Guinea-Bissau Economy

Guinea-Bissau Economy


  • Basic data
  • Public finances and the state budget
  • Banking system
  • Tax System

Basic data

In 2020, the economy was expected to grow at a sustained rate of 5%, but this was revised towards -0.5% due to the outbreak of COVID-19, but it is expected to increase to 2.1% in 2021, depending on the global economic revival. Guinea-Bissau’s weak growth performance is matched by a low level of private investment – ​​2% of GDP – the second lowest in the world. Gross revenue for 2020 was estimated at $2020. The sharp decline in cashew nut exports led to a drop in tax revenues and a worsening of the country’s fiscal deficit, which was expected to rise from 3.1% of GDP before the pandemic in 2020 to 4.5-4.8% of GDP. Guinea Bissau’s economy is highly dependent on the primary sector. The agriculture sector contributes approximately 52.5% to the GDP, while the services sector accounts for 37.2% and the industry sector 13.2%. The agriculture sector employs about 67.8%, while the industry sector employs about 7, 0%. The service sector accounts for 25.2%. Despite the rise in oil prices, inflation remained below the Community convergence threshold of 3.0% set by the UEMOA. The inflation rate increased from 0.3% in 2019 to 2% in 2020. Check ebizdir for economical facts of Guinea-Bissau.

Table from MOP + additionally balance of payments, indebtedness/GDP.

Pointer 2018 2019 2020 2021 2022
GDP growth (%) 3.8 4.6 -0.5 2.1 3.2
GDP/population (USD/PPP) 1,999.8 2070.0 2020.0 2040.0 2090.0
Inflation (%) 0.4 0.3 2.0 2.6 3.0
Unemployment (%) 2.8 2.8 3.2 ON ON
Export of goods (billion USD) 0.3 0.3 0.3 0.3 0.3
Import of goods (billion USD) 0.3 0.3 0.3 0.3 0.3
Trade Balance (Billion USD) 0.1 0.0 0.0 0.0 0.0
Industrial production (% change) ON ON ON ON ON
Population (millions) 1.9 1.9 2.0 2.0 2.1
Competitiveness ON ON ON ON ON
OECD export risk 7/7 7/7 7/7 7/7 ON

Source: EIU, OECD, WEF

Public finance and state budget

Public finance
State budget balance (% of GDP) -3.0
Public debt (% of GDP) ON
Current account balance (billion USD) -0.1

In 2015, Guinea-Bissau adopted a new development framework for the period 2015-2025: the Guinea-Bissau Vision 2025. The first phase of this program known as “Terra Ranka, 2015-2020” was implemented in the period 2015-2020. The next phase of the project should continue in 2021. The debt-to-GDP ratio was 69.2% in 2019. In 2020, the debt-to-GDP ratio was estimated at 79.8%. Guinea-Bissau’s fiscal position remains under pressure, particularly due to higher-than-planned spending; the deficit of public finances at the beginning of 2019 was significantly higher than assumed in the draft budget. The fiscal deficit remained high at an estimated 6.1% of GDP in 2020 – above the WAEM deficit target of 3.0%.

Banking system

Guinea-Bissau’s financial sector faces major challenges and access to financial services is low. Most indicators of financial health point to the vulnerability of Guinea-Bissau’s financial system, financial depth appears to be below the level indicated by the country’s characteristics, and access to financial services is limited. Commercial banks are on average less profitable and less liquid, face higher non-performing loans and are less compliant with key prudential indicators than banks in other WAEMU countries. While financial intermediation has picked up recently, credit to the private sector remains lower than the country’s fundamentals suggest. Access to financial services is low in Guinea-Bissau and the banking sector contributes only marginally to corporate investment programs. The financial sector in Guinea-Bissau, as in other WAEMU countries, is dominated by the banking sector. The banking sector currently includes four banks whose assets represent almost 32 percent of Guinea-Bissau’s GDP. While the industry is on average well capitalized, with average solvency ratios above WAEMU average levels, there is considerable heterogeneity across banks and most profitability and liquidity ratios are weaker than in other WAEMU countries. Lending is concentrated in several sectors.

Tax system

The main items, in addition to social security (14%) and health insurance (8%), include VAT (15%), corporate tax (25%), property tax (according to the size and type of use of the building), interest tax (15% ), administrative (stamp) tax (varies), vehicle ownership tax (varies), PHM tax (varies) and press notices and advertising tax (100 CFA). Tax on dividends is 30%.

Guinea-Bissau Economy