Guinea Bissau's economy is excessively dependent on the production and export of cashew nuts, leaving the country highly exposed to fluctuations in international prices and local weather conditions, the International Monetary Fund (IMF) has said.
As a way out, the IMF suggests that diversifying its output and exports can contribute to higher and more sustainable growth.
Guinea Bissau is one of the poorest countries in the world. It has the vital cashew nut crop as its main source of foreign exchange that provides a modest living for most of Guinea Bissau’s farmers. The West African country, has a massive foreign debt and an economy that relies heavily on foreign aid.
“Opportunities lie in a range of areas such as agriculture, processing industries, natural resources and tourism,” the IMF said. “Taking advantage of these opportunities requires addressing constraints that have hindered diversification to date”.
Some of the actions that IMF is taking include addressing human capital needs, improving the regulatory environment, encouraging financial deepening, removing infrastructural bottlenecks, and maintaining political stability.
In February, the IMF said its management had approved the second review of the country´s Staff-Monitored Program which was to support the government’s programme of reforms. This aimed at supporting macroeconomic stability and debt sustainability, which will in turn aid in strengthening social policies and enhancing public governance of the country.