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World > Africa > Guinea-Bissau > Economy (Notes)

Guinea-Bissau - Economy (Notes)


ECONOMY
Guinea-Bissau is among the world's least developed nations and depends mainly on agriculture and fishing. Guinea-Bissau exports some fish and seafood, although most fishing in Guinea-Bissau?s waters is presently not done by Bissau-Guineans and very little fish and seafood is processed in Guinea-Bissau. The country?s other important product is cashews. License fees for fishing provide the government with some revenue. Rice is a major crop and staple food and, if developed, Guinea-Bissau could potentially be self-sufficient in rice. Tropical fruits such as mangos could also provide more income to the country if the sector were developed. Because of high costs, the development of petroleum, phosphate, and other mineral resources is not a near-term prospect. However, unexploited offshore oil reserves may possibly provide much-needed revenue in the long run.

The military conflict that took place in Guinea-Bissau from June 1998 to early 1999 caused severe damage to the country's infrastructure and widely disrupted economic activity. Agricultural production is estimated to have fallen by 17% during the conflict, and the civil war led to a 28% overall drop in gross domestic product (GDP) in 1998. Cashew nut output, the main export crop, declined in 1998 by an estimated 30%. World cashew prices dropped by more than 50% in 2000, compounding the economic devastation caused by the conflict. Before the war, trade reform and price liberalization were the most successful part of the country's structural adjustment program under International Monetary Fund (IMF) sponsorship. Under the government's post-conflict economic and financial program, implemented with IMF and World Bank input, real GDP recovered in 1999 by almost 8%. In December 2000 Guinea-Bissau qualified for almost $800 million in debt-service relief under the first phase of the enhanced Heavily Indebted Poor Countries (HIPC) initiative. However, Guinea-Bissau?s Poverty Reduction and Growth Fund program with the IMF was suspended that same month--following disbursement of the first tranche--due to off-program expenditures by the Yala regime. Thus, IMF and Paris Club internal debt relief for Guinea-Bissau was also suspended in 2001.

The year 2006 was disastrous for Guinea-Bissau's economy. Real GDP growth slowed from 2005, as did exports, which was largely the result of the government's cashew-pricing policy. The government had artificially set the price of cashews at 70 U.S. cents/kg--more than twice what traders were willing to pay. Farmers were eventually forced to sell their crops at knock-down prices, and many were pushed to the brink of starvation. The UN Food and Agriculture Organization has advised the government to let market forces dictate prices in the future. In an effort to stimulate exports, the government has significantly reduced export taxes.


Facts at a Glance: Geography - People - Government - Economy - Communications - Transportation - Military - Climate - Current Time - Ranking Positions - CFA Franc BCEAO Exchange Rates
Notes and Commentary: People - Economy - Government and Political Conditions - Historical Highlights - Foreign Relations - Relations with U.S.



Facts at a Glance
Geography
People
Government
Economy
Communications
Transportation
Military
Climate
Current Time
Ranking Positions
CFA Franc BCEAO Exchange Rates


Notes and Commentary
People
Economy
Government and Political Conditions
Historical Highlights
Foreign Relations
Relations with U.S.





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