## 1gnqea2024001

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---

### Outlook and Risks
- Medium-term outlook faces substantial downside risks, including:
  - faster-than-projected depletion of oil reserves;
  - waning demand for hydrocarbons amid acceleration of global transition to net zero;
  - delays in implementing key policy reforms.
- Hydrocarbon production is projected to decline by a further 50 percent between 2023 and 2028 (projection based on wells actively being drilled).
- Without strong policy responses, all gains in per capita income achieved over the last two decades are expected to fully unravel by 2028.
- Staff projections and risk tilt:
  - Real GDP is expected to contract by 8.8 percent in 2023 and to contract by 1.4 percent on average between 2024–28.
  - Projected average growth in the nonhydrocarbon sector: 3.2 percent over 2023–28.
  - Inflation: 2.5 percent in 2023; temporarily increase to 5.0 percent in 2024; stay below 3 percent on average from 2025 onwards.
  - Current account balance surplus is expected to decline to 1.0 percent of GDP in 2023 and average - 7.6 percent of GDP over the medium term.
  - Staff assesses Equatorial Guinea’s overall risk of sovereign stress as moderate.

### Executive Board Assessment and Directors’ Priorities
- Directors urged front-loaded efforts to:
  - support macroeconomic and financial stability;
  - implement transformative reforms to promote economic diversification;
  - advance the governance and anti-corruption agenda to support sustainable growth.
- Fiscal anchors and consolidation:
  - Directors welcomed the authorities' agreement to anchor fiscal policy on the nonhydrocarbon primary balance and to consolidate public finances.
  - The 2024 budget targets a substantial fiscal adjustment while boosting investment in health and education.
- Financial sector stability:
  - Directors emphasized addressing banking-sector risks, restructuring and recapitalizing the troubled part of the banking sector, and tackling high levels of non-performing loans (NPLs).
  - These efforts should be coupled with asset-recovery actions to limit budgetary cost.
- Governance and transparency:
  - Urgent strong implementation of governance and anti-corruption reforms is needed.
  - Funding of the anti-corruption commission and adoption of the anti-corruption law are welcome steps; full implementation is encouraged.
  - Importance of improving transparency in the hydrocarbon sector, strengthening AML/CFT effectiveness, and addressing constraints in economic data generation and provision.
- Financing engagement:
  - Directors noted the authorities’ interest in a financing arrangement with the Fund and underlined the importance of building a track record on reforms and strengthening capacity, including through Fund technical assistance.

### Key Macroeconomic Indicators and Projections (selected)
- Real GDP (percent change): 2022: 3.2; 2023: -8.8; 2024: -5.5; 2025: 3.7; 2026: -4.1; 2027: -0.2; 2028: -0.8.
- Hydrocarbon GDP (percent change): 2022: 1.1; 2023: -21.0; 2024: -16.9; 2025: 4.7; 2026: -16.5; 2027: -7.3; 2028: -10.5.
- Non-hydrocarbon GDP (percent change): 2022: 5.4; 2023: 3.0; 2024: 3.0; 2025: 3.1; 2026: 3.4; 2027: 3.2; 2028: 3.5.
- Consumer prices (annual average): 2023: 2.5; 2024: 5.0; 2025: 1.8; 2026: 2.6; 2027: 2.2; 2028: 2.0.
- Gross investment (percent of GDP): 2023: 14.7; 2024: 14.3; 2025: 15.7; 2026: 16.1; 2027: 16.2; 2028: 16.3.
- Gross national savings (percent of GDP): 2023: 15.7; 2024: 10.5; 2025: 9.7; 2026: 7.9; 2027: 6.6; 2028: 5.7.
- Current account balance (including official transfers; - = deficit, percent of GDP): 2023: 1.0; 2024: -3.8; 2025: -6.1; 2026: -8.1; 2027: -9.6; 2028: -10.6.
- Imputed Foreign Reserves (net), US$ billion: 2023: 1.1; 2024: 0.8; 2025: 0.3; 2026: -0.5; 2027: -1.4; 2028: -2.5.
- Total public debt (percent of GDP): 2023: 42.1; 2024: 34.0; 2025: 33.3; 2026: 36.0; 2027: 37.4; 2028: 38.1.
- External debt (percent of GDP): 2023: 10.2; 2024: 2.1; 2025: 0.9; 2026: 2.5; 2027: 4.5; 2028: 5.7.
- Oil price (U.S. dollars a barrel): 2023: 82.7; 2024: 80.1; 2025: 76.5; 2026: 73.4; 2027: 71.1; 2028: 69.4.
- Nominal GDP (millions of US dollars): 2023: 9,917; 2024: 10,361; 2025: 10,914; 2026: 11,013; 2027: 11,356; 2028: 11,715.
- Non-hydrocarbon GDP (billions of CFA francs): 2023: 4,484; 2024: 4,939; 2025: 5,199; 2026: 5,531; 2027: 5,855; 2028: 6,201.
- Hydrocarbon volume (barrels, millions): 2023: 20.8; 2024: 15.4; 2025: 10.8; 2026: 8.2; 2027: 7.0; 2028: 6.7.
- Total Hydrocarbon Volume (millions of barrels of oil equivalent): 2023: 81.9; 2024: 61.7; 2025: 64.3; 2026: 53.3; 2027: 49.1; 2028: 45.1.
- Gross Reserve assets at the BEAC (months of next years' imports, imputed reserves): 2023: 5.4; 2024: 3.7; 2025: 2.0; 2026: -0.7; 2027: -3.8; 2028: -3.3.

### Fiscal Positions and Non-Hydrocarbon Balances
- Revenue (percent of GDP): 2023: 23.4; 2024: 24.6; 2025: 18.1; 2026: 16.2; 2027: 15.8; 2028: 15.4.
- Of which hydrocarbon revenue (percent of GDP): 2023: 19.2; 2024: 19.7; 2025: 13.1; 2026: 10.9; 2027: 10.3; 2028: 9.8.
- Non-hydrocarbon revenue (percent of GDP): 2023: 5.6; 2024: 6.2; 2025: 6.3; 2026: 6.4; 2027: 6.4; 2028: 6.4.
- Non-hydrocarbon primary balance (percent of GDP): 2023: -17.3; 2024: -15.3; 2025: -15.1; 2026: -15.5; 2027: -15.9; 2028: -16.3.
- Non-hydrocarbon primary balance (as percent of non-hydrocarbon GDP): 2023: -23.3; 2024: -19.5; 2025: -19.1; 2026: -18.6; 2027: -18.6; 2028: -18.6.
- Overall fiscal balance (Commitment basis, percent of GDP): 2023: 0.3; 2024: 2.9; 2025: -3.9; 2026: -6.6; 2027: -7.7; 2028: -8.7.
- Overall fiscal balance (Cash basis, percent of GDP): 2023: -2.0; 2024: 1.1; 2025: -5.3; 2026: -7.7; 2027: -8.8; 2028: -9.6.
- Change in domestic arrears (percent of GDP): 2023: -2.3; 2024: -1.8; 2025: -1.4; 2026: -1.1; 2027: -1.1; 2028: -1.0.

### Key Policy Recommendations
- Fiscal policy:
  - Anchor fiscal policy on the nonhydrocarbon primary balance.
  - Boost nonhydrocarbon revenue collection and reduce non-priority spending while improving social outcomes in health care and education.
  - The 2024 budget aligns with staff advice and is an ambitious step toward consolidation.
  - Staff recommended a cumulative adjustment in the NHPB of 6.0 percent of non-hydrocarbon GDP (or 2.7 percent of overall GDP) over 2024–26 to maintain public debt below 40 percent of GDP.
  - Staff advice to raise non-hydrocarbon revenue by at least 1.5 percentage points of NHGDP over 2024–26 via: deploying ASYCUDA to all ports; fully implementing the single window for vehicle clearance; enlarging the tax base; streamlining tax exemptions; introducing a digital VAT system; strengthening the large taxpayer’s unit.
  - Compress spending by 4.6 percentage points of NHGDP including phasing out fuel subsidies and streamlining civil servants’ benefits.
  - Create space for increasing social spending to at least 2 percent of GDP per year (against 1.8 percent of GDP on average per year over the last three years).
- Financial sector policy:
  - Restore banking-sector soundness by addressing solvency and liquidity issues in the troubled part of the banking sector, including restructuring and recapitalization.
  - Pair recapitalization with asset-recovery efforts, including creation of a special unit within any recapitalized bank and strengthening the debt enforcement framework.
  - Finalize and execute the financial inclusion strategy.
- Structural and inclusion policies:
  - Finalize and implement a comprehensive plan for repayment of domestic arrears.
  - Reduce regulatory burden for business creation.
  - Boost investment in basic healthcare, education, and sanitation to develop human capital.
  - Ensure well-functioning and efficient markets and advance privatization of some public assets through open and transparent international tenders.
- Governance and anti-corruption:
  - Step up efforts to address governance and corruption weaknesses and shortcomings in the AML/CFT framework.
  - Operationalization and funding of the anti-corruption commission and full implementation of the asset declaration regime are critical.
  - Improve transparency in the hydrocarbon sector and publish a comprehensive hydrocarbon report for 2022.
- Data, capacity, and TA:
  - Address data shortcomings (national accounts rebasing to 2022 planned for Q4 2025) and appoint a TA coordinator; authorities requested financing and TA, favoring long-term experts.

### Banking Sector, Domestic Arrears, and Financial Soundness
- Banking sector vulnerabilities and indicators:
  - At end-July 2023, non-performing loans (NPLs) stood over 55 percent of total loans due to domestic arrears.
  - Banks representing 60 percent of total assets were significantly undercapitalized.
  - One systemic bank is structurally dependent on liquidity provision from the central bank.
  - Liquidity ratios improved since 2022 due to an increase in government deposits.
- Domestic arrears:
  - From 2019–23, CFAF 572.2 billion (9.5 percent of GDP) out of CFAF 1,382.5 billion (20.8 percent of GDP) was paid to construction companies, of which CFAF 65.3 billion (1.1 percent of GDP) were paid using the SDR allocation.
  - As of August 2023, the net audited debt owed to construction companies (gross value minus fiscal obligations) was CFAF 479.3 billion (7.9 percent of GDP).
  - As of end-March 2023, bank-financed domestic arrears amounted to CFAF 334.2 billion (4.5 percent of GDP).
- Arrears clearance plan:
  - Government plans to clear audited arrears of CFAF 431.8 billion with annual payments of CFAF 29 billion over the next 15 years.
  - Staff recommended finalizing and publishing a comprehensive arrears clearance plan with criteria, strong safeguards, and annual progress reports by an international auditor.

### Non-Hydrocarbon Diversification and Structural Reform Priorities
- Hydrocarbon sector decline and implications:
  - Hydrocarbon production accounted for less than 50 percent of GDP in 2022, down from a high of 80 percent in 2004.
  - Total hydrocarbon production declined by 17 percent since 2018, from 337,571 barrels per day equivalent to 279,722 in 2022.
  - Production is expected to decline by a further 50 percent between 2023 and 2028 due to maturing oil wells and an accident in the largest oil field in 2022.
  - Even assuming newly signed production agreements come to fruition, these will contribute only 19 percent of total projected production by 2029.
- Diversification strategy:
  - Authorities target agriculture, finance, fisheries, and tourism plus horizontal reforms (single window, ASYCUDA deployment, access to finance, vocational programs).
  - Staff recommendations include reducing regulatory burden for business creation, prioritizing reforms that address market failures, and ensuring time-limited, evaluated sector support measures.
- Sector-specific notes:
  - Agriculture and fisheries: potential productivity gains; FAO data show yields gaps relative to Cameroon.
  - Tourism and logistics: untapped potential with Bata port and airport management contracts; online visa platform operationalized July 2023.
  - Finance: opportunity to expand digital financial services; National Financial Inclusion Strategy being finalized.

### Social Protection, Human Capital, and Climate
- Social protection and spending:
  - Social spending very low: total social spending values shown (examples in Text Table 2): Total Social Spending: 1.9, 1.9, 1.8, 1.6, 7.5, 4.3 (table entries as provided).
  - Completion of the national household survey will help define social policy priorities.
  - Ratifying the social protection law is a priority to create flagship social safety nets (SSNs).
  - Successful implementation of SSNs will be key in supporting energy subsidy reform.
  - Recent actions: hired 2,748 new public sector workers in social sectors in late 2022 (~80 percent aimed at pre-primary and primary education); building 8 new hospitals and 31 health centers, 1 university and 32 schools.
- Health, education, and WASH priorities:
  - Boost investment in basic healthcare, education, and sanitation to develop human capital.
  - Support expansion of “Distritos Sanitarios” and start the second demographic and health survey.
  - WASH policy should prioritize investments in schools and remote districts.
- Climate change and low-carbon transition:
  - Vulnerabilities: flooding, above-average sea-level and temperature rise, coastal erosion, biodiversity impacts, and pollution.
  - Commitments: ratified UNFCCC in 2018; ambitions to reduce emissions by 20 percent by 2030 (relative to 2010) and by 50 percent by 2050.
  - 2023: developed the National Action Plan for Adaptation to Climate Change (PANA).
  - Authorities committed to phasing out energy subsidies from 2024 and enacting new taxes on vehicles.
  - Recommended actions: operationalize the National Council of Sustainable Development and integrate climate considerations into budget planning.

### Governance, Transparency, AML/CFT, and Data
- Governance and anti-corruption:
  - Passage of Anti-corruption law in late 2021; funding appropriated for the anti-corruption commission; regulations to operationalize ACC and asset declaration process being finalized.
  - Staff called for full operationalization of the ACC by mid-2024.
  - Need to publish comprehensive hydrocarbon report for 2022; renewed commitment to EITI and steps toward membership.
  - Recommendations to publish beneficial ownership information and asset declarations of senior public officials; complete uploading of laws and decrees on Official Gazette website.
- AML/CFT:
  - GABAC agreed with the authorities on a comprehensive assessment mission of AML/CFT effectiveness in April 2024.
  - Staff warned failure to assess could result in FATF grey listing.
  - Recommendation for ANIF to develop and publish guidance for financial institutions on PEPs and beneficial ownership identification and suspicious transaction reporting.
- Data and capacity building:
  - Data shortcomings hamper surveillance despite progress on CPI, public finance, and national accounts.
  - Priorities: prompt dissemination of BOP and IIP data; establish statistical services in ministries; implement the 2022–25 national development strategy for statistics.
  - INEGE aims to publish rebased national accounts using 2022 as benchmark aligned with 2008 SNA in the fourth quarter of 2025.
  - Authorities requested TA and long-term experts; staff recommended appointing a TA coordinator.
  - Technical assistance missions and capacity development activities are ongoing across tax administration, PFM, national accounts, BoP, and financial statistics.

