## _cr09102

## Source details

**Canonical URL:** [_cr09102](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2009/_cr09102.pdf)

## Other formats

- [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2009/_cr09102.pdf.md)
- [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2009/_cr09102.pdf.json)

---

### Executive Summary — Background and outlook
- Growth rebounded in 2007 to 21.4 percent and is expected to remain strong in 2008 based on increased production of hydrocarbons.
- Higher government capital spending will be the main engine of near-term growth.
- Inflation is expected to rise to 6 percent, driven by increased food prices.
- Refined fuel prices are set administratively and are unchanged.
- High oil prices have led to strong fiscal and external current account surpluses.
- The non-oil fiscal deficit declined recently to 49.7 percent of non-oil GDP in 2007, with spending largely kept within budget.
- Going forward, softening oil prices and higher spending may lead to a decline in the fiscal and current account surpluses and a widening of the non-oil deficit.
- The Social Development Fund is ready to initiate critical projects but the authorities have not yet authorized disbursement of project funds.
- Equatorial Guinea’s participation in the Extractive Industries Transparency Initiative (EITI) is moving forward slowly; the World Bank is expected to assist with meeting the substantive requirement on civil society participation.
- The financial system, though underdeveloped, appears generally sound.

### Policy discussions and recommendations (Executive Summary)
- The mission judged the proposed expansionary 2009 budget will sustain inflationary pressures.
- The mission judged the significant increase in capital spending insufficiently addresses social needs; the authorities considered higher spending warranted for infrastructure projects.
- Over the longer term, the authorities agreed that the non-oil deficit needs to decline, once essential capital spending priorities are met.
- Improvements in public financial management are essential.
- Authorities remain committed to the EITI.
- The mission strongly urged prompt implementation of Social Development Fund projects; authorities indicated delays were because of political changes.
- The authorities propose a modest food subsidy in the 2009 budget; the mission suggested structuring it as a direct transfer to vulnerable households.
- Need to expand access to credit for small and medium businesses, including through restructuring of government assistance.
- Staff view: the real effective exchange rate (REER) seems to be somewhat overvalued.

### Recent developments — growth, inflation, exchange rates, external reserves
- Real GDP growth (selected): 21.4 percent in 2007; projected 7.4 (2008, Proj.) in historical series and 7.4 (2008) in medium-term projection table.
- Hydrocarbons developments: new oil field (late 2006) and liquefied natural gas facility (mid 2007) drove 2007 growth; full year LNG production in 2008 expected to produce moderate growth despite a small decrease in oil production.
- Inflation: consumer prices (end of period) 3.7 (2007); inflation expected to rise to 6 percent in 2008.
- REER: CPI-based REER appreciated and stood at 75 percent above its 2000 level by mid-2008; selected indicators (2007, index 2000=100): Terms of trade 165.5; REER, CPI-based 161.5.
- External reserves: gross official foreign assets rose to about 21 months of non-oil imports by end-2007; projected to drop to 12.7 months of imports in 2008 and to 11.5 in 2009 in revised projections.

### Assessment of the real effective exchange rate (Box 1 summary)
- Staff analysis suggests the REER is somewhat overvalued, complicated by structural changes since 1992 and data deficiencies for the non-oil sector and domestic price level.
- CPI-based REER appreciated and stood at 75 percent above its 2000 level by mid-2008.
- Official data likely understated actual consumer price increases during 2006–07, implying understatement of real appreciation.
- Non-oil export volumes: including derivatives rose to 1,116.5 (2007 index, 2000=100) while excluding derivatives the index was 79.5 (2007 index, 2000=100).

### Fiscal developments, public financial management, and recommendations
- Fiscal outcome: high fiscal surplus that narrowed in 2007 due to increased capital spending and some weakening of revenues relative to GDP.
- Depreciation of the U.S. dollar against the CFA franc largely offset the effect of higher dollar oil prices on oil revenues.
- Expenditures were in line with the budget.
- Non-oil primary deficit improved to about 49½ percent of non-oil GDP in 2007.
- Implementation of the Social Development Fund has been slow: about 12 projects agreed with USAID assistance (education, health, water and sewerage, gender equality, community development); funds were allocated in the 2008 budget but government has yet to approve disbursement.
- Steps to improve public financial management: tax administration training and monitoring, expanding taxpayer identification number use; customs automation and pre-shipment inspection; treasury improving classification of government expenditures; two international fiscal advisors started work in March 2008.
- Mission recommendations (short- and medium-term):
  - Scale down capital spending in the 2009 budget to avoid straining the economy and implementation capacity and eroding project quality.
  - Shrink the capital budget slightly relative to national output, sustaining gradual reduction in the non-oil deficit while allowing some scaling up of current expenditure.
  - Target a further decline in the non-oil deficit for longer-term sustainability: staff suggest reducing the non-oil deficit from about 26 percent of non-oil GDP in 2008 to 13 percent in 2020 under a permanent-income-type benchmark (Box 2, line 3).
  - More productive government spending, increased non-oil revenues from an invigorated non-oil economy, and new discoveries of reserves could relax implied spending limits.

### Fiscal framework scenarios and key numeric projections (Box 2 summary)
- Price of oil based on WEO (US$ per barrel): 107 (2008), 101 (2009), 103 (2012), 103 (2020).
- Baseline scenario assumes real return of 2 percent on financial investments.
- Staff estimates impacts on balances (percent of non-oil GDP and percent of GDP) across specifications and years; specific staff estimates cited include a worsening of the non-oil deficit from 47½ percent of non-oil GDP to 73½ percent of non-oil GDP under the authorities’ proposed 2009 budget.
- Permanent Income Model specifications described: expenditure kept constant in real terms (annuity from oil revenues plus non-oil revenue) and expenditure kept constant in terms of GDP (annuity computed by distributing evenly in terms of GDP until 2060, assuming 2 percent real return on assets).

### Monetary and financial sector developments and recommendations
- BEAC liquidity management in 2007: introduced negative auctions and raised reserve requirements (reserve requirements rose by 2.5 percentage points to 14 percent on demand deposits and by 1 percentage point to 10.5 percent on time deposits).
- Broad money (M2) estimated growth: about 41½ percent in 2007; private credit expanded 40½ percent in 2007.
- Expansion of private credit largely reflects short-term lending for working capital on public infrastructure projects.
- M2 velocity relative to non-oil GDP (excluding derivatives) declined slightly.
- Financial soundness indicators show a reduction in nonperforming loans and increased returns on both assets and equity in 2007.
- Consumer credit remains modest and the mortgage market is undeveloped; relatively few households have bank accounts.
- Recommended actions:
  - Expand financial infrastructure and access to borrowing for small and medium businesses.
  - Abolition of the maximum lending rate to enable better risk pricing.
  - Ensure the National Agency for Financial Investigation becomes operational in 2009.

### Medium-term outlook, diversification, and growth risks
- Medium-term macroeconomic outlook is favorable provided public spending returns to a moderate path.
- Growth expected to remain positive but will likely slow significantly absent any significant new petroleum-related projects.
- Continued public capital spending should support infrastructure development and, with rising incomes and private investment, lead to expanded commercial trade.
- Risks of overly high infrastructure spending: strain implementation capacity, lower project quality, and higher inflation.
- Potential diversification areas per NDP: fishing, timber, agriculture, petroleum-related services, hydroelectric power; constraints include rural labor shortages and need for private sector investment.
- Discussions underway to double liquefied natural gas production capacity.
- Primary oil and gas resources expected to last until around 2030 but output expected to decline significantly after 2012.
- The proposed major increase in public capital spending in 2009 will sustain inflationary pressures, and the high import content will weaken the current account.

### External sector, reserves, and balance of payments highlights
- High oil, gas, and derivatives prices contributed to a strong external current account and an overall balance of payments surplus in 2007.
- Gross official foreign assets: 1,648; 2,911; 5,078; 7,057; 8,472 (millions of U.S. dollars for 2004–2008).
- Gross official foreign assets measured in months of next year's imports: 5.5; 11.0; 16.0; 15.2; 13.2 (2004–2008).
- Current account balance (including official transfers; deficit -) (percent of GDP): -21.6; -6.2; 7.1; 4.3; 11.4 (2004–2008).
- Exports, f.o.b. (millions of U.S. dollars): 4,673; 7,113; 8,290; 10,250; 14,846 (2004–2008).
- Imports, f.o.b. (millions of U.S. dollars): -1,580; -2,121; -2,020; -2,365; -3,667 (2004–2008).
- Balance of payments revised projections (staff statement, Nov. 3, 2008):
  - Fiscal surplus projected at 16.9 percent of GDP in 2008, declining to a deficit of 4 percent of GDP in 2009 (revision from previously estimated 17.1 percent and 3.2 percent).
  - Non-oil deficit projected to remain at 47.4 percent of non-oil GDP in 2008 and worsen to 78.4 percent of non-oil GDP in 2009.
  - External current account balance projected to weaken to 10.2 percent of GDP in 2008 and -15.8 percent of GDP in 2009.
  - Overall balance of payments projected to decline to 2.7 percent of GDP in 2008 and -3.0 percent of GDP in 2009.

