- The African Development Bank (ADB) today made public its 2002-04 country strategy paper for Guinea-Bissau, which was approved during the last months of the civilian regime of ex-President Kumba Yala. The Bank sums up a chaotic and down-spiralling economic situation in Mr Yala's Guinea-Bissau.
In July this year, the ADB Board had considered the 2002-2004 Country Strategy Paper for Guinea-Bissau and "noted the deteriorated economic situation." The situation resulted in a sharp fall in the GDP growth rate from 7.5 percent in 2000 - the year President Yala was elected - to only 0.2 percent in 2001 and continued with a recession estimated at 4.2 percent in 2002.
The overall budget balance posted a deficit equivalent to 24 percent of the GDP in 2001 - compared with 18 percent in 1997, the last year before the civil war - thereby generating strong cash flow pressures. The ADB pointed out that although inflation which stood at 3.3 percent in 2003 was maintained within reasonable limits, "practically all other macro-economic aggregates deteriorated."
The 2000-2003 Yala regime, which was to reconstruct Guinea-Bissau after years of civil war, destructions and political chaos, thus did not succeed in one of its primary tasks. Only in Mr Yala's first year as Guinea-Bissau's President did the country's economy grow substantially - something to be expected of a post-conflict society.
The following recession is harder to explain, as Guinea-Bissau still remains a post-conflict society in utter poverty. According to the ADB, poverty still affects close to 65 percent of the population of Guinea-Bissau. Continued political instability and President Yala's inability to produce consensus have been blamed for development optimism turning into pessimism in 2001, thus preventing foreign investments in the country.
The ADB warns the then-government of President Yala over his failure to govern in its strategy paper. The Bank voiced "concern over issues of governance attributable to institutional instability and the malfunctioning of key state institutions." It further "deplored the prolonged slackening of stabilisation and structural reform efforts which resulted in the suspension of programs with the Bretton Woods Institutions."
The ADB Board was also "concerned about the serious difficulties facing the implementation of the Bank Group's project portfolio and urged the government to intensify its efforts to improve project quality and impact on development." The failure to attract foreign investment was thus clearly placed with Mr Yala's government.
President Yala was also blamed for the failure to fight poverty in Guinea-Bissau - one of the world's poorest countries. The high level of poverty in Guinea-Bissau "is the result, among other things, of the inadequate production infrastructure and basic social services, the high cost of production support services and the lack of skilled manpower," the ADB paper reads.
The ADB therefore encouraged the Bissau authorities to complete its long awaited Poverty Reduction Strategy Paper. Furthermore, the Bank called on the authorities "to initiate the necessary structural reforms to enable the renewed commitment of foreign partners to the country's development."
Lastly, the ADB Board urged the Bissau authorities "to redouble efforts to develop the country's agricultural, fisheries and tourism potential." All in all, the Tunis-based Bank seems to have prescribed the Bissau government a textbook in basic economy, again demonstrating that Mr Yala's government was basically inoperative from 2001.
The Bank said it had approved of substantial development aid for Guinea-Bissau in form of loans and grants. It however emphasised that this aid would be channelled "at supporting the fight against poverty through human resources development and institution building."
The civilian government of President Yala was toppled by a military junta on 14 September this year, which also quoted Mr Yala's incompetence as a reason for the coup. An interim government, led by the civilian businessman and interim President Henrique Rosa is now leading the troubled nation towards economic reform and new elections.
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