From the Executive Board

• Pages: 266-269

Page 266

Following are excerpts of recent IMF press releases. Full texts are available on the IMF's web site (http://www.imf.org) under "news" or on request from the IMF's Public Affairs Division (fax: (202) 623-6278).

Guinea-Bissau: ESAF

The IMF today approved a request by the government of Guinea-Bissau to extend the period of the three-year arrangement under the Enhanced Structural Adjustment Facility (ESAF) to end-March 1998, and to augment the amount available by SDR 1.1 million (about $1.4 million). This will provide SDR 4.7 million (about $6.5 million) to support the government's economic program for 1997-98. The IMF had approved a three-year ESAF loan for Guinea-Bissau equivalent to SDR 9.45 million (about US$13 million) on January 18, 1995 (see Press Release No. 95/3, IMF Survey, February 6, 1995).

Medium-Term Strategy and 1997-98 Program

The basic economic objectives for 1997-99 are to maintain annual economic growth of about 5 percent, to lower inflation to 5 percent in 1999 from about 66 percent in 1996, and to reduce the external current account deficit (excluding grants) by about 5 percentage points to 16 percent of GDP by 1999. The program aims to maintain the level of investment at 22 percent of GDP, while enhancing its efficiency, through a projected rise in gross domestic saving to 4 percent of GDP in 1999 from 1 percent of GDP in 1996.

Within this medium-term framework, the 1997-98 program, supported by the third annual ESAF loan, seeks to raise annual real GDP growth to about 5 percent, to contain annual inflation (on an end-period basis) at about 10 percent in 1997 and 7 percent in 1998, and to reduce the external current account deficit (excluding grants) to 18 percent of GDP in 1997 and to 16.4 percent in 1998.

[ GRAPHICS ARE NOT INCLUDED ]

Page 267

To achieve these aims, fiscal policy will be the key focus of the authorities' economic policy, with a twofold objective of further raising the current primary surplus through an increase in the revenue/GDP ratio, and overhauling the tax system. The program seeks a reduction in the central government deficit to 12.3 percent of GDP in 1997 from 18 percent of GDP in 1996. On the revenue side, a general sales tax and a major reform of external...