### Debt sustainability and external debt projections (DSA summary)
- Assuming no new borrowing, external debt expected to decline from around 1 percent of GDP in 2007 to less than 0.5 percent by 2013.
- Activation of the China credit line negotiated in 2006 could increase external debt to 18 percent of GDP in 2013 if drawn.
- External debt was 2 percent of GDP in 2006 and 1 percent of GDP in 2007.
- DSA using the middle income country template: external debt would remain below the CEMAC convergence criteria of 70 percent of GDP under all stress-test scenarios.
- Most relevant scenario: current account shock reflecting vulnerability to a sudden decline in oil prices.
- Baseline external debt (percent of GDP) projection series shown: 10.4, 6.2, 3.0, 1.6, 1.1, 0.7, 0.7, 0.6, 0.5, 0.5, 0.5 (series shown in projections table).
- Memorandum items—Debt to total GDP ratio series: 1.0, 0.68, 0.66, 0.60, 0.55, 0.50, 0.48 (2007–2013).
- Policy implication: external debt sustainable under baseline and stress tests; main vulnerability remains oil-price-driven current account shocks.

### Public investment program and social spending (selected numeric figures)
- Total Public Investment Program actual execution (US$ millions): 845.6 (2005), 1,453.1 (2006), 2,125.8 (2007).
- Public Investment Program Budgeted by Sector 2008-2010 (US$ millions):
  - Social: 631.2 (2008), 1,626.2 (2009), 1,490.6 (2010).
  - Infrastructure: 985.6 (2008), 1,355.5 (2009), 560.0 (2010).
  - Productive: 731.3 (2008), 1,249.4 (2009), 1,643.5 (2010).
  - Public Administration: 347.3 (2008), 562.1 (2009), 392.1 (2010).
  - Total: 2,695.5 (2008), 4,793.2 (2009), 4,086.1 (2010).
- Mission advice: undertake public investment projects only if they generate higher returns than financial savings; marginal relationship between capital spending and output growth appears somewhat weaker than in other CEMAC countries.
- Social Development Fund (SDF): about 12 projects identified; funds allocated in 2008 budget but government approval for disbursement pending.
- Mission suggested modest food subsidy planned for 2009 should be structured as direct transfers (food vouchers) rather than government purchase/resale to small retailers.

### Private sector, business climate, and labor market
- Non-oil growth drivers and promising areas: timber and fishing, manufacturing of wood products, petroleum-related services, hydroelectric power.
- Private sector should be main source of investment; policy needs include reducing barriers to private sector activities, improving training and access to credit (including restructuring INPYDE), ensuring competitive interpretation and implementation of the 2006 petroleum law, and improving financial services, labor quality, education, health care, utilities, and transport infrastructure.
- Labor market: systematic training will help achieve full employment; extensive use of foreign workers indicates jobs are available for well-trained domestic workers.
- Financial sector: banking system sound but underdeveloped; lending concentrated on public infrastructure projects; recommendations to strengthen contract enforcement and expand credit intermediation to SMEs.

### Statistics, data gaps, and capacity-building priorities
- Data provision has serious shortcomings that hamper surveillance: deficiencies in quality, timing, and coverage in most macroeconomic data.
- Priorities: improve price statistics, national accounts, balance of payments, government finance statistics, and labor market and poverty indicators; establish the National Statistical Institute (NIS); participate in the IMF’s General Data Dissemination System.
- Specific measurement issues:
  - Output data: authoritative government data not produced on petroleum and other outputs; BEAC methodology does not account for intermediate consumption in value-added for petroleum derivatives and uses 1985 constant prices; IMF staff rebased to 2000 base year and accounted for intermediate consumption.
  - Measurement of the non-oil sector: BEAC data on non-oil output appear implausibly low; IMF staff adjusted upward estimates to capture informal and unrecorded activities.
- STA and AFRITAC technical assistance missions planned: AFRITAC seminar on budget classification in February 2009; on‑going TA on prices and national accounts; IMF/AFR back-stopped macrofiscal advisors; Article IV consultation February 2009.

### Executive Board assessment and recommended priorities (PIN highlights)
- Directors welcomed robust recent economic performance and sound macroeconomic policies.
- Directors cautioned the proposed 2009 budget is overly expansionary with only a small increase in the share of spending for social sectors.
- Key recommended policy directions:
  - Reign in capital spending on less pressing infrastructure projects; shift emphasis to human resource development.
  - Rapidly initiate SDF programs aimed at achieving the Millennium Development Goals and undertake a public expenditure review with the World Bank.
  - Press ahead with EITI and issue first EITI report for Equatorial Guinea in 2009.
  - Remit official offshore assets to the BEAC and develop a prudent asset-management strategy.
  - Intensify financial intermediation for SMEs and operationalize the National Agency for Financial Investigation in 2009.
  - Establish speedily the National Statistical Institute and build capacity to collect and analyze data.

### Key numeric highlights (preserved exactly as in source)
- Real GDP growth in 2007: 21.4 percent.
- Inflation (consumer prices, end of period): 3.7 (2007); expected 6 percent in 2008.
- Non-oil primary deficit: improved to 49.7 percent of non-oil GDP in 2007 (from 64 percent in 2006).
- Gross official foreign assets (millions of U.S. dollars): 1,648; 2,911; 5,078; 7,057; 8,472 (2004–2008).
- Gross official foreign assets (months of next year's imports): 5.5; 11.0; 16.0; 15.2; 13.2 (2004–2008); projected 12.7 months in 2008 and 11.5 months in 2009 in revised table.
- Public Investment Program totals (US$ millions actual execution): 845.6 (2005), 1,453.1 (2006), 2,125.8 (2007).
- Strategic purchase of Devon assets: USD 2 billon; government share increased from 5.0 to 23.75 percent in the Zafiro field.
- Broad money growth in 2007: 41.5 percent; private credit increase in 2007: 40.5 percent.
- SDF projects identified: 12 projects (education, health, water and sewerage, gender equality, community development).
- Non-oil primary balance (cash basis, percent of non-oil GDP) (projections): -47.4; -73.1; -57.6; -48.9; -41.7; -31.2 (2008–2013 Proj. series).
- Oil price (U.S. dollars per barrel) historical series: 33.7; 49.3; 60.3; 67.1; 103.5 (2004–2008).

*Source: IMF staff report (Executive Summary).*

### Executive Summary ......................................................................................................

### Executive Summary

### Background and outlook
- Growth rebounded in 2007 to 21.4 percent and is expected to remain strong in 2008 based on increased production of hydrocarbons.
- Higher government capital spending will be the main engine of near-term growth.
- Inflation is expected to rise to 6 percent, driven by increased food prices.
- Refined fuel prices are set administratively and are unchanged.
- High oil prices have led to strong fiscal and external current account surpluses.
- The non-oil fiscal deficit declined recently to 49.7 percent of non-oil GDP in 2007, with spending largely kept within budget.
- Going forward, softening oil prices and higher spending may lead to a decline in the fiscal and current account surpluses and a widening of the non-oil deficit.
- The Social Development Fund is ready to initiate critical projects but the authorities have not yet authorized disbursement of project funds.
- Equatorial Guinea’s participation in the Extractive Industries Transparency Initiative (EITI) is moving forward slowly. The World Bank is expected to assist with meeting the substantive requirement on civil society participation.
- The financial system, though underdeveloped, appears generally sound.

