Guinea-Bissau - Public finance
The IMF-sponsored structural adjustment program in Bissau began in 1987 and projected the achievements of a 3.5% growth rate, reforms to the economy, and public administration. Petroleum subsidies were reduced in 1988. In January 1989, customs duties and taxes on imports were lowered to reduce inflation. At the end of that year, the debt-service ratio stood at 43% of exports. The foreign debt was rescheduled by all major donors that fall. Early in the 1990s, failure to meet adjustment goals stopped payments, and progress in the mid-1990s brought the resumption of aid. Foreign aid literally supported the incumbent government of 1999. At the end of 2000, the country qualified for almost $800 million in debt relief. It will continue to receive assistance under the Heavily Indebted Poor Countries (HIPC) initiative.
The currency was devalued in May 1987. In January 1990, Guinea-Bissau agreed with Portugal to adopt the escudo. Reform of the national banking system was underway after 1989. In 1997, the escudo was replaced by the CFA franc. Bank officials siphoned off millions of dollars from reserves. External debt totaled $931 million.