The government is implementing a three-year extended credit facility (ECF) arrangement with the IMF, worth an estimated US$33.3m, which runs to 2012. The programme is focused on boosting economic expansion, with a key target of raising real GDP growth to 4.5% by 2012. The programme also aims to restrain inflation, reduce the fiscal deficit and narrow the current-account deficit. Key pledges under the ECF include a commitment to clearing the government's large stock of arrears with domestic banks and the private sector, and modernising the public administration, which will involve an overhaul of the public-sector workforce. The successful implementation of the programme and sufficient progress with reform resulted in the country reaching completion point under the heavily indebted poor countries initiative last December, when a debt write-off worth an estimated US$1.2bn became irrevocable.

The granting of the ECF in May 2010 was a major step forward for Guinea-Bissau, and offered to pave the way to a normalisation of relations with donors. However, the success of the ECF reform programme will depend on the maintenance of political stability, the support of the army and the continued engagement of donors. Following the military mutiny of April 1st 2010 and the rising influence of the armed forces over political affairs, this remains in doubt. With donors and investors withholding funding and investment, the country's recovery is in danger of faltering, while any meddling in economic policy by the military could derail the ECF, jeopardising macroeconomic stability and efforts to improve governance.