Guinea-Bissau - Domestic policy

Yala promised to promote national reconciliation, right the economy, restore production, and give priority to agriculture. He also stated that he would reduce public spending and cancel ministerial perks. Observers note, however, that his disregard for constitutional rule and his abrasive style have antagonized every political group including his own cabinet, the civil service, and the military. In January 2001, five ministers belonging to the opposition party resigned when they said they had not been consulted in a cabinet reshuffling. In May, the International Monetary Fund (IMF) and World Bank suspended funding when millions in foreign aid went missing from the budget. Yala dismissed the head of the Supreme Court and three judges in September for overturning a presidential decision and later put two of the judges and two journalists in jail. He dismissed his foreign minister in November apparently over criticism, fired his prime minister for failing to meet expectations, and in December the government reported a coup attempt by the army. Unsurprisingly, his decisions have paralyzed the justice system, encouraged teachers and health workers to strike, and produced an extremely dangerous level of instability.

An under-performing economy has aggravated Guinea-Bissau's political woes. Cashew prices declined 45% over an 18-month period. Real GDP decreased from 9.3% growth rate in 2000 to 7.2% in 2001 and was projected to level off at around 4.0% for 2002–03. The IMF Poverty Reduction and Growth Facility (PRGF) program was temporarily suspended in May 2001 because of the disappearance of us$15 million in development funds. Guinea-Bissau failed to meet the requirements of two subsequent programs which could have led to the restoration of the PRGF: a short-term macroeconomic program in August–November 2001 and an emergency financial management program in April–July 2002. The loss of funds has made it difficult for the government to pay civil servants and soldiers.

Guinea-Bissau clearly needs the support provided through the PRFG. It is one of the 10 poorest countries in the world with an average annual income of US $180. Its Human Development Index (HDI) ranking is 167 (out of 174), 67% of the population is illiterate, and life expectancy was 49.8 years in 2002. The documents produced following the roundtable pledging conference held in 2002 by the world's donor nations indicated that the world is willing to help. Responsibility for the provision of economic aid, however, falls upon the donor and recipient alike. In order to restore the PRGF, Yala will need win back international confidence. In this he faced a major challenge. Not only will he need to tighten up fiscal programs, reduce off-budget spending on the military, pay civil service salaries on time, restore public services, rebuild infrastructure, and improve socioeconomic indicators; he must also stop the frequent leadership changes within his cabinet so that office holders can develop necessary skills. The Yala government must change its present mode of operation in order to deliver on its part of the international aid bargain.