© 2011 International Monetary Fund December 2011 IMF Country Report No. 11/353 June 31, 2011 January 29, 2001 January 29, 2001 January 29, 2001 January 29, 2001 Guinea-Bissau: Second Poverty Reduction Strategy Paper This poverty reduction strategy paper on Guinea-Bissau was prepared in broad consultation with stakeholders and development partners, including the staffs of the International Monetary Fund and the World Bank. The PRSP describes the country’s macroeconomic, structural, and social policies in support of growth and poverty reduction, as well as associated external financing needs and major sources of financing. This country document is being made available on the IMF website, together with the Joint Staff Advisory Note on the Second Poverty Reduction Strategy Paper, by agreement with the member country as a service to users of the IMF website. Copies of this report are available to the public from International Monetary Fund Publication Services 700 19th Street, N.W. Washington, D.C. 20431 Telephone: (202) 623-7430 Telefax: (202) 623-7201 E-mail: [email protected] Internet: http://www.imf.org International Monetary Fund Washington, D.C. REPUBLIC OF GUINEA-BISSAU MINISTRY OF ECONOMY, PLANNING, AND REGIONAL INTEGRATION SECOND NATIONAL POVERTY REDUCTION STRATEGY PAPER DENARP/PRSP II (2011–2015) Bissau, June 2011 CONTENTS Acronyms and Abbreviations ............................................................................................................... 4 Executive Summary .............................................................................................................................. 6 1. Progress made and new challenges ......................................................................................... 6 2. Main Strategic Guidelines of the PRSP II ............................................................................... 7 Introduction ......................................................................................................................................... 12 I. POLITICAL, ECONOMIC, AND SOCIAL CONTEXT ........................................................... 13 1.1 Environment for Politics, Governance, and Security ................................................................. 13 1.2. Economic Performance ............................................................................................................. 15 1.3 Profile of Human Development ................................................................................................. 17 1.3.1 Overall situation: Limited and precarious human development ....................................... 17 1.3.2 Access to basic services: progress made and challenges to be overcome ......................... 19 1.3.3 HIV/AIDS: modest gains to be consolidated and expanded ............................................. 22 1.3.4 Human rights: difficult to implement and to exercise ....................................................... 23 1.3.5 Gender inequality: structural inequalities and setbacks in the progress towards equality between men and women ...................................................................................................... 25 1.4. Economic development and infrastructure ............................................................................... 26 1.4.1 Main findings and challenges facing the primary sector: little development of potential 26 1.4.2 Level of infrastructure development: lags in energy and transport .................................. 28 Energy Sector ............................................................................................................................. 28 1.4.3 Situation of the private sector: a developing sector in need of support ............................ 30 1.5 Analysis of poverty and MDG trends ........................................................................................ 30 1.5.1 Profile of monetary poverty: worsening poverty .............................................................. 30 1.5.2 Profile of nonmonetary poverty: precarious living conditions of the population ............. 32 1.5.3 MDG status and trends: sectoral comparison ................................................................. 36 II. GUIDELINES AND STRATEGIC CORE AREAS OF THE SECOND PRSP ....................... 38 2.1 Main lessons from the first PRSP ......................................................................................... 38 2.2. Guinea-Bissau’s Forward-Looking View ................................................................................. 42 2.2.1. Guinea-Bissau 2025 ......................................................................................................... 42 2.2.2. MDGs, 2020 Horizon ....................................................................................................... 43 2.2.3. Methodology and PRSP preparation process ................................................................... 44 2.3. Strategic guidelines ................................................................................................................... 46 2.3.1. Baseline for development and programming ................................................................... 46 2.3.2. Objectives ........................................................................................................................ 47 2.3.3. Strategic guidelines .......................................................................................................... 49 2.3.4. Guiding principles ................................................................................................................. 52 1. Adopting a stance geared toward development under the rule of law ................................... 52 2. Respect for and promotion of human rights ........................................................................... 52 4. Considering the issue of capacity building ........................................................................... 53 5. Promoting sustainable development that is more resilient to climate change .......................... 54 6. Promoting a new partnership with technical and financial partners ..................................... 54 2.4. The four strategic core areas of the second PRSP .................................................................... 55 2.4.1. Core area I: Strengthen the rule of law and republican institutions ................................. 55 1. Reform of the defense and security sector ............................................................................. 55 2. Combating the proliferation of small arms and light weapons and of drug trafficking ......... 58 3. Promoting human rights ......................................................................................................... 58 4. Strengthening justice and the rule of law .............................................................................. 59 5. Capacity building at the People’s National Assembly .......................................................... 61 6. Civic participation, national dialogue and reconciliation ...................................................... 61 7. Public administration reform and modernization ................................................................... 62 8. Decentralization and Local Development .............................................................................. 63 2 9. Natural disaster risk prevention and management ................................................................. 64 2.4.2 Core area II: Ensure a stable, stimulating macroeconomic environment ............................. 66 1. Stabilization of the macroeconomic framework and capacity building for strategic development management ..................................................................................................... 66 2. Public financial management reforms ................................................................................... 67 3. Improving the business climate and promoting the private sector ......................................... 68 2.4.3. Core area III: Promote inclusive, sustainable economic development ................................. 71 1. Support for growth-generating sectors .................................................................................. 71 2. Develop basic economic infrastructure ........................................................................................ 79 3. Improve governance in the emerging sectors of mining and oil ............................................ 83 4. Develop the processing industry ........................................................................................... 84 5. Improve and develop the job market ..................................................................................... 84 6. Environmental management and protection .......................................................................... 85 2.4.4. Core area IV: Raise the level of human capital development ............................................... 87 1. Develop and improve the quality of the education system ................................................... 87 2. Develop the health sector and upgrade the quality of services ............................................. 91 3. Intensify and expand HIV/AIDS programs ........................................................................... 96 4. Improve access to water and sanitation services ...................................................................