### Policy discussions and recommendations
- The mission felt that the proposed expansionary 2009 budget will sustain inflationary pressures.
- The mission judged that the significant increase in capital spending insufficiently addresses social needs; the authorities considered higher spending warranted for infrastructure projects.
- Over the longer term, the authorities agreed that the non-oil deficit needs to decline, once essential capital spending priorities are met.
- Improvements in public financial management are essential.
- The authorities remain committed to the EITI.
- The mission strongly urged the government to implement the Social Development Fund projects promptly; the authorities indicated delays were because of political changes.
- The authorities are proposing a modest food subsidy in the 2009 budget; the mission suggested it should be structured as a direct transfer to vulnerable households.
- There was agreement on the need to expand access to credit for small and medium businesses, including through restructuring of government assistance.
- In the mission’s view, the real effective exchange rate seems to be somewhat overvalued.

### Introduction — context and challenges
- Equatorial Guinea’s petroleum-based economy has become an important contributor to growth in central Africa.
- Medium-term prospects are good, but sustaining growth, diversifying the economy, and generating employment will require improvements in the business environment.
- Poverty remains high and social indicators weak: the 2006 Household Expenditure Survey showed about 77 percent of the population fell below the poverty line in 2006.
- The National Development Plan (NDP) adopted in 2007 will guide the government’s economic strategy until 2020 with four main pillars: improvements in infrastructure, human capital, governance, and social welfare.
- The NDP’s macrofiscal policy is based on a permanent income model to help contain inflation and improve long-run fiscal sustainability.
- Structural deficiencies (including a weak statistical base) and an underdeveloped financial system are obstacles to NDP success.

### Recent developments — growth, inflation, and exchange rates
- Economic growth recovered sharply in 2007 to an estimated 21½ percent, driven by a new oil field (late 2006), a liquefied natural gas facility (mid 2007), and increased public infrastructure spending.
- In 2008, despite a small decrease in oil production, a full year of liquefied natural gas production is expected to produce moderate growth.
- Activities in the non-oil economy, other than petroleum derivatives, mainly reflect public-sector related construction.
- Rising international food and oil prices contributed to inflationary pressures; inflation is expected to jump in 2008 mainly because of pent-up pressures from rising import prices.
- The real effective exchange rate (REER) continued to rise in 2007 as the euro (to which the currency is pegged) appreciated against the U.S. dollar.
- The appreciation of the REER is consistent with recent movements in the terms of trade but has been accompanied by a contraction of non-petroleum exports, raising concern that the REER may be somewhat overvalued.

### Assessment of the real effective exchange rate (Box 1 summary)
- Staff analysis suggests the REER is somewhat overvalued, complicated by structural changes since 1992 and data deficiencies for the non-oil sector and domestic price level.
- The CPI-based REER appreciated and stood at 75 percent above its 2000 level by mid-2008.
- Official data likely understated actual consumer price increases during 2006–07, implying understatement of real appreciation.
- Non-oil export volumes: including derivatives rose to 1,116.5 (2007 index, 2000=100) while excluding derivatives the index was 79.5 (2007 index, 2000=100).
- Selected indicators (2007, index 2000=100): Terms of trade 165.5; REER, CPI-based 161.5.
- The macroeconomic balance approach suggests a modest REER overvaluation: current account norms indicate a need for larger current account surpluses than currently projected.

### External sector and reserves
- High oil, gas, and derivatives prices contributed to a strong external current account and an overall balance of payments surplus in 2007.
- Gross official foreign assets rose to about 21 months of non-oil imports of goods and services by end-2007.
- The current account and balance of payments are expected to strengthen in 2008 because of the rise in oil prices.
- The government’s purchase of Devon Corporation’s assets in Equatorial Guinea is expected to produce a net outflow of foreign direct investment and a decline in foreign asset cover.
- Though diversification is occurring in petroleum derivatives, other non-oil exports have contracted considerably.

### Fiscal developments and public financial management
- The fiscal outcome was strong: a high fiscal surplus that narrowed in 2007 due to increased capital spending and some weakening of revenues relative to GDP.
- The depreciation of the U.S. dollar against the CFA franc largely offset the effect of higher dollar oil prices on oil revenues.
- Expenditures were in line with the budget.
- The non-oil primary deficit improved to about 49½ percent of non-oil GDP, reflecting budgetary restraint and growth of non-oil GDP.
- The 2008 non-oil deficit is expected to improve slightly, with a minor weakening of the overall surplus. Spending is expected to stay within budgetary limits.
- Implementation of the Social Development Fund has been slow: about 12 projects were agreed to be implemented with USAID assistance in education, health, water and sewerage, gender equality, and community development; funds were allocated in the 2008 budget but the government has yet to approve disbursement.
- Steps to improve public financial management: tax administration strengthening training and monitoring, expanding taxpayer identification number use; customs automation and pre-shipment inspection; treasury improving classification of government expenditures; two international fiscal advisors started work in March 2008.

### Monetary and financial sector developments
- BEAC managed liquidity more actively in 2007 by introducing negative auctions and raising bank reserve requirements (reserve requirements rose by 2.5 percentage points to 14 percent on demand deposits and by 1 percentage point to 10.5 percent on time deposits).
- Broad money (M2) is estimated to have grown about 41½ percent in 2007, and private credit expanded 40½ percent.
- Expansion of private credit largely reflects short-term lending for working capital on public infrastructure projects.
- M2 velocity relative to non-oil GDP (excluding derivatives) declined slightly.
- Money and credit are expected to expand at about the same rate in 2008 as public spending continues to be high.
- Financial soundness indicators show a reduction in nonperforming loans and increased returns on both assets and equity in 2007.
- Financial institutions are introducing new technologies and products. Bank real lending rates have come down in recent years; lending is mainly concentrated in public infrastructure projects.
- Consumer credit remains modest and the mortgage market is undeveloped. Relatively few households have bank accounts.

### Medium-term outlook and risks
- The medium-term macroeconomic outlook is favorable, provided public spending returns to a moderate path.
- Growth is expected to remain positive but will likely slow significantly over the medium term absent any significant new petroleum-related projects.
- Continued public capital spending should support infrastructure development and, with rising incomes and private investment, lead to expanded commercial trade.
- Overly high increases in infrastructure spending will strain implementation capacity, lead to lower project quality, and generate higher inflation.
- Realization of the government’s NDP objectives would encourage diversification of exports into potential comparative advantage areas such as fishing, timber, agriculture, and petroleum-related services, but developing these sectors faces many challenges including rural labor shortages as workers migrate to the cities.
- Discussions are underway to double liquefied natural gas production capacity.
- Primary oil and gas resources are expected to last until around 2030 but output is expected to decline significantly after 2012.
- The proposed major increase in public capital spending in 2009 will sustain inflationary pressures, and the high import content will weaken the current account.

*Source: IMF staff report (Executive Summary).*

### 15.      The fiscal surplus is expected to diminish sharply in line with slowing economic

### _cr09102 - 15.      The fiscal surplus is expected to diminish sharply in line with slowing economic

### Overview
- The fiscal surplus is expected to diminish sharply in line with slowing economic growth, a decline in oil prices, and the proposed rise in capital spending.
- Achieving the NDP objectives depends on choosing public investments that support human capital and non-oil economic development.
- Continued reinforcement of tax administration and a determined effort to reform customs administration are essential to improve non-oil revenues.

### Fiscal outlook and policy recommendations
- Short-term fiscal pressures
  - The forecast decline in oil prices in 2009, combined with a surge in government spending and hence imports, is expected to put the external current account into deficit.
  - The authorities’ proposed 2009 budget moves strongly away from the reduction-of-non-oil-primary-deficit framework, with high spending increases that staff estimates would worsen the non-oil deficit from 47½ percent of non-oil GDP to 73½ percent of non-oil GDP (Box 2, line 1).
- Mission recommendations
  - Scale down capital spending in the 2009 budget because the increase would considerably strain the economy and implementation capacity, and likely erode the quality of projects.
  - The capital budget should shrink slightly relative to national output, sustaining gradual reduction in the non-oil deficit while allowing some scaling up of current expenditure (Box 2, line 2).
  - Target a further decline in the non-oil deficit for longer-term sustainability: staff suggest reducing the non-oil deficit from about 26 percent of non-oil GDP in 2008 to 13 percent in 2020 under a permanent-income-type benchmark (Box 2, line 3 and Figure 9).
  - More productive government spending, increased non-oil revenues from an invigorated non-oil economy, and new discoveries of reserves could relax implied spending limits; a longer planning horizon or a lower return on financial investments would imply tighter spending limits.

