By Eva Graf
- The IMF Executive Board approved Equatorial Guinea’s request for emergency assistance equivalent to about US$67.38 million under the Rapid Financing Instrument.
- The pandemic and the Bata explosions have inflicted heavy damage on Equatorial Guinea’s economy, substantially weakened its near-term economic outlook, increased economic and financial stress, and severely affected the livelihood of much of the population.
- The authorities are committed to taking further steps as part of their ongoing effort to address macro-critical governance and corruption challenges facing Equatorial Guinea.
The Executive Board of the International Monetary Fund (IMF) today approved a disbursement of SDR 47.25 million (about US$67.38 million, 30 percent of quota) to Equatorial Guinea under the Rapid Financing Instrument (RFI). The disbursement will help meet the urgent fiscal and balance of payments needs stemming from the COVID-19 pandemic and March Bata explosions, and catalyze additional external resources as well as bolster the regional reserves of the Economic and Monetary Community of Central Africa (CEMAC).
The COVID-19 pandemic and the Bata explosions have inflicted heavy damage on Equatorial Guinea’s economy and have increased external financing needs in the balance of payments by an additional projected US$625 million (5 percent of GDP) in 2021-22 (relative to the EFF-supported program). The authorities have appropriately boosted critical frontline healthcare spending, including the purchase of a large batch of vaccines, and rolled out social assistance to households severely affected by the pandemic and the Bata explosions.
While tackling these crises, the authorities have taken an important initial step to address macro-critical governance and corruption challenges by adopting an anti-corruption law, which is in line with international good practices. To boost transparency, they have established two escrow accounts at the Bank of Central African States (BEAC) for pandemic and Bata emergency-related spending, and are undertaking audits of such spending.
The IMF stands ready to provide policy advice and further support to Equatorial Guinea as it battles the fallout from the pandemic and the Bata explosions, including as part of the ongoing cooperation under the EFF-supported program.
Following the Executive Board’s discussion on Equatorial Guinea, Mr. Bo Li, Deputy Managing Director and Acting Chair, made the following statement:
“The Bata explosions and still unfolding COVID-19 pandemic have inflicted heavy human and economic damage on Equatorial Guinea. The authorities are taking measures to contain and mitigate the fallout from these shocks on the most vulnerable segments of the population and limit the impact on economic activity. They have ramped up frontline healthcare and social spending and have provided limited and temporary tax relief to the private sector to cushion adverse effects on activity and employment.
“Addressing longstanding macro-critical governance and corruption challenges is critical to secure inclusive growth. The authorities met four prior actions. They adopted an anti-corruption law, in line with their obligations under the United Nations Convention Against Corruption. They have also commissioned audits for the pandemic and Bata emergency-related spending, they have established two escrow accounts at the BEAC for emergency spending, and they have committed to adhering to good public procurement practices. Continued implementation of these measures is essential for effective spending on pandemic- and reconstruction-related needs.
“To safeguard macroeconomic stability, promote inclusive growth and fight corruption, the authorities need to accelerate reforms under the EFF-supported program. The recent progress in advancing some governance reforms is welcome, but this effort must be sustained and reforms under the EFF-supported program need to be fully implemented.
“It is important that the authorities honor their commitment to prepare and publish a list of meaningful public assets for privatization, and approve regulations in line with the anti-corruption law for an asset declarations regime for public officials and the governance of the anti-corruption commission as soon as possible. Measures to strengthen banking sector stability, such as the settlement of domestic arrears and the recapitalization of the largest bank, need to be implemented without further delay. Additional efforts to safeguard social spending and enhance social protection are needed, together with continued reforms on revenue administration and strengthening public financial management framework.”
|Table 1. Equatorial Guinea: Selected Economic and Financial Indicators, 2018–26|
|(Annual percentage change, unless otherwise specified)|
|Production, prices, and money|
|Consumer prices (annual average)||1.3||1.2||4.8||0.5||3.1||3.1||3.1||3.1||3.0|
|Consumer prices (end of period)||2.6||4.1||-0.5||3.2||3.0||3.0||3.0||3.0||3.0|
|Monetary and exchange rate|
|Nominal effective exchange rate (- = depreciation)||3.3||-1.1||2.7||…||…||…||…||…||…|
|Real effective exchange rate (- = depreciation)||2.0||-2.3||7.5||…||…||…||…||…||…|
|Terms of trade||14.2||-6.2||-4.3||12.2||-7.9||-4.1||-1.3||-22.8||13.8|
|(Percent of GDP, unless otherwise specified)|
|Investment and savings|
|Gross national savings||7.2||1.7||-1.0||6.9||6.8||7.5||7.8||9.6||9.5|
|Of which: hydrocarbon revenue||16.2||14.7||10.6||12.3||10.5||9.3||8.5||7.6||6.7|
|Overall fiscal balance (Commitment basis)||0.5||1.8||-1.7||-0.8||-1.0||-0.1||-0.1||-0.2||0.0|
|Overall fiscal balance (Cash basis)2||1.3||-0.5||-3.2||-11.5||-1.0||-0.1||-0.1||-0.2||0.0|
|Non-hydrocarbon primary balance3||-15.1||-12.1||-11.1||-11.5||-9.9||-7.9||-7.1||-6.4||-5.4|
|Outstanding public debt4||41.2||43.0||48.9||42.7||45.4||44.4||43.5||42.8||41.4|
|Change in domestic arrears||0.8||-2.3||-1.4||-10.6||0.0||0.0||0.0||0.0||0.0|
|Current account balance (including official transfers; – = deficit)||-5.3||-6.1||-6.3||-4.2||-5.2||-3.8||-4.0||-16.0||-17.4|
|Total external public debt||12.6||13.9||15.3||16.1||20.6||22.0||23.7||25.7||27.1|
|External debt service-to-exports ratio (percent)||3.3||6.0||7.4||5.2||7.8||8.6||9.4||11.4||15.2|
|External debt service/government revenue (percent)||6.9||11.9||14.5||11.0||14.7||15.1||15.4||17.0||20.6|
|CEMAC Foreign Reserves|
|(US$ billions, end-of-period)5||6.6||7.4||7.8||8.9||10.3||11.5||n.a||n.a.||n.a.|
|(in months of extrazone imports)||2.7||3.6||3.1||3.4||3.8||4.1||4.2||4.4||n.a|
|Oil price (U.S. dollars a barrel)6||67.2||60.5||38.8||56.2||52.7||50.6||49.5||48.9||48.9|
|Nominal GDP (billions of CFA francs)||7,275||6,690||5,768||6,744||6,415||6,456||6,606||6,691||6,854|
|Nominal GDP (millions of US dollars)||13,097||11,417||10,036||…||…||…||…||…||…|
|Non-hydrocarbon GDP (billions of CFA francs)||3,855||3,875||3,849||3,964||4,191||4,426||4,714||5,012||5,328|
|Oil volume (crude + condensado, millions of barrels)||57||53||52||48||41||38||35||31||28|
|Exchange rate (average; CFA francs/U.S. dollar)||555.4||585.9||574.8||…||…||…||…||…||…|
1 Including oil, LNG, LPG, butane, propane, and methanol.
2 Includes a one-time clearance of outstanding arrears through securitization in 2021.
3 Excluding oil revenues, and interest earned and paid.
4 Outstanding public debt includes domestic arrears, which amounted to 12.4 percent of GDP in 2020.
5 The SDR allocation is not included in this figure.
6 The local price of crude oil is the Brent and includes a quality discount.