BISSAU, June 3, 2025 - The World Bank has released the latest edition of the Guinea-Bissau Economic Update (EU), a report that examines recent economic trends and development issues in the country.
The current edition of the EU reviews economic developments in 2024 and provides an outlook for 2025-2028. It provides a deep dive on tax revenue composition and performance while providing recommendations to enhance revenue mobilization in Guinea-Bissau.
Despite a challenging cashew campaign, Guinea-Bissau's economy remained resilient in 2024, with real GDP growth reaching 4.8%, slightly above the 2023 rate of 4.4%. Inflation moderated to an average 3.8% in 2024, down from 7.2% in 2023. The fiscal deficit improved to 7.3% of GDP in 2024, driven by expenditure controls and higher donor grants notwithstanding lower-than-expected revenue collection.
Public debt climbed to 82.3% of GDP reflecting elevated financing needs and the tightening of financial conditions in the regional market.
The Economic Update highlights that tax pressure in Guinea-Bissau remains low and far below the West African Economic and Monetary Union (WAEMU) convergence criterion of 20 percent of GDP. A key immediate priority is to rationalize the country's multiple tax expenditures, including broadening the VAT base, strengthening the Personal Income Tax and the Corporate Income Tax, adjusting excise rates on fuels and alcohol, and improving transparency and oversight mechanisms.
"By pursuing these reforms, Guinea-Bissau can create fiscal space to address the rising need for quality public services, especially in the priority areas of health, education, and infrastructure," says Maria Elkhdari, World Bank Group Country Economist and lead author of the report.
For 2025-2028, the outlook is favorable but subject to risks - growth is projected to average 5.1%, assuming favorable cashew production, strong activity in the services sector, and continued investment in key infrastructure projects. The report also projects an improvement of the fiscal position supported by revenue-based fiscal consolidation. The improvement in the debt trajectory hinges on a large fiscal consolidation in 2025 that can only be achieved with a strong political commitment.
"Strengthening revenue mobilization is crucial for Guinea-Bissau to achieve sustainable economic growth," says Rosa Brito, World Bank Group Resident Representative in Guinea-Bissau. "The Economic Update Report offers timely and valuable insights for policymakers, presenting concrete policy recommendations to help build a more equitable, efficient, and resilient tax system that can effectively support Guinea-Bissau's development goals."