### Debt, Financing Needs, and Medium-Term Debt Outlook
- Public debt and projections:
  - Total public debt (percent of GDP): 2022: 34.6; 2023: 42.1; 2024: 34.0; 2025: 33.3; 2026: 36.0; 2027: 37.4; 2028: 38.1; 2029: 40.2; 2030: 43.1; 2031: 45.0; 2032: 47.2.
  - Staff recommended a cumulative adjustment in the NHPB of 6.0 percent of non-hydrocarbon GDP over 2024–26 to maintain public debt below 40 percent of GDP during that period.
- Gross financing needs and risk:
  - Gross Financing Needs (Percent of GDP) by year: 2022: -23.9; 2023: 0.3; 2024: 2.7; 2025: 10.0; 2026: 11.3; 2027: 14.2; 2028: 13.1; 2029: 12.9; 2030: 13.5; 2031: 17.9; 2032: 19.0.
  - Debt service (Percent of GDP): 2022: -3.7; 2023: 8.1; 2024: 12.4; 2025: 13.4; 2026: 12.2; 2027: 14.3; 2028: 12.4; 2029: 11.7; 2030: 11.6; 2031: 15.7; 2032: 16.2.
  - Debt Fanchart Module indicates a high level of mechanical risk; GFN Financeability Module suggests a lower but moderate level of risk.
- External financing and reserves:
  - International reserves in 2022: US$1,392.8 million.
  - Official net foreign assets increased from –2.7 percent of GDP in 2021 to 9.3 percent of GDP in 2022.
  - Projected NFA trajectory: average loss of 6.4 percent of GDP from 2024 to 2028; loss of 3.4 percent of GDP in 2023 and a loss of 9.0 percent of GDP in 2028.

### Staff Appraisal Highlights and Implementation Status
- Positive steps:
  - Reforms on TSA, public procurement, audits of state-owned oil and gas companies, and anti-corruption measures; BEAC safeguards assessed as strong in 2022.
  - ASYCUDA deployed in Malabo and being rolled out in Bata.
  - Audits of GEPetrol and SONAGAS published.
- Partial or in-progress items:
  - 2019 EFF lapsed end-2022 without reviews; 4 out of 9 structural benchmarks met by end-2022.
  - Many governance and transparency actions remain incomplete (asset declarations, full publication of Bata audit, Official Gazette uploads).
  - Social protection law drafted and pending ratification; single beneficiary registry not implemented.
- Priority actions reiterated:
  - Finalize and publish arrears clearance plan and implement payments per plan.
  - Operationalize and fund Anti-Corruption Commission and asset declaration regime.
  - Strengthen banking-sector restructuring and pair recapitalization with asset recovery.
  - Raise non-hydrocarbon revenue through ASYCUDA rollout, single window implementation, tax law modernization, and VAT digitalization.
  - Increase social spending and protect the most vulnerable during subsidy reform.
  - Pursue targeted technical assistance and appoint a TA coordinator.

*Source: REPUBLIC OF EQUATORIAL GUINEA — STAFF REPORT FOR THE 2023 ARTICLE IV CONSULTATION (December 21, 2023).*

### 19.5 percent of non-hydrocarbon GDP in 2024.

### 19.5 percent of non-hydrocarbon GDP in 2024.

### Outlook and Risks
- The medium-term outlook faces substantial downside risks, including:
  - faster-than-projected depletion of oil reserves;
  - waning demand for hydrocarbons amid acceleration of global transition to net zero;
  - delays in implementing key policy reforms.
- Hydrocarbon production is projected to decline by a further 50 percent between 2023 and 2028 (projection based on wells actively being drilled).
- Without strong policy responses, all gains in per capita income achieved over the last two decades are expected to fully unravel by 2028.

### Executive Board Assessment and Directors’ Priorities
- Directors urged front-loaded efforts to:
  - support macroeconomic and financial stability;
  - implement transformative reforms to promote economic diversification;
  - advance the governance and anti-corruption agenda to support sustainable growth.
- Fiscal anchors and consolidation:
  - Directors welcomed the authorities' agreement to anchor fiscal policy on the nonhydrocarbon primary balance and to consolidate public finances.
  - The 2024 budget targets a substantial fiscal adjustment while boosting investment in health and education.
- Financial sector stability:
  - Directors emphasized addressing banking-sector risks, restructuring and recapitalizing the troubled part of the banking sector, and tackling high levels of non-performing loans (NPLs).
  - These efforts should be coupled with asset-recovery actions to limit budgetary cost.
- Governance and transparency:
  - Urgent strong implementation of governance and anti-corruption reforms is needed.
  - Funding of the anti-corruption commission and adoption of the anti-corruption law are welcome steps; full implementation is encouraged.
  - Importance of improving transparency in the hydrocarbon sector, strengthening AML/CFT effectiveness, and addressing constraints in economic data generation and provision.
- Financing engagement:
  - Directors noted the authorities’ interest in a financing arrangement with the Fund and underlined the importance of building a track record on reforms and strengthening capacity, including through Fund technical assistance.

### Key Macroeconomic Indicators and Projections (selected)
- Real GDP (percent change): 2022: 3.2; 2023: -8.8; 2024: -5.5; 2025: 3.7; 2026: -4.1; 2027: -0.2; 2028: -0.8.
- Hydrocarbon GDP (percent change): 2022: 1.1; 2023: -21.0; 2024: -16.9; 2025: 4.7; 2026: -16.5; 2027: -7.3; 2028: -10.5.
- Non-hydrocarbon GDP (percent change): 2022: 5.4; 2023: 3.0; 2024: 3.0; 2025: 3.1; 2026: 3.4; 2027: 3.2; 2028: 3.5.
- Consumer prices (annual average): 2023: 2.5; 2024: 5.0; 2025: 1.8; 2026: 2.6; 2027: 2.2; 2028: 2.0.
- Gross investment (percent of GDP): 2023: 14.7; 2024: 14.3; 2025: 15.7; 2026: 16.1; 2027: 16.2; 2028: 16.3.
- Gross national savings (percent of GDP): 2023: 15.7; 2024: 10.5; 2025: 9.7; 2026: 7.9; 2027: 6.6; 2028: 5.7.
- Current account balance (including official transfers; - = deficit, percent of GDP): 2023: 1.0; 2024: -3.8; 2025: -6.1; 2026: -8.1; 2027: -9.6; 2028: -10.6.
- Imputed Foreign Reserves (net), US$ billion: 2023: 1.1; 2024: 0.8; 2025: 0.3; 2026: -0.5; 2027: -1.4; 2028: -2.5.
- Total public debt (percent of GDP): 2023: 42.1; 2024: 34.0; 2025: 33.3; 2026: 36.0; 2027: 37.4; 2028: 38.1.
- External debt (percent of GDP): 2023: 10.2; 2024: 2.1; 2025: 0.9; 2026: 2.5; 2027: 4.5; 2028: 5.7.
- Oil price (U.S. dollars a barrel): 2023: 82.7; 2024: 80.1; 2025: 76.5; 2026: 73.4; 2027: 71.1; 2028: 69.4.
- Nominal GDP (millions of US dollars): 2023: 9,917; 2024: 10,361; 2025: 10,914; 2026: 11,013; 2027: 11,356; 2028: 11,715.
- Non-hydrocarbon GDP (billions of CFA francs): 2023: 4,484; 2024: 4,939; 2025: 5,199; 2026: 5,531; 2027: 5,855; 2028: 6,201.
- Hydrocarbon volume (barrels, millions): 2023: 20.8; 2024: 15.4; 2025: 10.8; 2026: 8.2; 2027: 7.0; 2028: 6.7.
- Total Hydrocarbon Volume (millions of barrels of oil equivalent): 2023: 81.9; 2024: 61.7; 2025: 64.3; 2026: 53.3; 2027: 49.1; 2028: 45.1.
- Gross Reserve assets at the BEAC (months of next years' imports, imputed reserves): 2023: 5.4; 2024: 3.7; 2025: 2.0; 2026: -0.7; 2027: -3.8; 2028: -3.3.

### Fiscal Positions and Non-Hydrocarbon Balances
- Revenue (percent of GDP): 2023: 23.4; 2024: 24.6; 2025: 18.1; 2026: 16.2; 2027: 15.8; 2028: 15.4.
- Of which hydrocarbon revenue (percent of GDP): 2023: 19.2; 2024: 19.7; 2025: 13.1; 2026: 10.9; 2027: 10.3; 2028: 9.8.
- Non-hydrocarbon revenue (percent of GDP): 2023: 5.6; 2024: 6.2; 2025: 6.3; 2026: 6.4; 2027: 6.4; 2028: 6.4.
- Non-hydrocarbon primary balance (percent of GDP): 2023: -17.3; 2024: -15.3; 2025: -15.1; 2026: -15.5; 2027: -15.9; 2028: -16.3.
- Non-hydrocarbon primary balance (as percent of non-hydrocarbon GDP): 2023: -23.3; 2024: -19.5; 2025: -19.1; 2026: -18.6; 2027: -18.6; 2028: -18.6.
- Overall fiscal balance (Commitment basis, percent of GDP): 2023: 0.3; 2024: 2.9; 2025: -3.9; 2026: -6.6; 2027: -7.7; 2028: -8.7.
- Overall fiscal balance (Cash basis, percent of GDP): 2023: -2.0; 2024: 1.1; 2025: -5.3; 2026: -7.7; 2027: -8.8; 2028: -9.6.
- Change in domestic arrears (percent of GDP): 2023: -2.3; 2024: -1.8; 2025: -1.4; 2026: -1.1; 2027: -1.1; 2028: -1.0.

### Key Policy Recommendations
- Fiscal policy:
  - Anchor fiscal policy on the nonhydrocarbon primary balance.
  - Boost nonhydrocarbon revenue collection and reduce non-priority spending while improving social outcomes in health care and education.
  - The 2024 budget aligns with staff advice and is an ambitious step toward consolidation.
- Financial sector policy:
  - Restore banking-sector soundness by addressing solvency and liquidity issues in the troubled part of the banking sector, including restructuring and recapitalization.
  - Finalize and execute the financial inclusion strategy.
- Structural policies to foster nonhydrocarbon growth and inclusion:
  - Finalize and implement a comprehensive plan for repayment of domestic arrears.
  - Reduce regulatory burden for business creation.
  - Boost investment in basic healthcare, education, and sanitation to develop human capital.
  - Ensure well-functioning and efficient markets and advance privatization of some public assets.
- Governance and anti-corruption:
  - Step up efforts to address governance and corruption weaknesses and shortcomings in the AML/CFT framework.
  - Operationalization and funding of the anti-corruption commission and full implementation of the asset declaration regime are critical.

### Background and Recent Developments
- A secular decline in oil production over 2014–21 led to macroeconomic imbalances; real GDP fell by a compound growth rate of -5 percent per year over 2014–21.
- Macroeconomic conditions improved somewhat in 2022 owing to elevated hydrocarbon prices; net foreign assets (NFA) at BEAC improved and turned positive in 2022.
- The 2019 three-year EFF expired at end-2022 without a single completed review; many reforms were delayed but some progress was made since late 2021, including passage of an Anti-Corruption law in late 2021 and audits of the largest state-owned oil and gas companies.
- Political developments: presidential and legislative elections in November 2022; ruling coalition won; participation of women in Parliament improved compared to 2017.

*Source: REPUBLIC OF EQUATORIAL GUINEA — STAFF REPORT FOR THE 2023 ARTICLE IV CONSULTATION (December 21, 2023).*

### 4.      The macroeconomic situation improved in 2022, but this was short-lived as shown by

### 4.      The macroeconomic situation improved in 2022, but this was short-lived as shown by some high-frequency indicators in the first half of 2023.

### Macroeconomic developments and key indicators (2021–2023 H1)
- Real GDP:
  - After seven consecutive years of contraction, real GDP grew by 3.2 percent in 2022, reflecting a recovery in the non-hydrocarbon sector following the lifting of COVID-19 containment measures and Bata reconstruction, as well as a temporary boost in hydrocarbon production spurred by high energy prices.
  - Hydrocarbon real GDP collapsed by 18.9 percent year-on-year in the first half of 2023 due to an accident at one of the platforms in the largest oil field.
- Inflation:
  - Average inflation rose to 4.9 percent in 2022 (against –0.1 in 2021), driven by increased food prices stemming from the global shocks.
  - Inflation (year-on-year) declined to 2.3 percent through October 2023.
- Fiscal position:
  - The overall fiscal surplus jumped from 2.6 percent of GDP in 2021 to 13.6 percent of GDP in 2022, higher than projected at the 2022 Article IV consultation, owing to a larger hydrocarbon revenue windfall.
  - The non-hydrocarbon primary fiscal deficit deteriorated to 13.1 percent of non-hydrocarbon GDP in 2022 from 8.6 percent in 2021, reflecting underperformance of non-hydrocarbon revenue collection and large capital spending linked to the Bata reconstruction.
  - Budget execution through 2023 H1: total revenues dropped by 34 percent compared to the same period of 2022, reflecting a sharp decline in hydrocarbon revenue, and there was lower execution of the spending envelope.
- External sector and reserves:
  - The current account surplus declined from 4.2 percent of GDP in 2021 to 2.4 percent of GDP in 2022, primarily driven by a deterioration in the income balance deficit due to increased outflows related to the repatriation of retained earnings.
  - BEAC net foreign assets (NFA) turned positive in 2022 for the first time since 2015, driven by record FDI inflows in the petroleum sector.
  - In 2023, hydrocarbon export volumes in the first half of the year decreased by approximately 25 percent year-on-year.
- Note on 2022 outturn:
  - The 2022 outturn was weaker than projected in the 2022 Article IV consultation due to an over-estimation of natural gas production that was not realized, and the accident at the Zafiro oil field in September of 2022.

