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  • Record cashew crop gives fragile Guinea-Bissau economic reprieve

    Sep 15th, 2015

    A record cashew harvest in Guinea-Bissau is helping shore up government finances, the IMF and a former finance minister said, allaying concerns of an economic collapse following a month-long political crisis.President Jose Mario Vaz dismissed his cabinet in August, prompting West African regional bloc ECOWAS to warn that economic gains made since a 2014 election were "seriously threatened".But an International Monetary Fund official said that in fact the economy had been boosted by this year's bumper crop of cashews, which make up more than 80 percent of all exports in the tiny West African nation."So far, there are no indications that political developments have had a substantial impact on the economy, which has benefited from a record cashew campaign," the IMF official said.

    The former Portuguese colony, which has seen nine coups since 1980, currently has no government and its ministries are only partly operational.ECOWAS is trying to mediate a solution to the crisis that has alienated Vaz from the ruling PAIGC party.The IMF official put cashew exports at around 152,000 tonnes as of the end of August, or some 2,000 tonnes above the 2015 projection. He added that higher prices had created a bigger incentive to export.The government said last year's exports were 136,000 tonnes.The cashew season runs from April-September. Geraldo Martins, finance minister until last month, told Reuters that data showed exports of 170,000 tonnes, beating the 2011 record."If there is a solution to the political crisis in the next few weeks, the economic impact can be minimal," he said.But he warned that fiscal revenues had fallen by 25-30 percent in August and said aid pledges from international donors could be in jeopardy due to the power vacuum."We were on the right track but with the current paralysis it's not clear we can conclude agreements with foreign partners," he said.Former prime minister Domingos Simoes Pereira helped convince donors to pledge over 1 billion euros ($1.1 billion) in financial assistance to the country in March.Martins added that before his dismissal, the economy was on track for GDP growth of 7 percent in 2015 versus an IMF forecast of 4.7 percent.