### Fiscal framework scenarios and key numeric projections (Box 2 summary)
- Price of oil based on WEO (US$ per barrel): 107 (2008), 101 (2009), 103 (2012), 103 (2020).
- Baseline scenario assumes real return of 2 percent on financial investments.
- Staff estimate impacts on balances (percent of non-oil GDP and percent of GDP) across specifications and years; specific staff estimates cited:
  - Non-oil primary balance and overall balance movements reported in Box 2 (examples cited in text include 47½ percent to 73½ percent changes in the non-oil deficit).
- Permanent Income Model specifications:
  - Expenditure kept constant in real terms (annuity from oil revenues plus non-oil revenue).
  - Expenditure kept constant in terms of GDP (annuity computed by distributing evenly in terms of GDP until 2060, assuming 2 percent real return on assets).
- Figure 9 describes oil revenues, annuity, and asset accumulation under scenarios (percent of GDP; asset accumulation derived from saving the difference between actual oil revenues and the annuity).

### External sector vulnerabilities and debt position
- External vulnerabilities
  - Concentration of exports in petroleum-based products renders the external sector highly vulnerable to petroleum price swings.
  - A relaxation of the fiscal stance makes it harder to avoid inflation and real exchange rate appreciation despite better monetary management and structural measures to enhance supply of food and other products.
  - Sustained increase in public spending would significantly weaken the external position.
- Foreign direct investment and inflation
  - Foreign direct investment is expected to remain strong, led by investment in oil and derivatives.
  - Better monetary management and structural measures are expected to bring inflation down, but fiscal loosening complicates this objective.
- Debt and arrears
  - Equatorial Guinea currently has a minimal debt service burden and no outstanding arrears.
  - In 2006 the government agreed with China, through its Eximbank, on a credit line of up to US$2 billion at 5.5 percent interest, but so far has not drawn on it.
- Debt sustainability
  - A Debt Sustainability Analysis carried out by the mission applying alternative scenarios for new debt accumulation finds debt sustainability remains strong under likely scenarios.

### Risks and structural constraints
- Principal risks identified
  - A prolonged and deep drop in oil prices would weaken the external current account and budget execution; the high stock of public financial assets should buffer against temporary moderate shocks.
  - Private sector development is deterred by lack of clarity on application of key laws, slow pace of confidence-building initiatives such as the EITI, limited financing for small and medium-sized businesses, and poor skills of workers.
  - High cost of imported goods suggests lack of genuine competition and other market distortions that could hinder competitiveness outside petroleum.
  - The country’s scores on the World Bank’s “Doing Business” indicators are low, similar to other CEMAC countries.

### Growth, diversification, and the business climate
- Non-oil growth drivers
  - Growth of the non-oil economy depends on prudent economic management and raising total factor and labor productivity.
  - Promising areas in the NDP: timber and fishing, manufacturing of wood products, petroleum-related services, hydroelectric power; private sector should be main source of investment.
  - Cocoa and coffee revival would require significant new investments and committed labor; small-scale government training and financing could help smallholder agriculture.
- Private sector policy needs
  - Reduce barriers to private sector activities, improve training and access to credit (including restructuring INPYDE), ensure competitive interpretation and implementation of the 2006 petroleum law, and improve financial services, labor quality, education, health care, utilities, and transport infrastructure.
- Labor market
  - Systematic training will help achieve full employment; extensive use of foreign workers indicates jobs are available for well-trained domestic workers.
- Financial sector
  - Banking system is sound but does not play a sufficient intermediation role for the private sector and is overly concentrated on intermediating public spending through short-term lending.
  - Abolition of the maximum lending rate should enable better risk pricing; strengthening contract enforcement would facilitate credit extension to small and medium businesses.
- Anti-money-laundering
  - A 2007 temporary ministerial order requires prior authorization of the General Directorate of Banking before money can be transferred abroad; staff are assessing consistency with Article VIII, Sections 2 and 3.
  - In 2009, the authorities should ensure the National Agency for Financial Investigation becomes operational.

### Public investment, social spending, and poverty reduction
- Public investment characteristics
  - The 2009 proposed budget significantly increases infrastructure spending; the proportion to social sectors would rise but remain relatively small in relation to social needs.
  - The Public Investment Plan shows a higher share of spending on social sectors, but overall social spending is still low (Box 4).
  - The mission advised undertaking projects only if they generate higher returns than financial savings; marginal relationship between capital spending and output growth appears somewhat weaker than in other CEMAC countries (Box 3).
- Public Investment Program (selected figures)
  - Total Public Investment Program actual execution (US$ millions): 845.6 (2005), 1,453.1 (2006), 2,125.8 (2007). Budgeted totals and sectoral allocations are reported in Box 4 and subsequent tables.
  - Public Investment Program Budgeted by Sector 2008-2010 (US$ millions): Social 631.2 (2008), 1,626.2 (2009), 1,490.6 (2010); Infrastructure 985.6 (2008), 1,355.5 (2009), 560.0 (2010); Productive 731.3 (2008), 1,249.4 (2009), 1,643.5 (2010); Public Administration 347.3 (2008), 562.1 (2009), 392.1 (2010). Total 2,695.5 (2008), 4,793.2 (2009), 4,086.1 (2010).
- Social safety net and Social Development Fund
  - Implementing the Social Development Fund is critical to mitigating poverty by raising spending for human capital development; the government has not yet approved disbursement so work can begin.
  - The mission suggested that a modest food subsidy planned for 2009 would be better structured as a direct transfer to vulnerable households through food vouchers rather than the proposed government purchase/resale to small retailers at regulated prices.
  - The retail fuel subsidy mainly benefits well-off households and keeping the price below market may lead to gasoline shortages and illegal trade.
- Poverty and measurement
  - Reducing poverty is a high priority; authorities acknowledged high poverty and are working with development partners to better measure social indicators. Delays in initiating the Social Development Fund raise questions about the genuineness of commitment.

### Management of public assets and macroeconomic institutions
- Asset management
  - The authorities must manage a diversifying portfolio: reserves in the BEAC, offshore assets, and shares in private corporations.
  - Authorities favor raising the return on foreign assets under BEAC management; mission cautioned against concentrating asset holdings in oil-related investments.
  - Authorities emphasized benefits of purchasing Devon’s minority share to share management of the key oil field; mission cautioned about concentration risks.
- Integration of social security fund
  - Integrating the social security fund more fully into the state budget is advisable; benefits and revenues should ensure actuarial soundness.
  - BEAC should permit the government to move the social security fund surplus from commercial banks to the central bank to earn a higher interest rate.
- Trade liberalization
  - Authorities continue to work with CEMAC partners on trade liberalization; CEMAC agreement to relax some import surcharges and tariffs on necessities should benefit poor consumers.

### Statistics, data gaps, and recommended improvements
- Authorities committed to reforming inadequate statistical apparatus.
  - An expanded inflation survey covering the whole country will improve price statistics accuracy.
  - Other work underway to improve foreign trade data.
  - Bringing macroeconomic statistics in line with the IMF’s General Data Dissemination System will still be a considerable challenge.
- Specific measurement issues (Box 5)
  - Output data: Authoritative government data are not produced on petroleum and other outputs; such data would improve GDP measurement and avoid inconsistencies.
  - Petroleum derivatives: BEAC methodology does not account for intermediate consumption in calculating value-added for petroleum derivatives and uses 1985 constant prices; IMF staff rebased to a 2000 base year and accounted for intermediate consumption.
  - Measurement of the non-oil sector: BEAC data on non-oil output appear implausibly low; IMF staff adjusted upward estimates to capture informal and unrecorded activities, implying modest increases in nominal GDP and annual real GDP growth relative to BEAC.
- Data priorities
  - Improve price statistics, national accounts, balance of payments, government finance statistics, and labor market and poverty indicators to monitor MDG progress.
  - Allocate sufficient resources and trained personnel for statistical collection and analysis; aim to participate in the IMF’s General Data Dissemination System.

*Source: Excerpts from the provided IMF staff report content.*

### 41.      Equatorial Guinea’s recent robust economic performance reflects growth and

### _cr09102 - 41.      Equatorial Guinea’s recent robust economic performance reflects growth and

### Recent macroeconomic performance and banking
- Robust economic performance reflects growth and diversification within its petroleum industry.
- Sound macroeconomic policies have improved fiscal sustainability.
- Prudent lending has strengthened the banking system.