### Banking sector and financial system
- Non-performing loans and capitalization:
  - At end-July 2023, non-performing loans (NPLs) stood over 55 percent of total loans due to domestic arrears.
  - Banks representing 60 percent of total assets were significantly undercapitalized.
- Liquidity and systemic dependence:
  - Liquidity ratios show consistent and increasing improvements since 2022 due to an increase in government deposits.
  - One systemic bank is structurally dependent on liquidity provision from the central bank.
- Domestic arrears and banking impact:
  - From 2019–23, CFAF 572.2 billion (9.5 percent of GDP) out of CFAF 1,382.5 billion (20.8 percent of GDP) was paid to construction companies, of which CFAF 65.3 billion (1.1 percent of GDP) were paid using the SDR allocation.
  - As of August 2023, the net audited debt owed to construction companies (gross value minus fiscal obligations) was CFAF 479.3 billion (7.9 percent of GDP).
  - As of end-March 2023, bank-financed domestic arrears amounted to CFAF 334.2 billion (4.5 percent of GDP).
- Policy actions and reforms:
  - Authorities finalized an agreement with a private investor interested in acquiring a large stake in the banking sector.
  - A plan developed in consultation with the BEAC and COBAC addresses solvency and liquidity issues for half (by asset size) of the troubled portion of the banking sector.
  - Staff recommended pairing the recapitalization plan with efforts to recover distressed assets, including creation of a special unit within any recapitalized bank and strengthening the debt enforcement framework.
  - The government is finalizing the National Financial Inclusion Strategy (transposition/adaptation of the regional CEMAC strategy), covering financial literacy, indicators, and mobile payments.

### Structural reforms and governance progress (since last Article IV / end of EFF)
- Fiscal and subsidy reforms:
  - The 2024 budget phases out most of the existing fuel subsidies and the authorities are preparing a plan for their complete elimination.
  - The 2024 budget targets a reduction in the nonhydrocarbon fiscal deficit by 3.8 percentage points of NHGDP, projecting an increase in non-hydrocarbon revenue by 0.6 percentage point of NHGDP and a compression in total primary expenditure by 3.1 percentage points of NHGDP.
- Public financial management and revenue administration:
  - Adoption of a law limiting recourse to non-competitive tender in the public procurement code.
  - Adoption of a law establishing a treasury single account.
  - Deployment of the IT customs system ASYCUDA in the Luba port (in addition to Malabo) and deployment plans for Bata.
  - Progress on a new debt IT management system.
  - Authorities are finalizing a new tax law to enlarge the tax base and streamline tax exemptions.
- Trade, transport, and investment facilitation:
  - Operationalized the online visa platform.
  - Signed management contracts for the Malabo airport and Bata port.
- Anti-corruption and governance:
  - Funding appropriated for the anti-corruption commission.
  - Authorities intensified their fight against corruption, including in several high-profile cases.
- Domestic arrears clearance:
  - Authorities repaid part of domestic arrears and are finalizing a comprehensive domestic arrears clearance plan with the support of an international auditor.
  - Staff recommendation: adopt a comprehensive arrears’ clearance plan with criteria and strong safeguards, including an annual progress report produced by an international auditor.
  - Staff encouraged resolution of external arrears with Belgium and Spain; no reports of arrears with other external creditors.

### Outlook and risks (staff projections)
- GDP and growth:
  - Real GDP is expected to contract by 8.8 percent in 2023.
  - Real GDP is expected to contract by 1.4 percent on average between 2024–28.
  - Projected average growth in the nonhydrocarbon sector: 3.2 percent over 2023–28.
  - Note: "The spike in growth in 2025 is due to a base effect and an increase in crude oil production in 2025 because of 3 new wells coming onstream."
- Inflation:
  - Inflation is expected to moderate to 2.5 percent in 2023.
  - Inflation will temporarily increase to 5 percent in 2024 driven by the removal of food and fuel subsidy programs.
  - Inflation is projected to stay below 3 percent on average from 2025 onwards.
- External balance and reserves:
  - Current account balance surplus is expected to decline to 1 percent of GDP in 2023 and average - 7.6 percent of GDP over the medium term, leading to a fall in Equatorial Guinea’s contribution to international reserves at the BEAC.
- Fiscal projections:
  - In 2023, the overall fiscal surplus would drop to 0.3 percent of GDP from 13.6 percent in 2022.
  - The non-hydrocarbon primary fiscal deficit is expected at 23.3 percent of non-hydrocarbon GDP in 2023, up from 22.7 percent of non-hydrocarbon GDP in 2022.
  - In 2024, the overall fiscal surplus is projected to increase to 2.9 percent of GDP, while the non-hydrocarbon primary deficit would improve to 19.5 percent of non-hydrocarbon GDP.
  - Over the medium term (2025–26), the baseline scenario reflects an additional cumulative fiscal adjustment of 0.9 percentage points of non-hydrocarbon GDP based on the authorities’ currently approved measures and plans.
- Public debt and sovereign stress:
  - Equatorial Guinea’s debt stock is estimated at 34.6 percent of GDP by end-2022.
  - Staff assesses Equatorial Guinea’s overall risk of sovereign stress as moderate.
  - Staff recommended a cumulative adjustment in the NHPB of 6.0 percent of non-hydrocarbon GDP (or 2.7 percent of overall GDP) over 2024–26 to maintain public debt below 40 percent of GDP during that period.
- Balance of risks:
  - Tilted to the downside (Annex III). Downside risks include:
    - Faster-than-projected depletion of oil reserves.
    - Waning demand for hydrocarbons amid acceleration of global transition to net zero.
    - Delays in implementing key policy reforms.
    - Lower hydrocarbon prices and another global food shock.
  - If downside risks materialize, authorities would need to sharply adjust while protecting the most vulnerable.
  - Upside possibilities: several natural gas projects under development that could cushion the projected decline in hydrocarbon production.
- Authorities’ view on outlook:
  - Authorities broadly agreed with staff’s assessment of Equatorial Guinea’s outlook and risks.
  - Over the medium term they concurred with staff to not include, at this juncture, in the baseline scenario the impact of several hydrocarbon projects under development given elevated uncertainties.
  - Authorities stressed they have a plan to boost non-hydrocarbon growth and need capacity development (CD) and financing support of international organizations, including the IMF.

### Policy discussions and recommendations
A. Ensuring medium-term fiscal sustainability
- Anchor fiscal policy on nonhydrocarbon primary balance (NHPB) and consolidate public finances to smooth the adjustment to oil production decline and avoid procyclicality.
- Staff recommendation: cumulative adjustment in the NHPB of 6.0 percent of non-hydrocarbon GDP (or 2.7 percent of overall GDP) over 2024–26 to maintain public debt below 40 percent of GDP.
- Staff advice to raise non-hydrocarbon revenue and reduce non-priority expenditures:
  - Increase non-hydrocarbon revenue by at least 1.5 percentage points of NHGDP over 2024–26 by:
    - Deploying ASYCUDA to all ports.
    - Fully implementing the single window for vehicle clearance.
    - Enlarging the tax base.
    - Streamlining tax exemptions.
    - Introducing a digital VAT system.
    - Strengthening the large taxpayer’s unit.
  - Compress spending by 4.6 percentage points of NHGDP, including:
    - Phasing out fuel subsidies.
    - Streamlining civil servants’ benefits.
    - Reducing public investment on physical infrastructure.
  - Create space for increasing social spending to at least 2 percent of GDP per year (against 1.8 percent of GDP on average per year over the last three years).
- Staff highlighted non-hydrocarbon revenue level and constraints:
  - Non-hydrocarbon revenue is about 6.6 percent of NHGDP (or 5 percent of GDP), deemed too low to offset declining hydrocarbon revenue and finance development needs.
- Debt management:
  - Complete the new debt IT management system to improve debt management and reporting along with debt services projections.
  - Authorities should maintain their current policy of not contracting new guaranteed debt.
- Authorities’ stance:
  - Agreed to anchor the fiscal framework on the NHPB and embark on upfront fiscal consolidation.
  - Put forward a 2024 budget targeting a 3.8 percentage point NHGDP reduction in the nonhydrocarbon fiscal deficit, and adopted a series of impactful measures.

Box: Overview of the New Tax Law (summary of policy content)
- Objectives: modernize and simplify the tax system, expand the tax net, incentivize FDI, harmonize income tax regulations with CEMAC directives.
- Major tax policy changes and measures:
  - Proposed reduction of Corporate Income Tax (CIT) rate from 35 to 25 percent and on capital income.
  - Adjustments in deductibility of general expenses; introduction of a foreign tax credit; refunds of input VAT tax credits.
  - Special regime for SMEs, taxes on property, a financial activities tax, updated rates and obligations for gambling/entertainment/recreation.
  - VAT changes include reduced rates for essential goods and expansion of VAT base to cover electronic commerce services.
  - Special regime planned for non-profit entities and extractive sectors; extractive sectors also benefit from the lower 25 percent CIT rate.
- Implementation caveat:
  - Complementary tax administration measures are crucial; the new law provides little information on administrative efforts.
  - Staff recommends a medium-term strategy focusing on revenue administration, strengthening the Large Taxpayer Unit, improving VAT administration, and enhancing property registries.
  - Example: deployment of ASYCUDA has led to large increases in taxes collected.

B. Strengthening the banking sector and financial inclusion
- Key points:
  - Banks representing 60 percent of total assets are significantly undercapitalized.
  - Authorities advanced measures addressing solvency and liquidity for half (by asset size) of the troubled banking sector, implemented in consultation with BEAC and COBAC.
  - Staff insisted on pairing recapitalization with asset recovery efforts, creation of special units in recapitalized banks, and strengthening debt enforcement.
  - Clearance of audited domestic arrears to construction companies would help restore capital positions of remaining troubled banks.
- Financial inclusion:
  - National Financial Inclusion Strategy being finalized (transposition/adaptation of regional CEMAC strategy), covering financial literacy, indicators, and mobile payments.
- Authorities’ view:
  - Agreed with the need to strengthen the banking sector and promote financial inclusion.
  - Committed to executing the restructuring and recapitalization plan and to reduce its cost to the state by stepping up asset recovery.
  - Do not intend to prioritize clearance of domestic arrears linked to NPLs at banks outside the scope of their current plan but will include them in the general arrears clearance strategy being prepared.

C. Fostering inclusion and non-hydrocarbon growth
- Social spending and human capital:
  - Social spending is significantly lower than peers: government spends less than 2 percent of GDP on social sectors.
  - In contrast, average social spending in Sub-Saharan Africa and CEMAC is almost 5 and 3 times higher than in Equatorial Guinea, respectively.
  - Recommendation: increase social spending to boost human capital development.
- Education priorities:
  - Address low completion rates, high repetition and drop-out, and improve teachers’ training.
  - Construct public pre-primary, primary, and secondary schools in growing urban and peri-urban centers.
  - Ensure higher education centers are fully operational to develop human capital domestically.
- Health and WASH priorities:
  - Support the expansion of “Distritos Sanitarios” and start the second demographic and health survey.
  - WASH policy should prioritize investments in schools and remote districts with lower access to safe WASH services.

*Source: IMF staff report chapter on Equatorial Guinea (Content unit: 1gnqea2024001).*

### 22.      Equatorial Guinea needs to enhance its social protection system. The successful

### 22. Equatorial Guinea needs to enhance its social protection system

### Social protection and social spending
- Completion of the ongoing national household survey will help reduce the significant gaps in socio-economic indicators and define social policy priorities.
- Ratifying the social protection law is a priority toward the creation of a flagship social safety nets (SSNs).
- Successful implementation of SSNs will be key in supporting energy subsidy reform.
- Authorities’ recent actions:
  - Hired 2,748 new public sector workers in social sectors in late 2022, with about 80 percent aimed at pre-primary and primary education.
  - Building 8 new hospitals and 31 health centers, 1 university and 32 schools.
  - National household survey being completed with World Bank support; social protection draft law is under review.

- Text Table 2. Equatorial Guinea: Social Spending is Very Low by Regional Standards (Percent of GDP)
  - Years/benchmarks and values as presented:
    - Total Social Spending: 1.9, 1.9, 1.8, 1.6, 7.5, 4.3
    - Education and Vocational Training: 1.0, 0.6, 0.60.9, 4.1, 2.6
    - Health: 0.6, 1.01.1, 0.6, 1.8, 0.9
    - Drinking Water: 0.30.2, 0.1, 0.0, 0.3, 0.1
    - Social Assistance: 0.0, 0.0, 0.0, 0.11.2, 0.7
  - Memo: Social spending (in billion CFA): 128109, 121, 157, - , -

### Economic diversification and private sector reforms
- Context:
  - Hydrocarbon production in secular decline; diversification critical to long-term growth and macroeconomic stability.
  - Main constraints: a distortive business environment, lack of financing, high labor costs, labor market rigidities, and weak human capital.
- Authorities’ diversification strategy:
  - Targets four sectors – agriculture, finance, fisheries, and tourism – and a range of horizontal reforms (e.g., single window for establishing new firms, increasing access to mobile and internet service coverage, extending access to finance, developing vocational programs, internships, and secondments) and vertical policies (e.g., sector-specific tax exemptions, subsidies, special economic zones).
  - Published a list of state assets for privatization through outright sales or management contracts and should prepare an asset-sales plan based on open and transparent international tenders.
- Staff recommendations:
  - Reduce regulatory burden for business creation, stimulate private sector-led growth, ensure efficient markets, and improve coordination between ministries.
  - Justify sector-support policies based on clearly identified market failures, tailor them to country capacity, evaluate periodically, identify externalities that could justify direct support, and include sunset clauses on sectoral support measures.
  - Prioritize initiatives that drive long-term diversification goals (example: tourism promotion and awareness campaign).

### Health outcomes and public investment in human capital
- Figure notes indicate potential to improve health outcomes through greater spending adequacy and focus on priority areas; sources cited internally include WHO, WEO, Global Burden of Disease, and IMF staff calculations.
- Staff priorities: boost investment in basic healthcare, education, and sanitation to develop human capital and support market functioning.

### Climate change and low-carbon transition
- Vulnerabilities: flooding, above-average sea-level and temperature rise, coastal erosion, biodiversity impacts, and pollution linked to infrastructure development and hydrocarbon extraction.
- Commitments and plans:
  - Ratified UNFCCC in 2018; ambitions to reduce emissions by 20 percent by 2030 (relative to 2010 levels) and by 50 percent by 2050.
  - Environmental sustainability a pillar of National Strategy for Sustainable Development “Horizon 2035”.
  - 2023: developed the National Action Plan for Adaptation to Climate Change (PANA).
  - Authorities committed to phasing out energy subsidies from 2024 and enacting new taxes on vehicles.
- Recommended actions to integrate climate agenda:
  - Operationalize the National Council of Sustainable Development (created under the 2021 Presidential Decree 69) to oversee “Horizon 2035”.
  - Integrate climate change considerations in budget planning, mapped to “Horizon 2035”.
  - Transition away from fossil fuel energy over time.

