Guinea-Bissau is a republic with a president as head of state. Formal power is in the hands of the president, who is assisted by a prime minister. However, the army, especially after recent events, is a very important power factor that does not hesitate to use force or the threat of force to defend its own interests. Several times, these interests have turned out not to always run parallel with the country's interests. The government consists of the President, the Prime Minister, the other ministers and state secretaries and the director of the Central Bank. The Government is accountable to the 102-member Parliament. Parliament was dissolved by Yala in November 2002, but was reinstated with the elections of 28 March 2004. However, the latest crisis has once again shown that, when it comes down to it, parliament is not a significant power factor. Only with a structurally reduced role for the armed forces could the parliament function properly, but this does not look likely at present. Moreover, within the individual parties and between the parties themselves, various currents are fighting for power. For some years now, ethnic contrasts (mainly between Balantes and other ethnic groups, but also between South and North Balantes) have been playing an increasing role, and this is not expected to disappear in the future.
The poor administration by the former government of President Yala, the poor economic and human rights situation and the deteriorating financial and social position of the army led to the coup d'état of 14 September 2003. Under an interim government, the first steps towards stabilisation and economic recovery were taken. The new government called on the international community to come to the country's aid. However, there was virtually no response. Previously, when the military needed money, they could visit state institutions such as the Central Bank, the customs service and the tax office, with some show of force and guaranteed success. The interim government, partly at the instigation of the IMF and the EU, increasingly tried to put a stop to these 'mafia practices'. After various elections and coups, power is currently in the hands of a military unta led by Manuel Serifo Nhamadjo.
For the current political situation, see the history section.
The economy is mainly based on the agriculture (58%) and services (28.5%) sectors. Rice and cereals are the products used for domestic consumption and the main export product is cashew nuts. The cashew crop is important but the world market price of the cashew nut has fallen sharply since 1999, reducing its net value. Other exports include palm hearts, frozen fish and shrimp. Guinea-Bissau, Cape Verde, Gambia, Guinea, Mauritania and Senegal signed an agreement to promote regional cooperation in monitoring their fishing areas. The country has had a fisheries agreement with the European Commission since 2001. This agreement allows European fishermen to fish in the territorial waters of Guinea-Bissau. In addition, several separate fishing contracts have been concluded in the past, with the proceeds going directly to the President. The IMF emergency budget has clearly identified these (considerable) money flows.
Although the country has many natural resources, they are not used efficiently. This is partly due to Portugal's legacy of poor infrastructure, an import-intensive and limited industrial base and few well-trained workers. Thanks to World Bank and IMF programmes, the economy was cautiously on the right track before the outbreak of the conflict in 1998, despite large budget deficits and high inflation in the early 1990s. However, the conflict has proved very detrimental to economic development and the country is far from recovering from it.
The country is heavily dependent on support from the World Bank, the IMF and the European Commission. The number of bilateral donors is very limited and does not represent much in terms of aid volume. At the end of 2000, the very high nominal debt burden of $ 824 million (for a population of 1.2 million) was provisionally cancelled in the context of the HIPC. In May 2001, however, the IMF and World Bank decided to suspend their programmes, the Poverty Reduction Growth Facility and the Rehabilitation Credit respectively, because of the government's poor macroeconomic policies. The World Bank and IMF then provided some form of interim debt relief, but this too was discontinued at the end of 2002 due to a lack of transparency in the management of public finances. Following an Article IV consultation, Guinea-Bissau had succeeded in obtaining an agreement for a Staff Monitored Programme (SMP) with the IMF, but this was seriously delayed by the resignation of Prime Minister Carlos Gomes. The new government has indicated that it wants to be eligible for emergency post-conflict assistance (EPCA) in 2006. Some facts about the economy of Guinea-Bissau are that the growth rate was 3.5% in 2013. The GDP is $1,200 per capita (2013). In Guinea-Bissau, 58% of the GDP comes from the agricultural sector, industry contributes 13.5% and the service sector accounts for 28.5% of the GDP.
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