### Medium-term prospects and vulnerabilities
- Medium-term prospects are favorable.
- Critical need: improvements in the business environment to sustain growth, diversify the economy, and generate employment.
- Vulnerabilities:
  - The economy is vulnerable to swings in the price of oil.
  - Inadequate governance and transparency may limit private sector development.

### National Development Plan (NDP) and public sector role
- The NDP, guiding the government’s economic strategy until 2020, provides a sound framework to diversify the economy and enhance competitiveness.
- The four pillars encompass needed reforms.
- The government will need to ensure a proper and limited role for the public sector.

### Fiscal policy, 2009 budget, and sustainability
- The NDP’s fiscal policy, based on a model of permanent income, will help contain inflation and improve long-run fiscal sustainability.
- Concern: the proposed 2009 budget is too expansionary.
  - Increase in capital spending is hard to justify when the share for social sectors is rising only slightly.
- Strengthening of the fiscal position is essential.

### Social Development Fund and human capital
- Urgent priorities:
  - Ensure that the Social Development Fund programs are introduced.
  - Ensure the budget emphasizes human resource development.
- Concern: the delay in approving spending under the fund is worrisome.
- Limited human capital undermines diversification, job creation, and poverty alleviation.

### Fiscal management, transparency, and public expenditure quality
- Continued efforts to improve fiscal management and transparency are essential to ensure the quality of public spending and build non-oil revenues.
- Authorities have undertaken useful reforms of tax and customs administration and public expenditure management, but progress is slow.
- Slow progress on these reforms and the EITI are major concerns.
- Improving tax and customs administration and systems of procurement, audit, and evaluation will require sustained attention.

### BEAC governance and asset management
- Authorities’ commitment to working with CEMAC partners to improve governance and management of BEAC is commendable.
- Recommendation: authorities should remit offshore assets to BEAC, which is an appropriate venue for asset management.
- Caution: authorities should be cautious about concentrating their financial portfolio too heavily in domestic oil assets.

### Exchange rate regime and competitiveness
- The pegged exchange rate regime has served Equatorial Guinea well.
- While its appreciation has been largely consistent with fundamentals, the REER is moderately overvalued.
- It will be important to:
  - Enhance competitiveness with a sound fiscal stance.
  - Undertake meaningful structural reforms that enhance total and factor productivity.

### Private sector development and investment climate
- A healthy climate for private sector development is a prerequisite for diversification.
- Private investments should underpin development of all key productive sectors.
- Authorities should ensure that the petroleum and other key laws and regulations are interpreted and administered so that the economy is attractive to petroleum and other investors.

### Financial system development
- Although the financial system appears generally sound, it is underdeveloped.
- Crucial actions:
  - Continue to develop the financial infrastructure to support greater access to borrowing for small and medium businesses.
  - Ensure that the National Agency for Financial Investigation becomes operational in 2009.

### Data, statistical capacity, and surveillance
- Data provision has serious shortcomings that seriously hamper surveillance.
- Recent improvements are welcome.
- Authorities should:
  - Establish the National Statistical Institute.
  - Ensure it has robust capacity to collect and analyze data.

*Source: _cr09102 - 41.*

### 52.      It is recommended that the next Article IV consultation be held on the standard

### _cr09102 - 52.      It is recommended that the next Article IV consultation be held on the standard 12-month cycle.

### Recommendation / Policy timing
- It is recommended that the next Article IV consultation be held on the standard 12-month cycle.

### Production, prices, and money (selected historical and projected indicators)
- Real GDP (annual percentage change): 38.0; 9.7; 1.3; 21.4; 7.4 (2004–2008, Proj.)
- Oil and gas GDP (excluding hydrocarbons secondary production): 40.4; 6.7; -6.4; 11.9; 2.5 (2004–2008, Proj.)
- Non-oil GDP (including hydrocarbons secondary production): 28.4; 22.8; 29.8; 47.2; 17.6 (2004–2008, Proj.)
- GDP deflator (annual percentage change): 16.9; 42.6; 14.4; -1.2; 29.3 (2004–2008, Proj.)
- Hydrocarbons production (thousands of boe per day): 378.4; 401.7; 382.0; 459.8; 464.7 (2004–2008)
- Oil and gas primary production (thousands of boe per day): 351.0; 367.4; 344.8; 356.8; 335.2 (2004–2008)
- Hydrocarbons secondary production (thousands of boe per day): 27.4; 34.2; 37.3; 103.0; 129.5 (2004–2008)
- Oil price (U.S. dollars per barrel): 33.7; 49.3; 60.3; 67.1; 103.5 (2004–2008)
- Consumer prices (annual average): 4.2; 5.7; 4.5; 2.8; 5.9 (2004–2008)
- Consumer prices (end of period): 5.1; 3.2; 3.8; 3.7; 6.0 (2004–2008)
- Broad money (annual percentage change): 33.5; 34.7; 14.1; 41.3; 38.2 (2004–2008)

### External sector (historical and projected)
- Exports, f.o.b. (annual percentage change): 65.4; 52.2; 16.6; 23.6; 44.8 (2004–2008)
- Hydrocarbons exports (annual percentage change): 66.9; 53.3; 16.7; 23.5; 45.3 (2004–2008)
- Imports, f.o.b. (annual percentage change): 27.7; 34.3; -4.8; 17.1; 55.1 (2004–2008)
- Terms of trade (annual percentage change): 11.6; 33.2; 16.5; 3.5; 24.5 (2004–2008)
- Nominal effective exchange rate (depreciation -): 5.1; -0.1; 0.4; 5.0; ...
- Real effective exchange rate (depreciation -): 7.0; 2.7; 2.1; 7.1; ...
- Exports, f.o.b. (millions of U.S. dollars): 4,673; 7,113; 8,290; 10,250; 14,846 (2004–2008)
- Hydrocarbons exports (millions of U.S. dollars): 4,591; 7,040; 8,217; 10,149; 14,743 (2004–2008)
- Imports, f.o.b. (millions of U.S. dollars): -1,580; -2,121; -2,020; -2,365; -3,667 (2004–2008)
- Trade balance (millions of U.S. dollars): 3,093; 4,992; 6,270; 7,885; 11,179 (2004–2008)
- Current account balance (including official transfers; deficit -) (percent of GDP): -21.6; -6.2; 7.1; 4.3; 11.4 (2004–2008)
- Gross official foreign assets (millions of U.S. dollars): 1,648; 2,911; 5,078; 7,057; 8,472 (2004–2008)
- Gross official foreign assets (months of next year's imports): 5.5; 11.0; 16.0; 15.2; 13.2 (2004–2008)
- Gross official foreign assets (months of next year's imports (excl. petroleum sector)): 13.7; 17.6; 24.9; 20.9; 16.0 (2004–2008)
- Exchange rate (average; CFA francs/U.S. dollar): 528; 527; 523; 479; 430 (2004–2008)

### Government finance (central government; selected aggregates)
- Revenue and grants (percent of GDP, 2004–2008): 75.0; 82.5; 36.1; 12.8; 20.4 (table header other context)
- Revenue and grants (billions of CFA francs, 2005–08): 1,504.2; 2,047.1; 2,308.5; 2,224.2; 2,780.6
- Tax revenue (billions of CFA francs): 371.0; 510.0; 472.8; 631.4; 637.6 (2005–08)
- Nontax revenue (billions of CFA francs): 1,133.1; 1,537.1; 1,835.7; 1,587.7; 2,143.0 (2005–08)
- Hydrocarbons sector nontax revenue (billions of CFA francs): 1,089.4; 1,476.0; 1,702.0; 1,503.8; 2,067.3 (2005–08)
- Royalties (billions of CFA francs): 462.6; 969.9; 1,130.6; 455.1; 655.4 (2005–08)
- Profit sharing (billions of CFA francs): 573.5; 500.3; 469.5; 1,048.0; 1,411.3 (2005–08)
- Total expenditure and net lending (billions of CFA francs): 621.9; 869.7; 1,151.9; 1,347.2; 1,347.1 (2005–08)
- Capital expenditure (billions of CFA francs): 446.0; 667.6; 928.5; 1,130.4; 1,130.4 (2005–08)
- Overall balance (billions of CFA francs): 882.2; 1,177.4; 1,156.6; 877.0; 1,433.5 (2005–08)
- Overall balance (percent of GDP): 20.4; 23.4; 19.2; 10.5; 17.1 (2005–08)
- Non-oil primary balance (billions of CFA francs): -458.2; -580.1; -784.9; -968.0; -975.1 (2005–08)
- Non-oil primary balance (percent of non-oil GDP): -60.9; -54.6; -49.7; -47.0; -47.4 (2005–08)
- Nominal GDP (billions of CFA francs): 4,334.4; 5,021.4; 6,026.4; 8,372.3 (years vary across tables)