### Governance, anti-corruption, and transparency
- Governance and corruption vulnerabilities are serious and critical to address for private sector-led growth.
- Public financial management:
  - Authorities have taken steps to improve cash management and limit non-competitive bidding in public procurement.
  - Staff recommended: (i) steadfast implementation of the law on the Treasury Single Account and the law on public procurement; (ii) timely publication of budget execution reports two months after the end of the period; and (iii) interconnection of expenditure tracking systems with the treasury operations IT system.
- Anti-Corruption:
  - 2019 governance diagnostic recommendations largely remain to be implemented.
  - Steps taken: passage of the Anti-corruption law in late 2021, allocation of funding in the revised 2023 budget and the 2024 budget, finalizing regulations operationalizing the Anti-corruption Commission (ACC) and asset declaration process.
  - Staff called for full operationalization of the ACC by mid-2024 to enable implementation of the anti-corruption framework, including asset declarations of senior public officials.
- AML/CFT:
  - GABAC agreed with the authorities on a comprehensive assessment mission of AML/CFT effectiveness in April 2024.
  - Staff warned failure to assess could result in FATF grey listing, with negative repercussions on correspondent banking and financial sector soundness.
  - Recommendation: National Financial Intelligence Agency (ANIF) should develop and publish guidance for domestic financial institutions to identify and verify politically exposed persons and beneficial ownership, and to report related suspicious transactions to ANIF.
- Transparency in hydrocarbon sector:
  - Need to prepare and publish a comprehensive hydrocarbon report for 2022 (following the one for 2019).
  - Authorities have renewed commitment to EITI, launched a website, and are pursuing membership steps.
- Additional transparency actions needed:
  - Complete publication of beneficial ownership information of COVID- and Bata-related spending and publish related procurement documents.
  - Publish asset declarations of senior public officials.
  - Complete uploading of all laws and decrees on the Official Gazette website.

### Data, technical assistance, and capacity building
- Data shortcomings significantly hamper surveillance despite progress on CPI, public finance, and national accounts.
- Deployment of ASYCUDA to all ports expected to strengthen external sector statistics.
- Remaining priorities: prompt dissemination of BOP and IIP data, establishment of statistical services in all ministries and public agencies, and steadfast implementation of the 2022–25 national development strategy for statistics.
- Given limited capacity, successful reforms must be supported by technical assistance (TA); a list of TA priorities has been developed and staff recommended appointing a TA coordinator.
- Authorities requested a financing arrangement with the Fund in June to provide external financing and anchor reforms; they favor more TA and long-term experts (LTXs), offering to pay part of costs and do not favor a staff-monitored program (SMP).

### Macroeconomic outlook and fiscal policy
- 2022 improvements:
  - Real GDP expanded on account of hydrocarbon and non-hydrocarbon recovery.
  - Fiscal and current account balances were in substantial surpluses due to high oil and gas prices; part of the windfall was saved.
  - Equatorial Guinea was the lead contributor to the increase in the CEMAC’s international reserves in 2022.
  - Non-hydrocarbon primary fiscal deficit deteriorated somewhat in 2022 relative to 2021 due to Bata reconstruction-related expenditures and underperformance of nonhydrocarbon revenue.
  - Headline inflation was higher than historical average.
  - External position assessed substantially weaker than fundamentals and desirable policies, consistent with the 2022 Article IV consultation.
- Outlook and risks:
  - Recovery short-lived; economy expected to fall back into recession in 2023 due to a sharp decline in oil production; headline inflation expected to moderate.
  - Longer-term projection: economy to remain in recession due to continued decline in oil production and lackluster non-hydrocarbon growth, straining fiscal and external accounts.
  - Downside risks linked to secular oil production decline and challenging business environment.
- Fiscal policy guidance:
  - Anchor fiscal policy on nonhydrocarbon primary balance and consolidate public finances.
  - Raise non-hydrocarbon revenue and reduce non-priority spending.
  - Near-term priorities: deploy IT customs system in additional offices, fully implement single window for vehicle clearance, phase out fuel subsidies, strengthen taxpayer segmentation centered on the Large Taxpayer Office.
  - 2024 budget aligns with staff advice, targets substantial fiscal adjustment, includes significant reduction in fuel subsidies and a new tax law already approved by the council of ministers to enlarge tax base and streamline tax exemptions.

### Banking sector, financial inclusion, and structural reform priorities
- Banking sector vulnerabilities need addressing; priority actions:
  - Steadfast implementation of plan to restructure and recapitalize troubled parts of the banking sector.
  - Couple restructuring with asset recovery efforts to limit budgetary cost.
  - Prepare a plan to address capital shortfalls in the remainder of the banking system.
  - Finalize and implement the national financial inclusion strategy.
- Structural reform priorities:
  - Advance repayments of domestic arrears based on a comprehensive plan with clear criteria and strong safeguards to ensure transparency.
  - Reduce regulatory burden for business creation.
  - Accelerate privatization of some public assets based on open and transparent international tenders.

### Staff appraisal highlights
- Positive signs: reforms on TSA, public procurement, audits of state-owned oil and gas companies, and anti-corruption measures and cases; BEAC safeguards assessed as strong in 2022.
- Key recommendations reiterated: operationalize ACC, improve transparency (including hydrocarbon reporting and Official Gazette uploads), implement national statistics strategy, and pursue TA with an appointed coordinator.

*Source: IMF country report excerpt on Equatorial Guinea.*

### 45.      It is proposed that the next Article IV consultation take place on the standard 12-

### It is proposed that the next Article IV consultation take place on the standard 12-month cycle.

### Production, Prices, and Money
- Real GDP (annual percentage change): 2019 -5.5; 2020 -4.8; 2021 -0.4; 2022 3.2; 2023 -8.8; 2024 -5.5; 2025 3.7; 2026 -4.1; 2027 -0.2; 2028 -0.8.
- Hydrocarbon GDP (annual percentage change): 2019 -8.8; 2020 -3.5; 2021 -7.3; 2022 1.1; 2023 -21.0; 2024 -16.9; 2025 4.7; 2026 -16.5; 2027 -7.3; 2028 -10.5.
- Non-hydrocarbon GDP (annual percentage change): 2019 -1.4; 2020 -6.3; 2021 7.7; 2022 5.4; 2023 3.0; 2024 3.0; 2025 3.1; 2026 3.4; 2027 3.2; 2028 3.5.
- GDP deflator (annual % change): 2019 -3.2; 2020 -10.2; 2021 19.9; 2022 4.5; 2023 -10.1; 2024 10.3; 2025 1.2; 2026 5.1; 2027 3.4; 2028 4.1.
- Consumer prices (annual average): 2019 1.2; 2020 4.8; 2021 -0.1; 2022 4.9; 2023 2.5; 2024 5.0; 2025 1.8; 2026 2.6; 2027 2.2; 2028 2.0.
- Consumer prices (end of period): 2019 4.3; 2020 -0.6; 2021 2.9; 2022 5.0; 2023 2.2; 2024 6.3; 2025 0.4; 2026 2.2; 2027 2.3; 2028 1.8.
- Broad money (annual % change): 2019 19.6; 2020 -7.0; 2021 0.4; 2022 20.7; 2023 -6.6; 2024 10.1; 2025 4.1; 2026 4.1; 2027 4.0; 2028 3.2.
- Nominal effective exchange rate (- = depreciation): 2019 -1.5; 2020 2.5; 2021 0.9; 2022 -4.4.

### External Sector and Commodities
- Exports, f.o.b. (annual % change): 2019 -8.3; 2020 -46.6; 2021 33.7; 2022 83.7; 2023 -45.3; 2024 -10.0; 2025 1.8; 2026 -18.3; 2027 -8.7; 2028 -11.4.
- Hydrocarbon exports (annual % change): 2019 -15.7; 2020 -37.9; 2021 31.7; 2022 87.9; 2023 -46.5; 2024 -10.7; 2025 1.7; 2026 -19.6; 2027 -9.6; 2028 -12.7.
- Imports, f.o.b. (annual % change): 2019 -24.7; 2020 -27.7; 2021 4.4; 2022 15.1; 2023 -11.7; 2024 8.3; 2025 4.3; 2026 -11.8; 2027 9.2; 2028 1.6.
- Terms of trade (annual % change): 2019 7.3; 2020 -24.5; 2021 49.3; 2022 -18.5; 2023 -36.2; 2024 5.0; 2025 5.0; 2026 -8.8; 2027 -6.5; 2028 -2.7.
- Current account balance (including official transfers; - = deficit, percent of GDP): 2019 -7.5; 2020 -0.8; 2021 4.2; 2022 2.4; 2023 1.0; 2024 -3.8; 2025 -6.1; 2026 -8.1; 2027 -9.6; 2028 -10.6.
- Imputed Foreign Reserves (net), US$ billion: 2019 -0.2; 2020 -0.5; 2021 -0.3; 2022 1.1; 2023 1.1; 2024 0.8; 2025 0.3; 2026 -0.5; 2027 -1.4; 2028 -2.5.
- Oil price (U.S. dollars a barrel, Brent with quality discount): 2019 57.7; 2020 43.3; 2021 70.8; 2022 99.0; 2023 82.7; 2024 80.1; 2025 76.5; 2026 73.4; 2027 71.1; 2028 69.4.
- Oil volume (crude + condensado, millions of barrels): 2019 53; 2020 52; 2021 43; 2022 39; 2023 29; 2024 28; 2025 30; 2026 26; 2027 24; 2028 21.
- Total Hydrocarbon Volume (millions of barrels of oil equivalent): 2019 109; 2020 101; 2021 98; 2022 102; 2023 82; 2024 62; 2025 64; 2026 34; 2027 94; 2028 5 (table entries as provided).

### Government Finance and Fiscal Balances
- Revenue (percent of GDP): 2019 18.6; 2020 14.4; 2021 15.3; 2022 30.8; 2023 12.7; 2024 23.4; 2025 24.6; 2026 18.1; 2027 16.2; 2028 15.8; 2028 (alternative entry) 15.4.
- Hydrocarbon revenue (percent of GDP): 2019 14.8; 2020 10.7; 2021 12.3; 2022 27.9; 2023 10.9; 2024 19.2; 2025 19.7; 2026 13.1; 2027 10.9; 2028 10.3; 2028 (alternative) 9.8.
- Non-hydrocarbon revenue (percent of GDP): 2019 4.5; 2020 3.7; 2021 3.0; 2022 2.9; 2023 1.8; 2024 4.2; 2025 4.9; 2026 5.0; 2027 5.3; 2028 5.4.
- Expenditure (percent of GDP): 2019 16.8; 2020 16.2; 2021 12.7; 2022 17.2; 2023 10.9; 2024 23.0; 2025 21.7; 2026 22.0; 2027 22.8; 2028 23.5; 2028 (alt) 24.0.
- Overall fiscal balance (Commitment basis, percent of GDP): 2019 1.8; 2020 -1.8; 2021 2.6; 2022 13.6; 2023 0.3; 2024 2.9; 2025 -3.9; 2026 -6.6; 2027 -7.7; 2028 -8.7.
- Overall fiscal balance (Cash basis, percent of GDP): 2019 -0.5; 2020 -3.2; 2021 1.0; 2022 11.9; 2023 -2.0; 2024 1.1; 2025 -5.3; 2026 -7.7; 2027 -8.8; 2028 -9.6.
- Non-hydrocarbon primary balance (billions CFA francs): 2019 -763; 2020 -636; 2021 -586; 2022 -961; 2023 -516; 2024 -1,043; 2025 -961; 2026 -993; 2027 -1,031; 2028 -1,092; 2028 (alt) -1,156.
- Non-hydrocarbon primary balance (percent of non-hydrocarbon GDP): 2019 -19.5; 2020 -16.8; 2021 -14.6; 2022 -22.7; 2023 -23.3; 2024 -19.5; 2025 -19.1; 2026 -18.6; 2027 -18.6; 2028 -18.6.
- Change in domestic arrears (billions CFA francs): 2019 -156; 2020 -83; 2021 -111; 2022 -126; 2023 ...; 2024 -138; 2025 -114; 2026 -90; 2027 -75; 2028 -75; 2028 (alt) -70.
- Government deposits (percent of GDP): 2019 11.4; 2020 11.0; 2021 13.2; 2022 21.3; 2023 20.8; 2024 15.4; 2025 10.8; 2026 8.2; 2027 7.0; 2028 6.7.

### Public Debt and Debt Service
- Total public debt (percent of GDP): 2019 43.2; 2020 49.4; 2021 42.1; 2022 34.6; 2023 42.1; 2024 34.0; 2025 33.3; 2026 36.0; 2027 37.4; 2028 38.1.
- Domestic debt (percent of GDP): 2019 29.2; 2020 34.0; 2021 29.9; 2022 24.6; 2023 31.9; 2024 31.9; 2025 32.4; 2026 33.5; 2027 32.9; 2028 32.4.
- External debt (percent of GDP): 2019 14.0; 2020 15.4; 2021 12.2; 2022 10.0; 2023 10.2; 2024 2.1; 2025 0.9; 2026 2.5; 2027 4.5; 2028 5.7.
- External debt service-to-exports ratio (percent): 2019 4.8; 2020 7.6; 2021 7.8; 2022 4.3; 2023 7.8; 2024 6.1; 2025 6.6; 2026 5.5; 2027 4.7; 2028 5.3.
- External debt service/government revenue (percent): 2019 11.9; 2020 15.2; 2021 16.5; 2022 7.6; 2023 11.9; 2024 7.7; 2025 10.8; 2026 8.1; 2027 6.4; 2028 6.4.

### Balance of Payments (selected items)
- Current Account (billions CFA francs): 2023 -502; 2024 -452; 2025 851; 2026 795; 2027 9; 2028 -238; 2028 (further projections) -400; -539; -658; -749 (table entries across columns).
- Trade balance (billions CFA francs): 2023 185; 2024 475; 2025 812; 2026 732; 2027 976; 2028 123; subsequent entries 393, 992, 868, 946, 6284 (as in table).
- Exports of goods, f.o.b. (billions CFA francs): 2023 308; 2024 416; 2025 482; 2026 203; 2027 404; 2028 721; further sequence includes 531, 933, 1960, 1599, 1461, 1296.
- Imports of goods, f.o.b. (billions CFA francs): 2023 -1,231; 2024 -890; 2025 -930; 2026 -1,070; 2027 -920; 2028 -994; subsequent entries -1,032; -910; -994; -1,012.
- Services (net, billions CFA francs): 2023 -845; 2024 -493; 2025 -366; 2026 -416; 2027 -482; 2028 -611; subsequent entries -715, -705, -661, -667.
- Income (net, billions CFA francs): 2023 -1,359; 2024 -1,944; 2025 -495; 2026 -2,118; 2027 -584; 2028 -455; subsequent entries -497, -404, -340, -250.
- Capital and Financial Account (billions CFA francs): 2023 188; 2024 -412; 2025 312; 2026 756; 2027 -222; 2028 892; further entries 908, 811, 5,  (table shows continuing sequence).
- Overall Balance (billions CFA francs): 2023 -92; 2024 -133; 2025 788; 2026 693; 2027 8; 2028 -210; subsequent entries -308, -449, -570, -634.
- Change in net international reserves (- = increase, billions CFA francs): 2023 95; 2024 142; 2025 -83; 2026 -867; 2027 -321; 2028 1,130; subsequent entries 8, 449, 570, 634.

