The International Monetary Fund has approved fresh funding for Guinea-Bissau after completing two programme reviews, even as it flagged weak reform performance and rising risks in the fragile West African economy.

The IMF said its Executive Board had concluded the ninth and tenth reviews of Guinea-Bissau's Extended Credit Facility (ECF), unlocking about $3.2 million in new financing.

The disbursement brings total support under the programme, approved in January 2023, to roughly $50.8 million.

The three-year arrangement is aimed at stabilising public finances, improving governance and reducing corruption, while creating room for broader economic growth.

Despite the latest approval, the Fund noted that programme implementation has fallen short. Several key targets were missed in 2025, including most of the quantitative performance criteria and all continuous structural benchmarks, reflecting policy slippages and political disruptions towards the end of the year.

To keep the programme on track, the IMF granted waivers for missed targets and approved adjustments to future goals. It also extended the programme by one year to December 2026.

Still, Guinea-Bissau's economy showed signs of resilience. Growth was estimated at 5.5 per cent in 2025, supported largely by strong cashew production, its main export, and favourable trade conditions. Inflation remained subdued at under 1 per cent, while the current account deficit narrowed.

However, fiscal pressures persisted. The budget deficit widened more than expected due to weak revenue collection, rising interest payments and lower external support. Public debt declined slightly to about 75 per cent of GDP, but the IMF warned that maintaining a downward trend would require tighter fiscal discipline.

"The economy of Guinea-Bissau has shown continued resilience… Program performance was negatively affected by policy slippages as well as political disruptions," said IMF Deputy Managing Director Bo Li.

Looking ahead, the Fund said the government's 2026 budget aims to strengthen fiscal consolidation by cutting the deficit and improving revenue collection, including tighter tax enforcement and better customs valuation.

The IMF also pointed to progress in financial sector reforms, including efforts to recapitalise a struggling bank, though it stressed the need for timely completion to restore stability. Reforms in the energy sector have begun to reduce losses at the state electricity company and improve cost recovery, while the government is exploring ways to expand power supply through regional markets and private investment.

Governance reforms have also advanced, particularly in improving transparency around public contracts, but the IMF said more needs to be done to strengthen accountability and improve the business environment.

Guinea-Bissau remains one of the world's poorest countries, heavily reliant on cashew exports and vulnerable to political instability. The IMF warned that downside risks remain significant, underscoring the need for sustained reform efforts and stronger policy discipline.