US $790 million debt relief

The World Bank and the International Monetary Fund have agreed to a US $790-million debt relief package for Guinea-Bissau in support of the country’s poverty reduction programmes, the World Bank announced.

“Guinea-Bissau’s eligibility for debt relief under the enhanced HIPC Initiative is a recognition by the international community of the progress made in implementing economic reforms that should help to achieve poverty reduction,” it said on Tuesday.

HIPC is the bank’s facility known in full as the Heavily Indebted Poor Countries Initiative. According to the statement Guinea-Bissau, which has experienced armed conflicts in the last two years, remains one of the world’s poorest countries with some 88 percent of the population subsisting on less than US $1 a day.

However, the bank said that real gross domestic product (GDP), which shrunk by 28 percent in 1998, recovered by nearly 8 percent in 1999. The country’s fiscal deficit of more than 6 percent of GDP turned into a surplus of 3 percent over the same period.

Continued commitment of the international multilateral financial institutions to the government’s financial and economic programme remains, on condition the government makes “satisfactory progress” in implementing a basic education plan and the national health development programmes. In addition, the government is required to reintegrate combat veterans into normal, civilian life.