### Monetary Aggregates (end of period, billions CFA francs)
- Net Foreign Assets: 2023 -77; 2024 -251; 2025 -151; 2026 769; 2027 773; 2028 568; subsequent entries 260, -187, -756, -1,388.
- Net Domestic Assets: 2023 1,148; 2024 1,247; 2025 1,151; 2026 438; 2027 354; 2028 673; subsequent entries 1,031, 1,530, 2,141, 2,820.
- Broad Money (end period, annual change): 2019 1,070; 2020 996; 2021 1,000; 2022 1,207; 2023 1,127; 2024 1,240; 2025 1,291; 2026 1,343; 2027 1,386; 2028 1,432.
- Broad money (annual percentage change): 2019 19.6; 2020 -7.0; 2021 0.4; 2022 20.7; 2023 -6.6; 2024 10.1; 2025 4.1; 2026 4.1; 2027 4.0; 2028 3.2.
- Credit to the private sector (in percent of GDP): 2019 13.9; 2020 16.3; 2021 13.3; 2022 12.0; 2023 9.3; 2024 9.0; 2025 7.1; 2026 9.3; 2027 10.1; 2028 10.6.

### Fiscal Financing and Memoranda
- Fiscal Financing Requirements, Overall Fiscal Deficit (Commitment Basis, billions CFA francs): 2022 -121; 2023 101; 2024 -180; 2025 -997; 2026 -19; 2027 -181; 2028 257; subsequent entries 437, 526, 612.
- Program Financing (EFF, billions CFA francs): 2023 240; 2024 210; 2025 0; 2026 0; 2027 0; 2028 0; further zeros.
- Memorandum Nominal GDP (billions of CFA francs): 2019 6,658; 2020 5,695; 2021 6,804; 2022 7,340; 2023 6,019; 2024 6,277; 2025 6,583; 2026 6,634; 2027 6,848; 2028 7,074.
- Memorandum Nominal GDP (millions of US dollars): 2019 11,364; 2020 9,894; 2021 12,269; 2022 11,767; 2023 9,917; 2024 10,361; 2025 10,914; 2026 11,013; 2027 11,356; 2028 11,715.

*Sources: Data provided by the Equatoguinean authorities; and staff estimates and projections.*

### 1. Total Financing Requirements

### 1. Total Financing Requirements

### Total financing requirements (summary table entries)
- -161-671,32877196324257228276
- Current account deficit78-515-287-983936638951,0911,240
- Debt amortization1631572361701501711078286
- Net change in external arrears (increase =-)-5110325811100
- Net change in government deposits abroad (increase=+)-10538-14-5700000
- Net change in net reserves (increase=+)-2471501,3914-348-511-746-945-1,050

### Total financing sources (summary table entries)
- -94-1791,32877196324257228276
- Capital transfers000000000
- Foreign direct investment (net)-263361,389142187284277270310
- Portfolio investment (net)6523437616060636771
- Debt financing1,134-4651571919
- -19-80-107-101
- Commercial banks' capital flows55-29-85-3-9-1-4-2-2
- Other net capital inflow
  - 1
  - -1,05420-76-142-62000-2
- Errors and omissions-268-275-94000000

*Source: IMF staff estimates. Includes the SDR allocation. Projections for 2020 2021 2022.*

### Financial Soundness Indicators for the Banking Sector, 2015–22

### Capital adequacy and capital ratios
- Total bank regulatory capital to risk-weighted assets1 23.8 27.331.8 29.5 -2.8-1.6 -6.20.6
- Total capital (net worth) to assets 11.2 13.0 13.4 12.8 -0.7 -0.2 -1.3 1.2
- Total assets (growth) -9.2 -10.2 -2.9 3.4 -10.3 -0.1 53.2 -30.2

### Asset quality
- Non-performing loans (gross) to total loans (gross) 16.824.627.236.748.8 51.155.1 55.4
- Non-performing loans less provisions to regulatory capital2 0.00.10.10.1-1.6-3.1 -1.010.1

### Earnings and profitability
- Return on equity3 9.79.1 5.43.7 -0.6 -3.9-3.9 ...
- Return on assets 1.6 1.7 1.2 0.9 0.1 -0.6 -0.5 ...
- Non interest expense to gross income 53.066.0 70.0 71.6 79.3 106.8 106.3 ...

### Liquidity
- Liquid assets to total assets 35.830.331.230.3 20.219.912.721.9
- Liquid assets to short-term liabilities 200.7158.4 171.2170.1120.7 131.5130.3152.1
- Total deposits to total (noninterbank) loans 131.9106.499.4 98.1104.098.5 102.6...

### Credit
- Gross loan (banks' book)2 1,219.41,269.51,267.9 1,283.51,020.71,028.2 1,058.8988.4
- Gross loan - annualized growth rate 4.1-0.11.2 -20.50.73.0-6.7

### Other indicators
- Foreign-currency-denominated loans to total loans 0.00.0 0.00.10.5 0.30.30.2
- Foreign-currency-denominated liabilities to total liabilities ......... 1.41.5

*Source: Banking Commission of Central Africa (COBAC). 1. Calculated according to the Basel I guidance. 2. Billions CFAF. 3. Return in ROE is calculated based on annualized net profit before tax.*

### Annex I — Implementation of Past IMF Advice (Article IV 2022)

### A. Fiscal policy to maintain sustainability while supporting inclusive growth
- A.1. Rebuild macroeconomic buffers and provide temporary relief from higher food prices: Implemented.
  - In 2022, Equatorial Guinea saved a significant part of the hydrocarbon revenue windfall as reflected in the large fiscal surplus (13.5 percent of GDP), and for the first time in years, accumulated net foreign assets at the BEAC. The authorities also launched a food imports program to abate food inflationary pressures.
- A.2. Tackle underperformance of SOEs and reducing transfers to the gas company and other public entities: Partially implemented.
  - Audits of major hydrocarbon SOEs were completed.
- A.3. Increase spending efficiency prioritizing health and education to boost human capital: Implemented.
  - There was an increase in social spending in the 2023 budget.
- A.4. Strengthen public debt management:
  - A.4.1. Conclude the first part of the domestic arrear’s clearance: Implemented.
  - A.4.2. Settle external arrears in line with agreements: Partially Implemented.
    - The government made significant advances clearing domestic arrears to construction companies —in 2022, it paid CFAF 71.4 billion, including CFAF 65 billion from the SDRs allocation. There are no reports of arrears to Spain and other external creditors, except Belgium. The authorities have not yet reached an agreement with Belgium: discussions appear to have stalled.

### A.5. Raise spending efficiency (medium-term)
- A.5.1 Strengthen PFM to improve public expenditure monitoring and tracking to improve accountability: In progress.
  - Tighter procedures for expenditure approvals and oversight for current and capital spending introduced. Budget preparation revamped; projects reviewed by a budget committee. Expenditure tracking strengthened; decree establishing a Treasury Single Account (TSA) adopted in 2023. An upcoming FAD mission will provide details on extent of PFM reforms.
- A.5.2 Implement a more comprehensive reform for fuel subsidies, moving to an automatic pricing mechanism with price smoothing rules and targeted protection for low-income households: In progress.
  - Authorities decided to eliminate fuel subsidies. The 2024 budget envisions 70 percent reduction in fuel subsidies.
- A.5.3 Strengthen the public procurement framework, including publishing beneficial ownership information: In progress.
  - Full implementation of Decree 141/2021—requiring publication of beneficial owners within 15 days of contract signature—still pending. Currently, a limited number of contracts comply. Government approved draft law limiting non-competitive bidding.

### A.6. Revenue priorities — improve non-hydrocarbon revenue collection
- A.6.1 Ensure rapid implementation of the new electronic system to collect VAT: In progress.
  - Steps taken towards establishing a digital VAT system.
- A.6.2 Implement measures to fully roll out customs IT reform across posts and ensure adequate power and connectivity: In progress.
  - ASYCUDA rolled out in Malabo port and currently being rolled out in Bata.

### A.7. Strengthen public debt management
- A.7.1 Advance implementation of a multi-annual expenditure tracking and control system, and a new debt management and financial analysis system: In progress.
  - A new IT debt management system is under development.

### B. Improving social outcomes and protecting food security
- B.1. Develop a social protection strategy with objectives, measures, timelines, and financing within a streamlined administrative structure: In progress (substantially delayed).
  - A social protection law drafted and pending ratification; establishes framework and flagship social safety net. Timeline for implementation once ratified unclear.
- B.2. Develop a single beneficiary registry with evidence-based criteria for social assistance: Not implemented.
  - Authorities met with World Bank; no current timeline.
- B.3. Provide targeted support benefiting vulnerable households, including temporary subsidization of basic food items or temporary reduction of import taxes: Partly implemented.
  - There were imports of subsidized food items; targeting effectiveness unclear.
- B.4. Improve transparency of spending plans, execution, and outcomes by improving collection and reporting of social spending data: Partly implemented.
  - Efforts made but plans, execution, and outcomes remain wanting.

### C. Strengthening the banking sector and financial inclusion
- C.1. Hire a broker to assist with clearance of audited domestic arrears: Implemented.
  - A broker was hired in summer 2022.
- C.2. Strengthen the financial situation of a state-owned systemic bank, including requiring credible recapitalization or restructuring plans: In progress.
  - Agreement signed with a private investor to acquire a majority stake in the large systemic bank; ongoing discussions with State, investor, and COBAC.
- C.3. Enhance judiciary capacity and implement new mechanisms to resolve commercial and credit disputes: Not implemented.
- C.4. Advance the national financial inclusion strategy to develop and promote mobile payments with adequate oversight: In progress.
  - A draft financial inclusion strategy under consideration.
- C.5. Strengthen governance and transparency of state-owned banks and monitoring of regulatory compliance: Not implemented / No longer relevant.

### D. Improving governance, transparency and fighting corruption
- D.1. Issue regulations and asset declarations for senior government officials consistent with international good practices: In progress.
  - Government appropriated funding to the Anti-Corruption Commission (ACC) starting end-2023; LEG comments incorporated; prompt approval envisioned.
- D.2. Publish declarations and by-laws on a government website: In progress.
  - Official Gazette website established; only a few laws and declarations published to date.
- D.3. Complete and publish audits of COVID and Bata rehabilitation spending, public procurement contracts, and beneficial ownership information: Partially implemented.
  - COVID and Bata audits completed; COVID audit published. Bata audit final draft not published. Publication of contracts and beneficial ownership incomplete.
- D.4. Publish periodic reports on implementation of the 2019 Good Governance and Anti-Corruption Action Plan: Not implemented.
  - Pending full operationalization of the Anti-corruption commission.
- D.5. Continue to pursue EITI membership: In progress.
  - Civil society conference planned (postponed to December 2023); President expected to renew commitment.
- D.6. Improve timely publication of economic data essential for surveillance: Implemented.
  - Quarterly economic data began publication in 2022; rebasing exercise for national accounts expected to be published in 2025.
- D.7. Audits of the state-owned oil and gas companies: Implemented.
  - Independent audits of GEPetrol and SONAGAS published on the Ministry of Finance website in September 2022.

### E. Boosting non-hydrocarbon growth
- E.1 Prepare an asset-sales plan based on open and transparent international tenders to accompany the published list of assets for privatization: Partially implemented.
- E.2 Identify high-value liquid assets that could help fulfill financing needs: Not implemented.
- E.3 Establish an investment promotion agency: Not implemented.
- E.4 Establish a strategy to develop the tourism industry: Partially implemented.
  - Agreements for airport and regional airline management signed; online visa platform launched July 2023; no concrete time-bound strategy produced.
- E.5 Carefully assess measures to promote investment in the hydrocarbon sector: Implemented.
  - 2023 agreements to develop the Gas Mega Hub project and a cross-border field development agreement with Cameroon.
- E.5 Transparent and credible diversification framework: Partially implemented.
  - National diversification and sustainable development strategy developed; specific measures remain unclear.

### Annex II — Stocktaking of the 2019 EFF and the 2021 RFI

### Key points
- The three-year EFF-supported program lapsed in December 2022 without any reviews as external and domestic shocks1 and weak institutional capacity delayed implementation.
- Authorities met 4 out of 9 structural benchmarks under the EFF and completed 3 additional structural benchmarks with delay but prior to EFF expiration.
- In 2021 the IMF approved a disbursement under the RFI of SDR 47.25 million – all four prior actions for this disbursement were met, including passing the anti-corruption law.
- EFF objectives and outcomes:
  - EFF approved on December 18, 2019 for SDR 205 million (130 percent of quota).
  - EFF objectives included: (i) reduce macroeconomic imbalances to maintain public debt sustainability and rebuild NFAs; (ii) promote human capital and social protection; (iii) address financial sector vulnerabilities; (iv) foster good governance and transparency and fight corruption; (v) promote economic diversification.
  - The EFF goal of substantial fiscal adjustment fell short: envisioned cumulative improvement in the non-hydrocarbon primary balance (NHPB) of 8.2 percent of GDP over 2019–22; targeted frontloaded NHPB reduction for 2019–21 largely achieved, but NHPB target in 2022 was prevented by non-hydrocarbon revenue under-performance and larger capital spending.
  - Authorities took measures to increase non-hydrocarbon revenue and saved in 2022 a significant part of the hydrocarbon windfall; passed regulations for excise taxes and amended the 2017 Amnesty Tax Law; fiscal surplus reached 13.6 percent of GDP in 2022.
  - Little progress on banking sector vulnerabilities: high NPLs remain; slow progress clearing arrears to construction companies; no recapitalization plan for largest systemic bank.
  - Governance reforms moved steadily but slowly: anti-corruption law passed in late 2021; audits of state-owned oil and gas companies completed and published; several governance reforms remain unfinished.