### Investment and savings
- Gross investment (percent of GDP): 43.7; 39.9; 32.5; 35.3; 25.8 (2004–2008)
- Public investment (percent of GDP): 13.1; 10.3; 15.1; 16.9; 13.5 (2004–2008)
- Private investment (percent of GDP): 30.6; 29.6; 17.3; 18.4; 12.3 (2004–2008)
- Gross national savings (percent of GDP): 22.1; 33.6; 39.5; 39.6; 37.2 (2004–2008)

### Monetary sector and banking indicators
- Monetary survey (end of period, billions of CFA francs):
  - Net foreign assets: 499.6; 1,241.0; 1,573.9; 1,804.3; 1,986.4; 2,157.2 (selected years)
  - Net domestic assets: -292.4; -961.9; -1,255.4; -1,322.4; -1,488.9; -1,424.5
  - Broad money (M2): 207.2; 279.1; 318.5; 449.9; 417.3; 621.8
- Memorandum items:
  - CPI inflation (average annual): 4.2; 5.7; 4.5; 2.8; 5.9; 5.9
  - Broad money (M2) (annual percentage change): 33.5; 34.7; 14.1; 41.3; 15.9; 38.2
  - Reserve money (RM) (annual percentage change): 25.1; 77.9; 5.4; 28.1; -34.0; 25.9
  - Credit to the private sector (annual percentage change): 22.3; 48.8; 34.8; 40.5; 115.6; 49.1
  - Credit to the private sector (percent of non-oil GDP, excluding oil derivatives): 14.8; 18.8; 17.6; 19.8; 28.7; 24.1
  - Lending rate: 18.0; 17.0; 15.0; 15.0; 15.0; n.a.
  - Deposit rate: 5.0; 4.8; 4.3; 4.3; 4.3; 3.3

### Financial soundness indicators (banking sector, 2002–07)
- Regulatory capital to risk-weighted assets: 7.2; 11.0; 12.4; 9.2; 13.0; 8.6 (2002–07)
- Tier 1 capital to risk-weighted assets: 6.0; 9.8; 11.1; 8.0; 11.8; 7.4 (2002–07)
- Capital to total assets: 7.8; 7.9; 8.9; 5.6; 7.0; 5.8 (2002–07)
- Nonperforming loans (gross) to total loans (gross): 8.7; ...; 13.5; 17.2; 14.3; 10.8 (2002–07)
- Return on assets: 2.4; 2.2; 1.9; 1.9; 1.7; 3.3 (2002–07)
- Return on equity: 29.4; 27.6; 22.1; 27.5; 26.5; 52.8 (2002–07)
- Ratio of net loans to total deposits: 48.3; 35.3; 43.6; 29.1; 37.3; 37.4 (2002–07)

### Medium-term projections (2008–13) — key projected paths
- Real GDP (annual percentage change): 7.4; 4.6; 4.1; 4.5; 4.6; 2.5 (2008–2013 Proj.)
- Oil and gas GDP (excluding hydrocarbons secondary production): 2.5; -7.3; -2.7; 2.1; 0.1; -15.0 (2008–2013 Proj.)
- Non-oil GDP (including hydrocarbons secondary production): 17.6; 26.0; 13.1; 7.2; 9.4; 19.9 (2008–2013 Proj.)
- Oil price (U.S. dollars per barrel) (projections): 103.5; 97.0; 99.8; 100.0; 100.0; 100.0 (2008–2013 Proj.)
- Hydrocarbons production (thousands of boe per day) (projections): 464.7; 446.1; 428.4; 443.9; 448.4; 460.9 (2008–2013 Proj.)
- Consumer prices (annual average) (projections): 5.9; 6.0; 5.6; 5.2; 4.8; 4.6 (2008–2013 Proj.)
- Broad money (annual percentage change) (projections): 38.2; 45.0; 29.4; 14.7; 17.3; 17.1 (2008–2013 Proj.)
- Exports, f.o.b. (millions of U.S. dollars) (projections): 14,846; 13,176; 13,024; 13,469; 13,576; 12,539 (2008–2013 Proj.)
- Gross official foreign assets (millions of U.S. dollars) (projections): 8,472; 9,377; 10,529; 12,126; 13,517; 14,505 (2008–2013 Proj.)
- Gross official foreign assets (months of next year's imports) (projections): 13.2; 15.0; 16.6; 20.7; 23.1; 25.8 (2008–2013 Proj.)
- Current account balance (including official transfers; deficit -) (percent of GDP) (projections): 11.4; -2.2; -3.4; -0.8; 2.1; -0.2 (2008–2013 Proj.)
- Government finance: Revenue and grants (percent of GDP) (projections): 33.2; 31.6; 29.1; 29.7; 26.7; 24.6 (2008–2013 Proj.)
- Overall balance after grants (cash basis) (percent of GDP) (projections): 17.1; 3.2; 3.6; 6.2; 4.7; 1.6 (2008–2013 Proj.)
- Non-oil primary balance (cash basis, percent of non-oil GDP) (projections): -47.4; -73.1; -57.6; -48.9; -41.7; -31.2 (2008–2013 Proj.)

### Central government medium-term budget aggregates (2008–13)
- Total revenue and grants (billions of CFA francs): 2,224.2; 2,780.6; 2,443.3; 2,608.1; 2,511.4; 2,703.2; 2,538.4; 2,324.8 (2008–13 Budget/Proj.)
- Tax revenue (billions of CFA francs): 631.4; 637.6; 582.7; 604.9; 625.5; 713.9; 724.7; 500.5 (2008–13)
- Nontax revenue (billions of CFA francs): 1,587.7; 2,143.0; 1,860.0; 2,003.3; 1,885.9; 1,989.4; 1,813.7; 1,824.3 (2008–13)
- Total expenditure and net lending (billions of CFA francs): 1,347.2; 1,347.1; 2,346.2; 2,346.2; 2,203.3; 2,135.7; 2,090.5; 2,176.1 (2008–13)
- Capital expenditure (billions of CFA francs): 1,130.4; 1,130.4; 2,000.0; 2,000.0; 1,684.7; 1,516.2; 1,364.6; 1,311.1 (2008–13)
- Overall balance (billions of CFA francs): 877.0; 1,433.5; 97.0; 261.9; 308.1; 567.6; 448.0; 148.8 (2008–13)
- Overall balance (percent of GDP): 10.5; 17.1; 1.1; 3.2; 3.6; 6.2; 4.7; 1.6 (2008–13)

### Millennium Development Goals (selected indicators)
- Population (in thousands): 362; 398; 449; 492; 1,015 (2001 Census) (table shows multiple years/entries)
- Prevalence of child malnutrition (percent of children under 5): 21 (2000; MICS Survey)
- Net primary enrollment ratio (percent of relevant age group): 90.5; 87.1; 51 (2000-01 Ministry of Economy)
- Under 5 mortality rate (per 1,000): 206; 175; 156; 146; 50 (2001 Census)
- Infant mortality rate (per 1,000 live births): 122; 113; 103; 97
- Immunization, measles (percent of children under 12 months): 88; 80; 51; 51
- Adult literacy rate (percent of people ages 15 and over): 84.2
- Life expectancy at birth (years): 47.2; 50.0; 52.2; 59.3 (2001 Census)

### Key fiscal vulnerabilities and policy-relevant metrics (from tables)
- Non-oil primary balance very large negative in levels and as percent of non-oil GDP: e.g., -975.1 (billions of CFA francs) and -47.4 percent of non-oil GDP in 2008 (Table 4a/4b/9a)
- Large concentration of government revenue in hydrocarbons sector: Hydrocarbons sector nontax revenue accounted for 25.1; 29.4; 28.2; 18.0; 24.7 percent of GDP (2005–08, Table 4b)
- High gross official foreign assets position in 2008: 8,472 (millions of U.S. dollars) with government bank deposits abroad of 3,853 (millions of U.S. dollars) (Table 3 / Table 8)
- Significant capital expenditure program in 2007–08 and projected medium-term (capital expenditures in 2007 and 2008: 928.5; 1,130.4; and projections through 2013 remain high)

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

### 1.      Assuming no new borrowing, the external debt of Equatorial Guinea is expected to

### _cr09102 - 1.      Assuming no new borrowing, the external debt of Equatorial Guinea is expected to 

### Key findings on external debt levels and projections
- Assuming no new borrowing, the external debt of Equatorial Guinea is expected to decline from around 1 percent of GDP in 2007 to less than 0.5 percent by 2013.
- The external debt burden could increase substantially (to 18 percent of GDP in 2013) if the authorities decide to activate a credit line from China negotiated in 2006.
- External debt was 2 percent of GDP in 2006 and 1 percent of GDP in 2007.
- Medium-term external debt projections have been halved compared to last year’s projections.
- Domestic debt is minimal and expected to remain so; therefore no distinction is made between public debt sustainability and external debt sustainability under the projected scenario.

