \n1 The previous DSA was dated June 2, 2022 (IMF Country Report No. 22/196) and accompanied the third review under Guinea-Bissau’s Staff-Monitored Program (SMP) .  \n2 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 2022 WEO update and the World Bank’s 2021 World Bank’s Country Policy and Institutional Assessment (CPIA), indicates that the country’s debt carrying capacity remains weak (Para. 15) .  \n3 This DSA follows the Guidance Note of the Join Bank-Fund Debt Sustainability Framework for Low Income Countries  , February 2018.  \npublic investment. The ratio of public debt to GDP increased in 2021 but is projected to start falling in 2023 and converge to below the 70 percent of GDP debt ceiling by 2027.  \nRisks include an adverse political scenario, limited capacity, weaker cashew nut exports, tighter global financial conditions, volatile global food and oil prices, and climate change-related natural disasters. Financial stress in stateowned enterprises and high NPLs could generate contingent liabilities and pose macro financial risks.  \nThe present value (PV) of public and publicly guaranteed (PPG) debt relative to GDP exhibits a prolonged and substantial breach of its indicative benchmark. 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 2022 onwards under the baseline scenario; and (iii) the external DSA indicators are consistent with sustainability following a downward trend over the medium-term, public debt is assessed as sustainable.  \nThis conclusion is contingent on the authorities’ continued commitment to 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 was supported by the Fund’s Staff Monitored Program (SMP) which is expected to continue during the Extended Credit Facility (ECF) arrangement. 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 ","cbCaip19Pf8z13rc","https://ap.wps.com/l/cbCaip19Pf8z13rc","pdf",1208830,1,24,"English","en",105,"# Key Risk Findings\n## External and Overall Debt Distress\n## Granularity and Judgment\n# Macroeconomic Assumptions\n## Growth Drivers and Recovery Path\n## Fiscal Consolidation and Social Spending\n# Debt Trajectory and Stress Factors\n## Public Debt Indicators and Ceilings\n## Contingent Liabilities and Shocks\n# Sustainability Assessment\n## Baseline Sustainability and Contingencies\n## Role of Donors and Concessional Terms","[{\"question\":\"How is the risk of external debt distress assessed in this analysis?\",\"answer\":\"The risk of external debt distress is rated high, with the overall risk of debt distress also remaining high.\"},{\"question\":\"What macroeconomic factors support the baseline assumptions?\",\"answer\":\"The baseline assumes gradual recovery in 2022–24 and sustained medium-term growth supported by improving terms of trade, a more stable socio-political environment, and ongoing governance and structural reforms.\"},{\"question\":\"Why is public debt assessed as sustainable despite high risk of distress?\",\"answer\":\"Sustainability is supported by WAEMU safeguards, a consistent downward trend of public debt PV under the baseline, and external DSA indicators that align with sustainability over the medium 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is the risk of external debt distress assessed in this analysis?","Question",{"text":74,"@type":75},"The risk of external debt distress is rated high, with the overall risk of debt distress also remaining high.","Answer",{"name":77,"@type":72,"acceptedAnswer":78},"What macroeconomic factors support the baseline assumptions?",{"text":79,"@type":75},"The baseline assumes gradual recovery in 2022–24 and sustained medium-term growth supported by improving terms of trade, a more stable socio-political environment, and ongoing governance and structural reforms.",{"name":81,"@type":72,"acceptedAnswer":82},"Why is public debt assessed as sustainable despite high risk of distress?",{"text":83,"@type":75},"Sustainability is supported by WAEMU safeguards, a consistent downward trend of public debt PV under the baseline, and external DSA indicators that align with sustainability over the medium 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