### Table 1. Status of Macro-Critical Structural Reforms under the 2019 EFF by end-2022 (completion summary)
- Prior Actions (3 out of 4 Met)
  - 1. Submission to parliament of a 2020 budget consistent with the program targets: Met
  - 2. Ministry to operationalize a system to track and control expenditure commitments: Met
  - 3. Publish the Governance Diagnostic Report and a governance strategy: Met
  - 4. Submit a membership application to the EITI: Not Met (New application process ongoing)
- Structural Benchmarks (4 out of 9 Met)
  - 1. Share active oil and gas contracts with BEAC: Met
  - 2. Congressional approval of legislation to implement excise taxes: Met
  - 3. Congressional approval of amendments to the 2017 tax amnesty law: Met
  - 4. Publication of a comprehensive hydrocarbon data and information report for 2019: Met
  - 5. Congressional approval of an anti-corruption law in line with UNCAC: Met with delay on May 2021
  - 6. Publication of the audits of GEPetrol and Sonagas: Met with delay on February and May 2022
  - 7. Preparation of list of assets for privatization and list for private management: Met with delay on April 2022
  - 8. Clearance through exchange with government bonds the domestic arrears validated through the audit: Not Met (Arrears clearance enhanced plan in progress)

*1 The country was hit in March 2020 by the COVID pandemic, in March 2021 by the Bata explosions and in March 2022 by the hike in food prices after the invasion of Ukraine. 2 Equivalent to US$282.8 million or 130 percent of the quota.*

*Source: IMF staff estimates.*

### 9. Set up a website for the official Gazette and publish all laws,

### 9. Set up a website for the official Gazette and publish all laws, orders, and decrees since 2000

### Reform status and pending commitments
- Status of this single reform item: Not Met; In progress.
- Summary of Prior Actions (4 out of 4 Met):
  - 1. Congressional approval of an anti-corruption law in line with international obligations under the UNCAC — Met
  - 2. Hire an international independent audit firm and start the audit of COVID-related expenditures — Met
  - 3. Hire an international independent firm to audit Bata emergency response expenditures — Met
  - 4. Establish two escrow accounts at BEAC-one for COVID and one for Bata emergency spending — Met
- Key Commitments (3 out of 7 Met):
  - Met:
    - 1. Completion and Publication of COVID expenditures related audits — Met
    - 2. Issuing regulations to require beneficial ownership information of companies awarded public procurement contracts for COVID and Bata related spending — Met
    - 3. Preparation and publication of the list of assets for privatization, including a high-value liquid asset — Met
  - Not met / In progress (with current notes preserved):
    - 4. Completion and Publication of Bata expenditures related audits — Not met; In progress. Pending Auditor’s Final Clearance
    - 5. Asset declarations of senior public officials — Not met; In progress. Pending approval of draft regulation and full operationalization of the Anti-Corruption Commission.
    - 6. Issue the implementation decree(s) related to the asset declaration regime for senior public officials and the governance of the Anti-Corruption Commission — Not met; In progress. Draft Regulation operationalizing the process pending final approval.
    - 7. Publication of all procurement contracts and the beneficial ownership information of awarded entities for COVID and Bata emergencies signed since the adoption of the new regulation — Not met; In progress. Most COVID contracts already published, but still require completion. Bata contract publications should follow, after auditor’s clearance.

### Real and external developments (2019–22) — key figures
- Real GDP and Real Non-Hydrocarbon GDP: (Figures presented for 2019–22; charts referenced in source).
- Inflation: (Annual average; chart referenced).
- Current Account Balance: (Percent of GDP; chart referenced).

### Fiscal developments (2019–22) — key figures
- Non-Hydrocarbon Primary Balance: (Change with respect to previous year, Percent of Non-Hydrocarbon GDP; chart referenced).
- Non-Hydrocarbon Revenue: (Change with respect to previous year, Percent of Non-Hydrocarbon GDP; chart referenced).
- Total Primary Expenditure: (Change with respect to the previous year, in percent of total GDP; chart referenced).
- Revenue: (Change with respect to the previous year, in percent of total GDP; chart referenced).

### Risk Assessment Matrix — selected risks and recommended responses
- Conjunctural Risks:
  - Intensification of regional conflict(s); escalation of Russia’s war in Ukraine — Relative Likelihood: High (↑) (↓); Expected Impact if realized: High; ST policy responses include: save windfall hydrocarbon earnings, adopt temporary fiscal measures to protect food security, diversify non-traditional sectors, monitor financial sector with CEMAC.
  - Commodity price volatility — Relative Likelihood: High (↑) (↓); Expected Impact: High; ST policy responses: save windfall hydrocarbon earnings, provide temporary targeted transfers, allow gradual pass-through of international prices, phase out generalized subsidies.
  - Abrupt global slowdown or recession — Relative Likelihood: Medium (↓); Expected Impact: High; ST, MT responses: enhance competitiveness, diversify nontraditional revenues, monitor financial sector with CEMAC.
  - Social discontent — Relative Likelihood: Medium (↓); Expected Impact: Medium; ST responses: provide temporary and targeted transfers, gradual pass-through of international prices, phase out generalized subsidies, monitor financial sector with CEMAC.
- Structural Risks:
  - Deepening geoeconomic fragmentation — Relative Likelihood: High (↓); Expected Impact: Medium; ST, MT responses: enhance international cooperation and competitiveness.
  - Natural disasters related to climate change — Relative Likelihood: Medium (↓); Expected Impact: Medium; ST, MT responses: implement national adaptation plans, invest in structural and financial resilience, arrange appropriate ex ante financing.
- Domestic Risks:
  - Weak governance and capacity — Relative Likelihood: High (↓); Expected Impact: High; ST, MT responses: press ahead with governance and PFM reforms; request technical assistance and training.
  - Banking sector weaknesses — Relative Likelihood: High (↓); Expected Impact: High; ST responses: expedite settlement of domestic arrears and take actions to restructure the largest systemic bank.

### External sector assessment — background, assessments, and policy implications
- Overall assessment: The external position of Equatorial Guinea in 2022 is assessed to be substantially weaker than the level implied by medium-term fundamentals and desirable policies. The estimated current account imbalance shows an improvement compared to 2019 and 2021.
- Potential policy responses: Structural and fiscal reforms to boost medium-term competitiveness by increasing non-hydrocarbon productivity and economic diversification, including reforms to the business environment, governance, financial sector, human capital, and more efficient allocation of government expenditures.
- Foreign Assets and Liabilities:
  - Official net foreign assets (NFA) as percent of GDP increased from –2.7 in 2021 to reach a substantial 9.3 percent in 2022.
  - International reserves in 2022: US$1,392.8 million.
  - Sources of reserve accumulation: trade balance surplus of 40.6 percent of GDP and capital inflow equivalent to 11.8 percent of GDP (direct investments, primarily in hydrocarbon sector).
  - Projected NFA trajectory: average loss of 6.4 percent of GDP from 2024 to 2028; loss of 3.4 percent of GDP in 2023 followed by a loss of 9.0 percent of GDP in 2028.
- Current Account:
  - CA in 2022: surplus of 2.4 percent of GDP; in 2021: surplus of 4.2 percent of GDP.
  - Hydrocarbon exports in 2022: 53.8 percent of GDP.
  - Trade balance surplus in 2022: 40.6 percent of GDP.
  - Gross national savings: 3.9 percent of GDP in 2020; 9.0 percent of GDP in 2021; 16.1 percent of GDP in 2022.
  - Projection: CA deficits are projected to become sizable in the medium term due to diminishing hydrocarbon output and exports and a gradual upturn of non-hydrocarbon activity.
- Assessment metrics and model outputs:
  - EBA-lite CA model: estimated CA gap of –4.5 percent of GDP in 2022 (improving from -5.7 percent in 2021 and –14.7 percent in 2019).
  - CA-Actual: 2.4
  - Cyclical contributions (from model): (-)0.4
  - COVID-19 adjustors (-) 2/: 0.0
  - Additional temporary/statistical factors (-): 0.0
  - Natural disasters and conflicts (-): -0.1
  - Adjusted CA: 2.1
  - CA Norm (from model) 3/: 6.6
  - Adjusted CA Norm: 6.6
  - CA Gap: -4.5
  - o/w Relative policy gap: 17.7
  - Elasticity: -0.3
- Real Exchange Rate (REER) and NEER:
  - REER depreciation in 2022: 6.5 percent (compared with 2.2 percent in 2021).
  - NEER depreciation in 2022: 4.4 percent (compared with appreciation of 0.9 percent in 2021).
  - REER gap (overvaluation) from CA-based approach: 16.7 percent.
  - EBA-lite REER model estimate: REER undervaluation of -6.4 percent.
  - Note: The 2022 REER overvaluation of 16.7 percent is lower than the 21 percent and the 54 percent recorded in August 2022 and December 2019 assessments respectively.
  - Closing the estimated REER overvaluation requires structural reforms to improve competitiveness.
- Capital and Financial Accounts:
  - FDI in 2022: 11.8 percent of GDP (compared with 2.7 percent of GDP in 2021).
  - Anticipation: FDI flows into the hydrocarbon sector are expected to dwindle over the upcoming decade due to depletion of hydrocarbon resources and possible lower oil and gas prices.
  - Assessment: Balance of Payments financing needs are expected to remain elevated in the medium term, requiring strong commitment to structural and fiscal reforms.

### Debt and institutional coverage (selected notes)
- Debt coverage in the DSA: (table entries present; subsector inclusion notes):
  - Budgetary central government — Yes
  - Extra budgetary funds (EBFs) — No
  - Social security funds (SSFs) — No
  - State governments — No
  - Local governments — No
  - Public nonfinancial corporations — Yes
  - Central bank — No
  - Other public financial corporations — Yes

*Source: IMF staff report (Equatorial Guinea) — content as provided in the supplied chapter/section.*

### 5. Debt consolidation across sectors:

### 5. Debt consolidation across sectors:

### Data coverage and recording
- Commentary: The data coverage is only for the central government.
- Reporting on intra-government debt holdings includes: Budget. central govt; Extra-budget. funds (EBFs); Social security funds (SSFs); State govt.; Local govt.; Nonfin pub. corp.; Central bank; Oth. pub. fin. corp.
- Basis of recording options noted in source: No n-cash basis 4/; Cash basis.
- Valuation of debt stock options noted in source: Nominal value 5/; Face value 6/; Market value 7/.
- Color code legend provided for chosen coverage, missing from recommended coverage, and not applicable.

### Public debt structure and baseline projections
- Public Debt (Percent of GDP) by year:
  - 2022: 34.6
  - 2023: 42.1
  - 2024: 34.0
  - 2025: 33.3
  - 2026: 36.0
  - 2027: 37.4
  - 2028: 38.1
  - 2029: 40.2
  - 2030: 43.1
  - 2031: 45.0
  - 2032: 47.2
- Change in Public Debt (Percent of GDP) by year:
  - 2022: -7.5
  - 2023: 7.5
  - 2024: -8.0
  - 2025: -0.8
  - 2026: 2.7
  - 2027: 1.4
  - 2028: 0.7
  - 2029: 2.1
  - 2030: 2.9
  - 2031: 1.9
  - 2032: 2.1
- Contribution of identified flows (Percent of GDP) by year:
  - 2022: -18.2
  - 2023: 5.8
  - 2024: -8.4
  - 2025: -1.9
  - 2026: 1.9
  - 2027: 0.8
  - 2028: 1.6
  - 2029: 3.0
  - 2030: 3.9
  - 2031: 3.2
  - 2032: 3.7
- Primary deficit (Percent of GDP) by year:
  - 2022: -20.1
  - 2023: -7.7
  - 2024: -9.5
  - 2025: -3.1
  - 2026: -0.8
  - 2027: 0.1
  - 2028: 0.9
  - 2029: 1.4
  - 2030: 2.2
  - 2031: 2.4
  - 2032: 2.9
- Noninterest revenues (Percent of GDP) by year:
  - 2022: 30.7
  - 2023: 23.3
  - 2024: 24.4
  - 2025: 17.9
  - 2026: 16.0
  - 2027: 15.6
  - 2028: 15.2
  - 2029: 14.7
  - 2030: 14.2
  - 2031: 13.9
  - 2032: 13.3
- Noninterest expenditures (Percent of GDP) by year:
  - 2022: 10.6
  - 2023: 15.5
  - 2024: 14.9
  - 2025: 14.8
  - 2026: 15.3
  - 2027: 15.6
  - 2028: 16.0
  - 2029: 16.2
  - 2030: 16.3
  - 2031: 16.2
  - 2032: 16.2
- Automatic debt dynamics (Percent of GDP) by year:
  - 2022: 0.1
  - 2023: 8.4
  - 2024: 2.1
  - 2025: 2.1
  - 2026: 3.9
  - 2027: 3.2
  - 2028: 3.1
  - 2029: 3.2
  - 2030: 3.2
  - 2031: 2.2
  - 2032: 2.2
- Real interest rate and relative inflation components (Percent of GDP) by year:
  - Real interest rate and relative inflation combined row shows: -0.4; 5.1; -0.3; 3.3; 2.5; 3.2; 2.9; 4.0; 4.0; 3.6; 3.4
  - Real interest rate row: -0.6; 6.6; -1.1; 3.3; 2.2; 3.0; 2.7; 4.0; 4.1; 3.6; 3.5
  - Relative inflation row: 0.2; -1.5; 0.8; -0.1; 0.3; 0.2; 0.2; 0.0; -0.1; 0.0; 0.0
- Real growth rate row (Percent) contains: -1.3; 3.3; 2.4; -1.2; 1.4; 0.1; 0.3; -0.8; -0.8; -1.4; -1.3
- Other identified flows (Percent of GDP) by year:
  - 2022: 1.9
  - 2023: 5.1
  - 2024: -1.0
  - 2025: -0.8
  - 2026: -1.2
  - 2027: -2.5
  - 2028: -2.5
  - 2029: -1.6
  - 2030: -1.5
  - 2031: -1.4
  - 2032: -1.4
- Contribution of residual (Percent of GDP) by year:
  - 2022: 10.7
  - 2023: 1.7
  - 2024: 0.4
  - 2025: 1.1
  - 2026: 0.9
  - 2027: 0.6
  - 2028: -0.8
  - 2029: -1.0
  - 2030: -0.9
  - 2031: -1.3
  - 2032: -1.6
- Gross Financing Needs (Percent of GDP) by year:
  - 2022: -23.9
  - 2023: 0.3
  - 2024: 2.7
  - 2025: 10.0
  - 2026: 11.3
  - 2027: 14.2
  - 2028: 13.1
  - 2029: 12.9
  - 2030: 13.5
  - 2031: 17.9
  - 2032: 19.0
- Of which: debt service (Percent of GDP) by year:
  - 2022: -3.7
  - 2023: 8.1
  - 2024: 12.4
  - 2025: 13.4
  - 2026: 12.2
  - 2027: 14.3
  - 2028: 12.4
  - 2029: 11.7
  - 2030: 11.6
  - 2031: 15.7
  - 2032: 16.2
- Debt service in local currency row (Percent of GDP) by year:
  - 2022: -2.0
  - 2023: 3.5
  - 2024: 9.1
  - 2025: 9.9
  - 2026: 9.6
  - 2027: 11.8
  - 2028: 9.7
  - 2029: 8.7
  - 2030: 8.4
  - 2031: 12.8
  - 2032: 13.5
- Debt service in foreign currency row (Percent of GDP) by year:
  - 2022: -1.7
  - 2023: 4.6
  - 2024: 3.3
  - 2025: 3.5
  - 2026: 2.6
  - 2027: 2.5
  - 2028: 2.7
  - 2029: 3.0
  - 2030: 3.2
  - 2031: 2.9
  - 2032: 2.7
- Memo items:
  - Real GDP growth (percent) by year: 3.2; -8.8; -5.5; 3.7; -4.1; -0.2; -0.8; 2.2; 2.0; 3.3; 2.9
  - Inflation (GDP deflator; percent) by year: 4.5; -10.1; 10.3; 1.2; 5.1; 3.4; 4.1; 1.1; 0.3; 1.6; 1.5
  - Nominal GDP growth (percent) by year: 7.9; -18.0; 4.3; 4.9; 0.8; 3.2; 3.3; 3.3; 2.2; 5.0; 4.5
  - Effective interest rate (percent) by year: 3.0; 5.5; 7.6; 11.5; 11.8; 12.1; 11.4; 12.0; 10.7; 10.3; 9.6
- Commentary: As of 2023, the government has adopted an arrears clearance plan to reduce debt held by the domestic banking system and other creditors. The share of foreign currency denominated debt is projected to decrease during the projection period, while the share of short-term debt is projected to decrease. Over the projection period the overall composition of public debt carries a relatively low-risk structure.
- Medium-term risk indicators (selected values):
  - Fanchart width: 111.2; 1.6
  - Probability of debt not stabilizing (pct): 83.5; 0.7
  - Terminal debt level x institutions index: 36.1; 0.8
  - Average GFN in baseline: 8.6; 2.9
  - Bank claims on government (pct bank assets): 17.7; 5.7
  - Chg. in claims on govt. in stress (pct bank assets): 4.7; 1.6
  - Prob. of missed crisis, 2023-2028 (if stress not predicted): 54.5 pct.
  - Prob. of false alarm, 2023-2028 (if stress predicted): 6.8 pct.
- Commentary on risk tools: The Debt Fanchart Module points to a high level of risk, while the GFN Financeability Module suggests a lower, but still moderate, level of risk. The overall high mechanical risk signal is attributed to increasing gross financing needs over the medium term and high historical volatility in debt indicators.