### Debt sustainability assessment (DSA) and stress tests
- The DSA—using the middle income country template—demonstrates that the country’s external debt would remain below the CEMAC convergence criteria of 70 percent of GDP under all stress-test scenarios.
- In stress-test scenarios, all shocks are calibrated over the period 2003–07 (shorter than the standard ten-year calibration because of extraordinary late-1990s oil-related volatility).
- The most relevant scenario for Equatorial Guinea is the current account shock, reflecting vulnerability to a sudden decline in oil prices.
- Given the very low level of Equatorial Guinea’s external debt, the impact of the interest rate, growth, and exchange rate shocks in the DSA is minimal.
- The explosive path of the external debt-to-GDP ratio under the current account stress-test arises from technical assumptions in the template—chiefly that reserves would continue to be accumulated at the same pace as in the baseline even under a severe negative external shock—which staff consider unlikely to hold for Equatorial Guinea.
- Residuals in the DSA are sizeable for Equatorial Guinea, reflecting government savings of oil revenues (accumulated foreign assets).

### Data revisions and implications
- Staff revised balance of payments data to explicitly account for government deposits abroad; this revision implied a level improvement in the current account and a corresponding weakening in the financial account.
- Compared to last year, debt sustainability has improved as a result of these revisions and other changes in assumptions.
- In 2008 medium-term foreign asset accumulation is projected to be slower than estimated in 2007 due to newly announced capital spending plans and the government’s purchase of domestic private sector assets; lower asset accumulation in the DSA leads to lower external debt under the template.

### Quantitative highlights and selected projections (as presented)
- Baseline: External debt (percent of GDP): 10.4, 6.2, 3.0, 1.6, 1.1, 0.7, 0.7, 0.6, 0.5, 0.5, 0.5 (series shown in the projections table).
- Change in external debt (percent of GDP): -10.4, -4.2, -3.2, -1.4, -0.5, -0.4, 0.0, -0.1, -0.1, 0.0, 0.0.
- Identified external debt-creating flows (percent of GDP): -, 21.3, -14.4, -18.8, -25.6, -18.3, -8.6, -6.6, -7.5, -9.0, -7.7, -4.8.
- Current account deficit, excluding interest payments (percent of GDP): 33.2, 21.6, 6.2, -7.1, -4.3, -11.4, 2.2, 3.4, 0.8, -2.1, 0.2.
- Net non-debt creating capital inflows (negative; percent of GDP): -48.9, -31.5, -22.8, -18.1, -13.6, 2.9, -8.8, -10.9, -9.8, -5.6, -5.0.
- Automatic debt dynamics (percent of GDP): -5.6, -4.5, -2.2, -0.4, -0.4, 0.0, 0.0, 0.0, 0.0, 0.0, 0.0.
- Residual, including change in gross foreign assets (percent of GDP): 10.9, 10.2, 15.6, 24.3, 17.8, 8.1, 6.6, 7.4, 8.9, 7.7, 4.8.
- External debt-to-exports ratio (in percent): 10.8, 6.8, 3.4, 1.9, 1.3, 0.9, 0.9, 0.9, 0.8, 0.8, 0.8.
- Gross external financing need (in billions of US dollars): 1.0, 1.1, 0.5, -0.6, -0.5, -2.2, 0.4, 0.7, 0.2, -0.5, 0.1.
- Gross external financing need (percent of GDP): 33.6, 21.8, 6.7, -6.1, -4.0, -11.4, 2.2, 3.4, 0.8, -2.1, 0.3.

### Creditor composition and debt service (selected items from the external debt position)
- Nominal stock of debt (Millions of U.S. dollars): 136, 129, 125, 119, 115, 110, 105 (series presented for 2007–2013).
- Multilateral creditors (nominal stock): 114, 112, 109, 106, 103, 100, 97.
  - IDA/World Bank: 56, 55, 54, 52, 51, 49, 47.
  - African Development Bank: 47, 47, 46, 45, 45, 44, 43.
- Bilateral creditors (nominal stock): 21, 16, 14, 12, 10, 8, 6.
  - Paris Club: 5, 2, 1, 1, 1, 1, 1.
  - Non-Paris Club (China listed): 16, 14, 13, 11, 9, 7, 5.
- Debt to private entities (nominal stock): 12, 2, 2, 2, 2, 2, 2.
- Amortization (Millions of U.S. dollars): 36, 9, 56, 55, 5, 5, 5 (series shown).
- Interest payments (Millions of U.S. dollars): 11, 11, 11, 11, 11, 11, 11 (series shown).
- Memorandum item—Debt to total GDP ratio: 1.0, 0.68, 0.66, 0.60, 0.55, 0.50, 0.48 (series for 2007–2013).
- Memorandum item—Debt to non-oil GDP (incl. oil derivatives) ratio: 3.85, 2.75, 2.05, 1.68, 1.45, 1.23, 0.95.

### Scenarios and model assumptions
- Individual shocks in the DSA are permanent one-half standard deviation shocks (figure notes).
- Historical scenario assumes GDP growth, the GDP deflator, and the nominal interest rate will remain at their current 5 year historical averages for the projection period.
- Combined shock: permanent 1/4 standard deviation shocks applied to the real interest rate, growth rate, and current account balance.
- Real depreciation shock: one-time real depreciation of 30 percent occurs in 2009 (figure notes).
- The DSA template’s debt-stabilizing non-interest current account is defined as a long-run, constant balance that stabilizes the debt ratio assuming key variables remain at their levels of the last projection year.

### Policy-relevant implications
- External debt is sustainable under the baseline and stress-test scenarios, remaining well below the CEMAC 70 percent of GDP criterion.
- The most relevant vulnerability is exposure to oil-price-driven current account shocks; however, technical assumptions in the template can overstate debt dynamics if they assume continued reserve accumulation in severe shocks.
- Activation of the China credit line negotiated in 2006 could markedly change the debt outlook (potentially up to 18 percent of GDP in 2013), but as of the 2008 Article IV consultations authorities indicated no immediate plans to draw on the China credit line given very large government foreign assets; the mission team did not include drawings in external debt forecasts based on that statement.

*Source: International Monetary Fund—Staff Report for the 2008 Article IV Consultation (Informational Annex), prepared October 17, 2008.*

### 1. Extractive Industries

### 1. Extractive Industries

### Transparency, technical assistance, and work program
- Transparency Initiative (EITI) assistance: Two missions, in late 2008 or 2009.
  - First EITI Report, 2nd quarter 2009; 2nd EITI Report, 1st quarter 2010.
  - Within the two-year period of the service agreement, ending in fiscal year 2010.
- Technical assistance to statistics office:
  - Household expenditure survey and national accounts.
  - Two missions in late 2008 and 2009; work through March 2009 with possibility of extension.
- Public Expenditure Review:
  - November 2008; timing of Fund/Bank inputs linked to progress of the Public Expenditure Review.
  - Fund request to Bank: Public Expenditure Review to provide input for analysis.
  - Bank request to Fund: 1. IMF macro analysis; 2. Conclusions of the IMF/AFRITAC missions on public accounting and statistics.
- IMF work program in the next 12 months:
  - 1. AFRITAC seminar on budget classification in February 2009
  - 2. On–going TA from AFRITAC on prices and national accounts
  - 3. IMF/AFR back-stopped macrofiscal advisors
  - 4. Article IV consultation February 2009
- Joint products and missions:
  - Financial Sector Assessment Program (FSAP) – mission tentatively in MCM’s schedule, Fiscal year 2009/2010.

