THE International Monetary Fund said it will halt upcoming payments under its loan programme with Guinea-Bissau until the government reverses a decision to bail out two banks.
The IMF envisaged its support for the West African nation at 6.1 billion CFA francs ($10.5 million) this year, Oscar Melhado, the fund’s country representative, said in an e-mailed response to questions on Friday. In the absence of future IMF funding, the budget shortfall would increase to 3.1% of Guinea-Bissau’s gross domestic product this year after donors suspended aid worth 2.1% of economic output, he said.
“The bailouts implied an immense overrun in net credit” totaling 34 billion CFA francs, or 5.5% of GDP, Melhado said. “Other development partners may withdraw their support to Guinea-Bissau as well, as an IMF programme also signals that the country’s macroeconomic policies are sound.”
The country of 1.7 million people is Africa’s second-largest producer of cashew nuts. The nation has had three coups and one president assassinated since 2009.