### Arrears to construction companies and clearance strategy (Annex VI)
- Background and audit findings:
  - Over a decade ago public construction boom led to accumulation of arrears that severely affected the financial system.
  - In 2019 the government hired Ernst and Young to audit outstanding debt.
  - Audit findings (Jun-19 totals and composition):
    - Total stock: CFAF 1,382.5 billion (20.8 percent of GDP).
    - Audited (validated) debt to be paid in cash: CFAF 900.2 billion (13.5 percent of GDP).
    - Audited (validated) securitized debt: CFAF 308.4 billion (4.6 percent of GDP).
    - Non-validated but recognized for payment: CFAF 173.9 billion (2.6 percent of GDP).
  - As of August 2023, the stock of arrears to construction companies stands at CFAF 584.1 billion comprised of:
    - CFAF 431.8 billion to be paid in cash (audited).
    - CFAF 47.5 billion securitized (audited).
    - CFAF 104.8 billion non-audited, but government has been paying as public works were completed.
- Cumulative payments and audit-adjusted stocks:
  - As of 2019–2023 total payments: CFAF 506.9 billion (table) and staff text reports a total paid amount of CFAF 572.2 billion (9.5 percent of GDP) from 2019 to 2023 including:
    - CFAF 297.0 billion to validated companies (of which CFAF 65.3 billion were drawn from the 2021 SDR allocation).
    - CFAF 206.1 billion (3.4 percent of GDP) paid through securitization.
    - CFAF 69.1 billion (1.1 percent of GDP) paid to non-validated companies.
  - Net debt, excluding non-audited debt, after taxes + 20 percent discount (2023 audit): CFAF 479.3 billion (table).
- Government payment plan:
  - The government plans to clear audited arrears of CFAF 431.8 billion with annual payments of CFAF 29 billion over the next 15 years.
  - Authorities intend to pay non-validated arrears of completed works but currently lack a time-bound, creditor specific strategy.
- Commentary: The accumulation of arrears undercut bank capitalization because construction companies that did not get government payments did not repay banks. Inclusion of domestic arrears in 2019 led to large upward revision in public debt-to-GDP.

### Policy recommendations (Annex VI, Policy Recommendations)
- High-level objectives:
  - Design and implement a time-bound arrears clearance strategy to restore financial system health and improve investment perception.
  - Ensure the strategy demonstrates commitment to adequate public procurement and financial management practices.
- Specific recommendations:
  - Prioritize payment of validated debt to construction companies indebted in the domestic banking sector.
  - After independent audits and verification, enhance arrears clearance strategy design: include guidelines, timelines, and official publication.
  - Start clearing arrears by engaging with creditors:
    - Government team should meet representatives from banking institutions and take stock of their balance sheets.
    - Negotiate a schedule of payments with creditors according to a pre-defined calendar and an agreed interest rate.
  - Classify debt beyond validated vs. non-validated, including:
    - Distinguish validated owed to banks and validated not owed to banks.
    - Consider impact on banking balance sheets and economic linkages to vulnerable populations.
    - Follow classification with a priority-centered payment timetable and informative justification.
  - Ensure transparency and accountability:
    - Issue an official arrears payment strategy report, publicly available, including aggregate audit results, proportions of validated and contested arrears, verification process details, criteria for rejecting claims, details on paid portion and pending amounts, payment sources, and priority-centered timetable.
    - Include an annual progress report produced by an international auditor as a safeguard.
  - Budgeting and monitoring:
    - Approve specific budget allocation and provide details on sources and destinations of arrears payments in each annual budget.
    - Prepare periodic implementation progress updates (quarterly or semi-annually).
    - Assign a technical team to oversee that payments follow the set strategy.
    - Record and revise the plan if originally non-validated arrears are validated as new procurement information surfaces.

*Source: IMF Staff.*

### 12.      In sum, staff recommended that the authorities finalize and issue their current draft

### 12.      In sum, staff recommended that the authorities finalize and issue their current draft arrears payment plan, engage in PFM reforms to prevent further arrears accumulation, and liquidate debt within the guidelines of the plan.

### Arrears clearance — staff findings and recommendations
- Staff recommended that the authorities finalize and issue their current draft arrears payment plan, engage in PFM reforms to prevent further arrears accumulation, and liquidate debt within the guidelines of the plan.
- Initial stages of an arrears clearance strategy—ownership, auditing, and verification—are done.
- Payments have been conducted without finalizing the strategy, risking:
  - inadequate payment management,
  - lack of consideration of economic priorities,
  - lack of consideration of the current state of the banking institutions.
- It is very important that:
  - the arrears clearance strategy is finalized and officially published, and
  - the government implements payments within the set guidelines of the strategy.

*REPUBLIC OF EQUATORIAL GUINEA — INTERNATIONAL MONETARY FUND 53*

### Annex VII. Non-Hydrocarbon Diversification — Background and recent developments
- The hydrocarbon sector continues its secular decline due to maturing oil fields.
- Hydrocarbon production and GDP share:
  - hydrocarbon production accounted for less than 5 0 percent of GDP in 2022, down from a high of 80 percent in 2004.
  - Total hydrocarbon production declined by 17 percent since 2018, from 337,571 barrels per day equivalent to 279,722 in 2022.
  - Production is expected to decline by a further 50 percent between 2023 and 2028 due to maturing oil wells and an accident in the largest oil field in 2022 that decreased regular output in that field by two-thirds.
  - Even assuming newly signed production agreements come to fruition, these will contribute only 19 percent of total projected production by 2029, insufficient to offset the decline of mature wells.
- The reduction in hydrocarbon production will negatively impact growth in the construction industry.
- Public spending and investment patterns:
  - social spending in Equatorial Guinea was around 1.6 percent of GDP in 2022, well below regional levels.
  - capital expenditure accounted for 4 percent of GDP in 2022, down from 9 percent in 2018.
  - public investment as a percentage of GDP is projected to continue declining through the medium term to less than 2 percent of GDP by 2030 given budget constraints.
- Despite recognition of the need to reduce hydrocarbon reliance, diversification plans lack concrete targets for social spending and sector-specific budget allocations.
- Large stock of capital and underutilized infrastructure exists, but human capital indicators lag peers of similar income level.

### Progress and constraints on structural reforms
- Progress on improving the business environment and attracting private investment has been slow.
- Noted obstacles:
  - capacity constraints,
  - uneven ownership of the reform agenda,
  - high regulatory burden and unclear procedures,
  - lack of transparency and contract enforcement undermining investor confidence.

### Horizontal and vertical policies (authorities’ approach)
- National development plan: La Agenda Guinea Ecuatorial 2035 focuses on non-hydrocarbon diversification and sustainable development but lacks concrete targets.
- Authorities pursue two avenues: Horizontal Policies and Vertical Policies.

Horizontal Policies — key elements:
- Reduce the regulatory burden for business creation:
  - establishment of the ‘single-point window’ (as part of the 2019 EFF) to streamline business registration.
  - public messaging to encourage registration to formalize businesses and increase the tax base.
- Foster demand-driven higher education and vocational training:
  - inauguration of higher education and vocational training institutes; National University campuses in Malabo, Bata, and Mongomo.
  - fishing industry training school opened in Bata in 2021.
  - telecommunications school and a new university in Ciudad de la Paz.
  - note: credentials from vocational programs often do not transfer between companies or industries; quality control for vocational credentials is fragmented.

Vertical Policies — targeted sectors:
- The diversification strategy targets four cornerstone sectors: agriculture, fisheries, tourism, and finance.
  - Agriculture and Fisheries:
    - heavy reliance on food imports despite most employment being in agriculture and widely available arable land.
    - 2035 strategy proposes rural and agricultural reforms, but few measures undertaken to date.
    - a 2016 contract was awarded for the Riaba fertilizer plant on Bioko Island (project still in planning stages).
  - Tourism and Hospitality Services:
    - steps taken since 2022 to increase tourism access; privatization discussions for airports and national airline Ceiba Intercontinental.
    - Malabo international airport serviced by Air France, Lufthansa, and Ethiopian Airlines.
    - July 2023: government launched an online visa application portal.
    - October 2022: agreement with Ethiopian Airlines to manage the airports.
  - Finance:
    - opportunity for digital financial services to position Equatorial Guinea as a regional financial and business center, building upon investments in telecommunications to increase mobile and internet banking penetration and digitization.

- Authorities continued to pursue hydrocarbon sector agreements:
  - plans announced for the country’s first oil refinery,
  - March of 2023: agreement with Marathon Oil and Chevron to further develop the Gas Mega Hub project begun in 2021.
  - February of 2023: bilateral treaty with Cameroon for cross-border natural gas development.
  - These projects will cushion the rapid decline in mature fields between 2023 and 2028, providing a longer transition to enact diversification.

### Staff advice — Horizontal policies
- Long-term non-hydrocarbon growth requires steadfast implementation of reforms to improve the business environment; many reforms will take time.
- Example: single-point window remains incomplete in practice because business owners must still obtain physical documents from banks.
- One-off actions are insufficient; authorities should demonstrate continued dedication through an integrated, multifaceted development strategy.
- Reforming education and vocational training:
  - government-funded and multinational vocational programs provide a foundation for skills transfer, but credentials often do not transfer across companies or industries.
  - quality control of vocational credentials is fragmented with ineffective oversight of non-formal vocational training.
  - authorities should standardize vocational training credentials, ensure formal vocational training availability in rural and low-income areas, and avoid rigidities in wage setting so wages grow in line with productivity.

### Staff advice — Vertical policies and sector-specific recommendations
- Agriculture and fisheries:
  - targeting these can generate employment for unskilled workers, reduce food import reliance, and boost productivity.
  - FAO data (2021) indicate yields per hectare of several staple food products (cassava, plantains, and bananas) were as much as 3 to 4 times higher in Cameroon than in Equatorial Guinea; similar gaps exist for cash crops such as cocoa and palm oil.
  - opportunity to increase productivity in the short to medium term by encouraging fertilizer use and more productive seed varieties.
  - potential for domestic fertilizer production using natural gas reserves.
- Tourism:
  - high potential due to natural geography; much existing tourism infrastructure is underutilized.
  - country is safe and stable.
  - recommended measures include a tourism promotion and marketing strategy, implementing airport management transfers to private companies, and pursuing agreements with travel agencies and airlines.
- Logistics:
  - Bata hosts one of the largest ports on the western coast of Africa; potential to serve an estimated 200 million consumers in Central Africa.
  - potential synergies with gas hub and tourism (cruise ships); good road infrastructure to facilitate cross-border freight.
  - potential to export electricity regionally following a July 2023 agreement with Gabon and operationalization of a major hydroelectric dam near Ciudad de la Paz.
  - success depends on effective and transparent customs regulations, strong institutional organization, inter-ministerial coordination, and likely technical assistance.
- Governance framework:
  - targeted interventions require a strong governance framework to guard against regulatory capture and rent seeking.
  - all favorable tax treatments (exemptions and subsidies) should be narrowly targeted, time-limited, consistent with WTO obligations, and regularly evaluated through transparent cost-benefit analysis.

*REPUBLIC OF EQUATORIAL GUINEA — INTERNATIONAL MONETARY FUND 59*

### Annex VIII. Key 2024 Revenue and Expenditure Measures — objectives and specific actions
- Budget target:
  - From 2023–24, the government budget targets an improvement in the non-hydrocarbon primary balance of 3.6 percentage points of NHGDP.
- Staff requested quantifying information on these measures; information not yet received. Staff and FAD stand ready to offer technical assistance.

Revenue Measures (listed by the authorities)
1. Creation of a tax inspection plan, including the implementation of:
   - A new tax law in 2024.
   - An annual tax inspection report.
   - A special corps of tax inspectors.
2. Digitalization of tax services.
3. Mandatory use of ASYCUDA.
4. Control and rationalization of customs exemptions in line with CEMAC’s customs code.
5. Implementation of the cadastral urban database for tax purposes.
6. Deployment of automated VAT collection terminals in large commercial centers.

