Guinea-Bissau, one of the world’s poorest and most fragile countries, has a population of about 1.9 million. Guinea-Bissau borders Senegal to the north and Guinea to the south, and it’s Atlantic Ocean coast is composed of the Bijagós archipelago, with more than 100 islands. Despite its size, Guinea-Bissau is host to a large variety of ethnic groups, languages, and religions.
Guinea-Bissau has a history of political and institutional fragility dating back to its independence from Portugal in 1974. It is one of the most coup-prone and politically unstable countries in the world. Since independence, four successful coups have been recorded, with another 17 coups attempted, plotted, or alleged. Some progress has been made with the previous president, José Mário Vaz to be the first to complete a full term since independence. The 2019 presidential elections were followed by a political crisis that ended in April 2020 with ECOWAS recognition of Umaro Sissoco Embaló as President of the Republic.
In February 2022, after a period of relative political stability, there was another attempted coup in Bissau at the Government Palace whilst a government cabinet meeting was in session. This was the 17th coup attempt in Guinea-Bissau since independence, which adds to the already high level of economic uncertainty and risks. President Embaló subsequently used his legislative powers in May 2022 to dissolve the Parliament and set elections for December 18, 2022. A transitional, interim government has been appointed until the elections, which were then postponed to June 4, 2023.
Presidential elections will take place at the end of 2024.
Real economic growth slowed to 3.5% in 2022, down from 6.4% in 2021. This was driven by supply chain disruptions and reduced demand and economic activity, caused by pandemic containing measures and policies. Inflation increased to 7.8%, from 3.3% in 2021. The overall fiscal deficit fell marginally from 5.5% of GDP in 2021 to 5.2% in 2022. Tax revenue remained the same at 9.1%, equating to a wage-to-tax-revenue ratio of approximately 65.3%. On the expenditure side, total government spending decreased slightly from 24.5% of GDP in 2021 to 23.3% in 2022. Public debt reached 80.2% as a result.
Real GDP growth is projected to reach 4.5% (2.3% in per capita terms) in 2023, as international demand for cashew recovers and exports rebound. Strong domestic production and export figures for cashew, and wage bill controls will help close the fiscal deficit to 4.2%. Debt is forecasted to fall to 78.1% of GDP. Inflation is projected to fall to 5%.
The outlook is subject to downside risks from continued inflationary pressures, shocks to the cashew sector, political instability, fiscal risks, and climatic shocks. Risks associated with banking instability and the SOE sector also remain a threat to macro-financial stability.
Another steep increase in oil prices would also put pressure on the external current account balance and leave fewer resources for pro-poor government spending. Addressing high inequality in the country also requires efforts to improve service delivery and enhance access to basic services. However, accelerating or even sustaining the pace of poverty reduction will be difficult if the major development challenges that constrain growth, inclusiveness, and sustainability are not addressed.
Last Updated: Apr 07, 2023