[{"bbox": [96, 153, 1133, 206], "category": "Text", "text": "force of the financing agreement. This Action may be implemented in indirect management with an entity which will be selected by the Commission's services."}, {"bbox": [96, 219, 1133, 405], "category": "Text", "text": "This Action is aligned with Priority 2 “Good Governance and Stability” of the 2021-2027 Multiannual Indicative Programme of the European Union in Guinea-Bissau, which aims to develop a transparent and accountable economic governance. It also contributes to the Global Gateway, by promoting a safer environment for investment. The Action specifically refers to its result 3.3.1 “Public financial management is significantly improved” and result 3.3.2 “Governance transparency and accountability is significantly improved”. Moreover, it contributes to the Sustainable Development Goals (SDGs), namely SDG16 (Peace, justice and strong institutions) and the SDG 17 (Global partnership for sustainable development)."}, {"bbox": [85, 433, 323, 464], "category": "Section-header", "text": "# 2 RATIONALE"}, {"bbox": [85, 498, 234, 525], "category": "Section-header", "text": "## 2.1 Context"}, {"bbox": [96, 563, 1133, 699], "category": "Text", "text": "Guinea-Bissau, one of the world's poorest and most fragile countries, has a population of about 1.9 million. The structure of the economy has barely changed in the last two decades and is almost entirely dependent on a single crop of cashew, which accounts for 90-98% of total export earnings. Agriculture accounts for more than 45% of GDP and employs 80% of the labour force, mainly women. The poorly diversified economy makes the country highly vulnerable to global shocks and adverse climatic conditions."}, {"bbox": [96, 712, 1133, 925], "category": "Text", "text": "According to the World Bank, real economic growth slowed to 3.5% in 2022, down from 6.4% in 2021. This was driven by supply chain disruptions and reduced demand and economic activity, caused by pandemic containing measures and policies. Inflation increased to 7.8%, from 3.3% in 2021. The overall fiscal deficit fell marginally from 5.5% of GDP in 2021 to 5.2% in 2022. Tax revenue remained at 9.1%, equating to a wage-to-tax-revenue ratio of 65.3%. On the expenditure side, total Government spending decreased slightly from 24.5% of the GDP in 2021 to 23.3% in 2022 with public debt reaching 80.2% of the GDP. Irregular and illegal economic activity is not quantified but it can be assumed as a substantial part of the total economy of the country. In this context, the risk of money laundering, in particular related to trafficking and organized crime, is increased."}, {"bbox": [96, 936, 1133, 1015], "category": "Text", "text": "Real GDP growth is projected to reach 4.5% in 2023, as international demand for cashew recovers and exports rebound. Strong domestic production and export figures for cashew, and wage bill controls should help close the fiscal deficit to 4.2%. Debt is forecasted to fall to 78.1% of the GDP. Inflation is projected to fall to 5%."}, {"bbox": [96, 1028, 1133, 1189], "category": "Text", "text": "In Guinea-Bissau, poverty and inequality remain widespread, with increasing rural-urban disparities and with human development indicators that remain amongst the lowest in the world.³ According to the World Bank, in 2018 the poverty rate at national poverty lines was 47.7%.⁴ In 2021, the Human Development Index (HDI) was 0.483, decreasing to 0.306 when adjusting for Inequality (Inequality-adjusted Human Development Index).⁵ The Gini Index in 2018 was 34.8. Following the latest available data from the World Bank (2018) almost 59% of the population pertaining to the poorest 40 per cent lives in rural areas.⁶⁷"}, {"bbox": [96, 1200, 1133, 1307], "category": "Text", "text": "The political instability in Guinea-Bissau has limited the development of the country's institutional capacity for good public financial management (PFM) and slowed down anti-corruption efforts. Current PFM systems do not ensure adequate expenditure management prioritization, control, accountability, and efficiency. In 2022, the country ranked 164/180 on the Corruption Perceptions Index (CPI) with a score of 21/100."}, {"bbox": [96, 1319, 1133, 1425], "category": "Text", "text": "The overall situation in the country remains fragile, facing challenges linked to transnational organised crime in a context of porous borders, weak rule of law, persistent socio-economic vulnerability, and climate change-related issues. Covid-19 disrupted the already fragile economy and led to the deterioration of the fiscal situation, accentuating the gap to the average growth of the West African Economic and Monetary Union's GDP. In January"}, {"bbox": [85, 1510, 1137, 1551], "category": "Footnote", "text": "³ World Bank (2023) In Guinea-Bissau, Economic Growth Depends on Strengthening Gender Equality and Education. Available at: https://www.worldbank.org/en/country/guineabissau/publication/in-guinea-bissau-economic-growth-depends-on-strengthening-gender-equality-and-education"}, {"bbox": [85, 1550, 1070, 1569], "category": "Footnote", "text": "⁴ World Bank (2018) Guinea-Bissau Country Profile. Poverty and Inequality Platform. Available at: https://pip.worldbank.org/country-profiles/GNB"}, {"bbox": [85, 1569, 1130, 1606], "category": "Footnote", "text": "⁵ UNDP (2021) Inequality-adjusted Human Development Index (HDI) database. Available at: https://hdr.undp.org/inequality-adjusted-human-development-index#/indicies/IHDI"}, {"bbox": [85, 1607, 1070, 1627], "category": "Footnote", "text": "⁶ World Bank (2018) Guinea-Bissau Country Profile. Poverty and Inequality Platform. Available at: https://pip.worldbank.org/country-profiles/GNB"}, {"bbox": [85, 1626, 1070, 1646], "category": "Footnote", "text": "⁷ World Bank (2018) Guinea-Bissau Country Profile. Poverty and Inequality Platform. Available at: https://pip.worldbank.org/country-profiles/GNB"}, {"bbox": [1130, 1680, 1144, 1701], "category": "Page-footer", "text": "4"}]