Expenditure Measures (listed by the authorities)
1. Budgetary Management Control:
   - Approval of all public expenditures by the Ministry of Finance shall be done in accordance with the Public Financial Management Law.
   - Acquisition and disposal of public property needs the approval of the Ministry of Finance.
   - Harmonization of public financial management directives along with CEMAC’s.
   - Implementation of the program budget and a medium-term budgetary framework.
2. Appointing chief economists and financial controllers in ministerial departments, state agencies and diplomatic missions.
3. Control and rationalization of current expenditure:
   - Use of the Integral Expenditure Management System (CONTFIN) to be extended to all ministries.
   - Reduction of fuel subsidies.
   - Rationalization of telephone expenses.
   - Review, inventory, and rationalization of contributions to regional and international organizations.
4. Rationalization of public investment:
   - In accordance with the annual fiscal year budget, all public investments shall be proposed by the National Payments Commission (presided by the Ministry of Finance).
   - Expenses to be made by the National Payments Commission shall be subject to authorization by the Ministry of Finance.
   - Payments submitted to the National Payments Commission shall follow the Public Investment Program (PIP) of the Budget Law and should be accompanied by a technical execution report prepared by the supervising company and validated by the Ministry of Public Works and GE-Proyectos.
   - The National Payment Commission shall ensure execution of works and corresponding amounts paid.
   - Before approving investments, the Department of Finance and Budgets shall request a report from the Ministry of Planning and Economic Diversification and verify that the project is under the established budgetary limit.
   - The payment percentages shall be adjusted to the corresponding budget allocation.
5. Settlement of Domestic Arrears and Use of Surpluses:
   - Priority will be given to payment of domestic arrears instead of new projects, and to payment of arrears to companies with bank debt.
   - A comprehensive arrears clearance plan will be developed, with clear criteria for the payment of other arrears and with strong safeguards to ensure the transparency of the payment process.
   - In the event of a budget surplus, the allocation will be used to pay arrears to construction companies. In the case of a Social Security (SS), the surplus, it will be reinvested in the SS Reserve Fund.

*REPUBLIC OF EQUATORIAL GUINEA — INTERNATIONAL MONETARY FUND 61*

### Annex IX. Capacity Development Priorities

### Annex IX. Capacity Development Priorities

### Priority areas and objectives (2022–24)
- Tax Policy & Revenue Administration
  - Raise non-hydrocarbon and hydrocarbon revenues; strengthen tax and customs administration and improve core functions.
- Public Financial Management
  - Improve budget preparation, execution, control and reporting and strengthen treasury management.
  - Improve coordination across ministries; redefine the architecture of the internal audit system and establish a mechanism to coordinate internal and external control and audit institutions; enhance fiscal transparency.
- Expenditure Policy
  - Enhance efficiency of public spending; shift allocated spending to support human capital formation and social programs, including SSNs, which serve the most vulnerable segments of the population; strengthen procurement processes.
  - Increase the fiscal space. Phase-out fuel subsidies.
- Banking Sector
  - Reduce high NPLs. Improve the governance framework for government owned banks.
  - Prepare and implement a financial inclusion strategy, with a focus on mobile payments.
- Legal Framework
  - Strengthening the framework for good governance, enhanced transparency and fighting corruption.
- Real Sector Statistics
  - Update the base year of the national accounts and the CPI basket using the results of the new household survey, further develop quarterly GDP data; improve timeliness of definitive annual national accounts data release.
- Government Financial Statistics
  - Improve the timeliness, quality, and coverage of fiscal data, including full recording of off-budget capital expenditures and government domestic arrears.
  - Provide more detailed budget execution data, including a clear delineation between capital and current spending and functional classification.
  - Implementation of TOFE Directive 5/11 of the CEMAC based on the GFSM 2001/2014 to update fiscal statistics.
- External Sector Statistics
  - Produce and disseminate up-to-date BoP and net IIP data, including quarterly series.
  - Support the Ministry of Finance and Budget to accelerate the use and expansion of the ASYCUDA software (trade flow statistics) and the DMFAS software (external public debt statistics).

### Technical assistance and capacity support (selected missions)
- 2023: December FAD mission on public investment budgeting; August FAD mission on macro fiscal frameworks and 3-year convergence programs; June STA mission on general government data compilation; May STA mission on national accounts; April MCM mission on strengthening government securities issuance; March AFRITAC mission on implementing CEMAC directives; March CP participation in HQ mission on FARI and oil fiscal regimes.
- 2022: May STA mission on balance of payments; April AFRITAC mission on GFS and PSDS; April AFRITAC mission on implementing CEMAC directives.
- 2021: September AFRITAC training on GFS and PSDS; September LEG desk-based review FY21; August AFRITAC mission on real sector and national accounts; March STA mission on external sector statistics; March AFRITAC mission on GFS.
- 2020: June AFRITAC mission on national accounts; June FAD mission on revenue administration FY 2021; May MCM mission on remote debt management; February LEG mission on legislative drafting on anti-corruption law.
- 2019: October FAD mission on assessment of revenue administration; October MCM mission on debt management diagnostic; September STA mission on external sector statistics; July AFRITAC mission on national accounts; July AFRITAC mission on GFS — implementation of the TOFE directive; April FAD mission on capital expenditure budgeting; February STA mission on external sector statistics; January STA mission on data dissemination standards.
- 2018: October AFRITAC mission on GFS.
- Resident Representative: The post of IMF Resident Representative in Malabo was established in 2019 and is currently operational.

### Key statistical and data-quality issues
- General
  - Data shortcomings in national accounts, monetary, fiscal, and external sector statistics with significant scope for improvements in quality, timing, and coverage.
- National Accounts
  - INEGE publishes national accounts according to the System of National Accounts, 1993 (1993 SNA).
  - Quarterly GDP estimates by production have been regularly released since September 2022.
  - INEGE aims to publish the rebased national accounts using 2022 as a benchmark year aligned with the System of National Accounts 2008 (2008 SNA) in the fourth quarter of 2025 (the current base is 2006).
- Price Statistics
  - Official CPI resumed in January 2009, based on data from five major cities representing approximately 58% of the national population; index weights derived from EEH-2006 (December 2006).
  - Deficiencies: outdated weights and basket composition; gaps in time series. Authorities are working on a new household expenditure survey to update the CPI.
- Government Finance Statistics
  - Budget execution data provided to the Fund with delays. Below-the-line transactions limited and not fully reconciled with monetary accounts.
  - Need to advance functional classification of spending, improve reporting of below-the-line transactions, and extend fiscal statistics beyond the budgetary central government to include local governments and other subsectors of general government.
- Monetary and Financial Statistics
  - Monetary statistics reported monthly to the Fund by BEAC in SRFs but with significant delays; the last MFS data submitted to STA referred to September 2022.
  - Depository corporation survey excludes deposit-taking microfinance institutions.
  - BEAC reports data for Equatorial Guinea on several Financial Access Survey indicators, including gender-disaggregated information and indicators adopted by the UN to monitor Target 8.10 of the SDGs.
- Financial Sector Surveillance
  - COBAC reports nine core and four additional FSIs for deposit-takers monthly and four core and two additional FSIs semi-annually to STA; the last FSI data submitted referred to July 2023.
- External Sector Statistics
  - BEAC-ND compiles BoP and IIP statistics; many BoP estimates rely on estimations and should be cross-checked against national accounts, monetary, and government finance statistics.
  - Discrepancies between current account and financial accounts due to lack of coverage of some transactions (mainly direct investment and nonfinancial private sector), use of current data sources, and public external debt data.
  - Data are disseminated with substantial lag. Annual BoP and IIP statistics have not been reported for publication to the IMF.
  - Staff capacity remains a concern; since October 2023 a LTX has been assigned to AFRITAC Central to assist nine countries including Equatorial Guinea under the D4D Fund work program.
- Data standards
  - Participant in the IMF Enhanced General Data Dissemination System (e-GDDS); National Summary Data Page launched in May 2019 but data have not been updated regularly. Metadata posted on the DSBB. No data ROSC has been conducted.

### Selected fiscal, macro, and reform context (high-level findings)
- Recent macro developments
  - The economy was in recession for seven consecutive years until 2022, when it experienced a modest growth of 3.2 percent.
  - Between 2014 and 2021, the country experienced an average 5 percent negative growth.
  - Inflation estimated at 4.9 percent in 2022, compared to -0.1 percent in 2021.
  - The economy suffered a setback in the first half of 2023 after an accident at a major oil field and is estimated to have reverted to negative growth in 2023.
- Fiscal outcomes
  - Overall fiscal balance surplus increased from 2.6 percent in 2021 to 13.6 percent in 2022, driven by higher-than-expected hydrocarbon revenues.
  - Projected overall fiscal balance at 0.3 percent of GDP for 2023.
  - Non-hydrocarbon primary deficit rose from 8.6 percent in 2021 to 13.1 percent in 2022 (17.3 percent of GDP in 2023).
  - 2024 budget includes the phasing out of most fuel subsidies; efforts are made to settle domestic arrears and improve public financial management.
- External sector
  - The current account surplus contracted to 2.4 percent in 2022.

*Source: Annex IX. Capacity Development Priorities, Republic of Equatorial Guinea — Staff Report for the 2023 Article IV Consultation (Informational Annex).*

### 4.2 percent of GDP in 2021, due to higher repatriation of retained oil sector earnings. The external

### 1gnqea2024001 - 4.2 percent of GDP in 2021, due to higher repatriation of retained oil sector earnings. The external

### External position and reserves
- Current account and reserves
  - External current account surplus is estimated to have declined to 1 percent of GDP in 2023.
  - Reserves assets of the BEAC received a positive contribution from Equatorial Guinea in 2022 after several years of weak performance, consistent with recorded firmer oil prices.

### Banking sector vulnerabilities and policy actions
- Key vulnerabilities
  - NPLs represent around 55 percent of total loans, posing a risk to banking system stability.
  - Many banks are undercapitalized.
- Recent improvements
  - Liquidity ratios have been improving since 2022.
  - Government efforts to clear domestic arrears have been undertaken.
- Policy actions and measures
  - The government reached an agreement with a private investor to restore the banking sector to a sound footing.
  - Key policy actions include measures to address solvency and liquidity challenges facing troubled banks.
  - Exchanges of overdue obligations with government bonds have been used to improve asset quality.
  - Audited domestic arrears toward construction companies have been cleared as part of these efforts.

### Economic outlook and projections
- Short- and medium-term outlook
  - Following a welcome recovery in 2022, the country is expected to experience a recession in 2023 and over the medium term.
  - Real GDP is projected to contract by 8.8 percent in 2023.
  - Real GDP is projected to contract by an average of 1.4 percent in the medium term.
  - Inflation should be contained below 3 percent as from 2025.
  - The external account is expected to deteriorate in the medium term.
- Sources of downside risk
  - Shrinking oil output from ageing wells.
  - Inadequate investment in the sector.
  - Declining commodity prices.

### Medium-term policy and reforms agenda
- Overarching strategy
  - The National Strategy for Sustainable Development ‘Horizon 2035’ is the authorities’ main roadmap for diversifying growth away from oil and gas, enhancing domestic revenue mobilization, and improving public financial management.
  - The strategy emphasizes investing in human development and strengthening social protection.

- Boosting non-hydrocarbon revenues and fiscal sustainability
  - The 2024 budget aims to reduce the non-hydrocarbon fiscal deficit by 3.8 percentage points of non-hydrocarbon GDP.
  - A new tax law is being finalized to modernize and simplify the tax system, aiming to improve the business climate for non-oil investment in tourism, farming, and fishing.
  - Tax reforms include harmonizing taxes regionally, streamlining deductions, and adjusting rates.
  - Authorities are optimizing revenue collection from business and employment income.
  - Other fiscal measures include rate changes for the VAT, customs duties, and taxed items such as alcohol, tobacco, property, entertainment, and financial activities.
  - Plans to gradually eliminate fuel subsidies in the medium-term to create space for higher social and human capital development expenditures.
  - Continued efforts to clear government arrears with support from a reputable international auditor to ensure transparency and comprehensiveness.

- Strengthening banking sector intermediation and promoting financial inclusion
  - Implement the banking restructuring and recapitalization plan developed under BEAC and COBAC supervision.
  - Progress includes improved solvency and liquidity for certain banks.
  - National Financial Inclusion Strategy is being finalized with World Bank technical assistance in the framework of the regional strategy for CEMAC.
  - Key financial inclusion priorities: facilitate mobile banking services, enhance financial literacy of SMEs and consumers, and upgrade financial infrastructure.

- Building capacity
  - Authorities value Fund TA under the SMP in PFM, tax policy and administration, national accounts and external sector.
  - Additional capacity development needs identified in macro-fiscal, governance, and data management.
  - Authorities prefer long-term experts and are willing to bear the cost.

- Enhancing nonhydrocarbon inclusive growth
  - Extensive consultations on diversification based on a diagnostic of the agenda; a conference on economic diversification with the private sector was held in November 2023.
  - Priority diversification sectors: fishery, tourism, agriculture, financial services, and digital economy, with opportunities under AfCFTA.
  - Steps taken: signed management contracts for the airport and the seaport for privatization; operationalization of the one stop window for creating businesses.
  - Social protection: plans to increase social spending, expand basic amenities and public services to rural and poorer regions; significant hiring in pre-primary and primary education in 2022; new hospitals and health centers built.
  - Review of social protection law and a national household survey underway to target social interventions more efficiently.

- Governance, anti-corruption, and transparency reforms
  - Developed a governance strategy in collaboration with the Fund.
  - Passed an Anti-corruption law in 2021.
  - Published audits of management in hydrocarbon sector SOEs and completed audits of domestic arrears.
  - Groundwork laid for asset declaration of public officials.
  - Advancing improvements in AML/CFT framework, operationalizing the TSA, and adopting a new procurement code.
  - Government intends to submit a new application for EITI membership to enhance transparency in oil and gas sectors.

- Climate resilience and environmental protection
  - Efforts to reduce climate change impacts across energy, transport, agriculture and forestry, industrial, and waste management sectors.
  - Integrating climate change repercussions into public investment decision-making.
  - Commitment to phasing out energy subsidies to promote cleaner energy sources by providing efficient price signals.

### Conclusion and external support
- Authorities’ stance and requests
  - Authorities count on Fund financial and technical support and its catalytic role to mobilize resources for development spending needs.
  - Committed to implementing orderly and comprehensive policies to foster sustainable and inclusive growth based on diversification away from oil and gas.
  - Call for an early agreement on a Fund financing arrangement and reiterate determination to maintain a conducive policy environment for the reform agenda.
  - Authorities look forward to Directors’ favorable conclusion of the 2023 Article IV consultation, and positive consideration of their request for a UTC-supported program.

*Source: 1gnqea2024001 - 4.2 percent of GDP in 2021, due to higher repatriation of retained oil sector earnings. The external*

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_Source: https://www.imf.org/-/media/files/publications/cr/2024/english/1gnqea2024001.pdf_