Two years after a military coup prevented Carlos Gomes Junior of the PAIGC from winning the 2012 election run-off, general elections are finally being held to restore democracy and reactivate foreign interest in the country. On 13 April, the legislative poll passed peacefully and the historically most popular party(PAIGC) won a majority in parliament. However, tensions will remain high as in the second round on 18 May - when the presidential vote will take place - the PAIGC candidate will face a contender who is supported by the military.

Impact on country risk

The interference of the powerful army in politics has traditionally been the main cause for destabilisation and economic meltdown in the small West-African country. The official economy is deeply vulnerable to the fluctuating world price of cashew (66% of total export revenues) and most international aid was suspended after the 2012 coup. Guinea-Bissau is a hub for illegal drugs coming from South-America destined to Europe and the high-ranked military leadership is accused of complicity and personal enrichment in this lucrative trade. Consequently, the threat of power loss will be resisted by army officials, which creates a continuous coup risk. Therefore, should the PAIGC win the presidential round next month and move towards reforming the army, the risk for military intervention will be high.

Analyst: Louise Van Cauwenbergh, l.vancauwenbergh@credendogroup.com