### Main statistical shortcomings and capacity constraints
- Data provision has serious shortcomings that significantly hamper surveillance.
  - Deficiencies in quality, timing, and coverage in most macroeconomic data related to insufficient administrative and technical capacity.
  - Need to consolidate TA gains, including participation in the General Data Dissemination System and establishment of the National Institute of Statistics (NIS).
- The Banque des États de l'Afrique Centrale (BEAC) regularly reports monetary, interest rate, and exchange rate statistics for publication in the International Financial Statistics (IFS), but the timeliness of these data need improvement.
- Priorities: production of basic statistics, implementation of the System of National Accounts, 1993, updating the reference period of the national accounts (1985), and updating the CPI’s basket and weights.

### Real sector and price statistics — findings and TA missions
- National accounts and price data suffer from weaknesses compounded by poor centralization of information from the island and continental regions.
  - National accounts compiled at current and constant prices often contain significant inconsistencies.
  - CPI compilation benefited from technical assistance of the Economic and Statistical Observatory of Sub-Saharan Africa, but weights and composition of the basket are outdated and geographical coverage is not comprehensive (though it will soon cover the entire country).
- STA TA missions:
  - Visits to Malabo in July 2005, January 2006, and March 2007.
  - 2005 mission: reviewed methods/data sources for national accounts and CPI, assessed adequacy of statistical legislation and resources, and made recommendations.
  - 2006 mission: reviewed implementation of recommendations, delivered short seminar on national accounts; found little progress due to management problems and severe human and computing resource constraints.
  - 2007 mission: found some progress — APS 2005–06 pilot being conducted with FAO support; Quick Household Survey (QHS) conducted Dec 2006–Feb 2007 in a sample of 5,240 households.
    - APS useful for revising coverage of production and value-added for agriculture.
    - QHS did not collect income; expenditure data reflect seasonality; if adjusted, QHS results would be valuable to update CPI basket and weights (currently corresponding to 1986) and compile poverty and social indicators.
  - 2007 mission provided hands-on assistance to prepare a business register/sample frame and a database on employment and compensation — basic sources for improving national accounts coverage.
  - Mission revised estimates on oil and non-oil GDP for 2000–06 with 2000 as base year and reclassified manufacturing of oil and gas derivatives in the non-oil sector following UN ISIC Rev. 3; methodological note left for authorities and GDSNA.
- CPI price collection was discontinued in June 2005 for budgetary reasons and reestablished in February 2006.
  - GDSNA revised official figures for July 2005–January 2006 using ICP data and carrying last reported CPI price forward.
  - 2007 mission observed atypical relative prices for February 2006 and recommended revising imputations for July 2005–January 2006 using price change of similar products, related group/class, or historical trend.
- Institutional framework:
  - Statistical legislation dated 2001 and generally adequate, but decree to create the NIS has not been passed.
  - Resources insufficient: only one person assigned to national accounts unit and three to CPI unit.
  - GDP estimates are prepared by the BEAC, rather than by the GDSNA.
  - Minister of Finance and Planning committed to improving statistics and requested assistance to establish NIS and train staff; assistance to be provided by Central AFRITAC.
  - World Bank signed service agreement to provide technical assistance for compiling poverty indicators and other statistical assistance.

### Government finance statistics — assessment
- Following technical assistance from France, some improvements in fiscal accounting.
- Further improvements needed, particularly in procuring timely and accurate data from the Debt-Service Unit (Caja Autónoma de la Deuda Pública).
- Equatorial Guinea does not report fiscal data to STA for publication in IFS and the Government Finance Statistics Yearbook.
  - Authorities provide budget execution data to AFR although full reconciliation with monetary accounts is lacking.
- 2006 STA mission findings:
  - Coverage remained incomplete.
  - No functional classification of expenditure.
  - Dissemination practices needed improvement.
  - Fiscal data are not subject to any internal process of verification as internal and external audit capability remains weak.

### Monetary and financial statistics — issues and initiatives
- BEAC regularly reports monetary, interest rates, and exchange rate statistics for publication in IFS, but delays occur in submission of data to STA.
- 2002 monetary and financial statistics mission:
  - Reviewed financial system structure and compilation procedures.
  - Provided TA to BEAC National Directorate staff on data collection, compilation, dissemination problems, and analytical usefulness.
  - Briefed authorities on MFSM methodology and initiated implementation steps.
  - An action plan designed; action pending.
  - Need to revise and update grouping of institutional units in general government and public sector to facilitate reconciliation of monetary and fiscal indicators on net credit to government.
- Accuracy of monetary statistics may be affected by large cross-border movements of BEAC-issued banknotes among CEMAC member countries:
  - About 60 percent of banknotes issued in Equatorial Guinea by the BEAC national directorate circulate in Cameroon and only 26 percent remain in the country, while currency in circulation in Equatorial Guinea includes some 18 percent of banknotes from Cameroon and as much from Gabon.
- BEAC initiated in mid-2007 a project to migrate monetary statistics of CEMAC member countries to MFSM methodology.
  - Regional workshop organized by BEAC in December 2007 to finalize mapping of source data from commercial banks to MFSM concepts and framework; STA participated.
  - Submission of data by BEAC using standardized report forms is pending.

### External sector statistics and external debt — findings
- Balance of payments (BOP) data:
  - BEAC produces BOP data, but delays are long and data suffer from significant inconsistencies with other datasets.
  - BOP data often not derived from records of current stocks or flows; statistics largely constructed on a historical basis from estimates rather than actual financial and customs records.
  - Customs data improved since Central African Customs and Economic Union reform and deployment of customs brigades, but lack of computerization hampers data analysis.
  - Some progress in compiling current and financial account items, but lack of current source data is a key concern.
  - BOP data published in IFS Yearbook through 1996 only.
- External debt:
  - Data on outstanding stock of external debt and projections of debt-service payments are hampered by serious inconsistencies.
  - Debt service paid—reported by the Debt-Service Unit—is often significantly different from that reported by the budget and the Paris Club, as the unit usually lacks precise information on payments made.
  - Details regarding scheduled debt-service obligations are not incorporated into the budget in a systematic and timely manner.
  - Debt-service projections beyond the following year are only provided in a highly aggregated form and some debt service takes place outside the Debt-Service Unit.
  - Authorities have started a major inventory of debt and are beginning to address capacity constraints in the Debt-Service Unit through training and new staffing.

### Table of Common Indicators (selected timing notes as of September 25, 2008)
- Exchange Rates: Date of latest observation: Current; Date received: Current; Frequency of Data: M; Frequency of Reporting: M; Frequency of publication: M.
- International Reserve Assets and Reserve Liabilities: Date of latest observation: Oct. 2006; Date received: Dec. 2006; Frequency: M; Reporting: M; Publication: M.
- Reserve/Base Money: Date of latest observation: Aug. 2008; Date received: Sept. 2008; Frequency: M; Reporting: M; Publication: M.
- Broad Money: Date of latest observation: Aug. 2008; Date received: Sept. 2008; Frequency: M; Reporting: M; Publication: M.
- Central Bank Balance Sheet: Date of latest observation: Aug. 2008; Date received: Sept. 2008; Frequency: M; Reporting: M; Publication: M.
- Consolidated Balance Sheet of the Banking System: Date of latest observation: Aug. 2008; Date received: Sept. 2008; Frequency: M; Reporting: M; Publication: M.
- Interest Rates: Date of latest observation: Aug. 2008; Date received: Sept. 2008; Frequency: M; Reporting: M; Publication: M.
- Consumer Price Index: Date of latest observation: Dec. 2006; Date received: Mar. 2007; Frequency: M; Reporting: I; Publication: I.
- Revenue, Expenditure, Balance and Composition of Financing – Central Government: Date of latest observation: Dec. 2006; Date received: Jan. 2007; Frequency: Q; Reporting: I; Publication: I.
- External Current Account Balance: Date of latest observation: Dec. 2005; Date received: Jul. 2006; Frequency: A; Reporting: I; Publication: I.
- Exports and Imports of Goods and Services: Date of latest observation: Dec. 2005; Date received: Jul. 2006; Frequency: A; Reporting: I; Publication: I.
- GDP/GNP: Date of latest observation: Dec. 2006; Date received: Mar. 2007; Frequency: A; Reporting: I; Publication: I.
- Gross External Debt: Date of latest observation: Dec. 2006; Date received: Jan. 2007; Frequency: A; Reporting: I; Publication: A.
- Notes on frequency codes: Daily (D); Weekly (W); Monthly (M); Quarterly (Q); Annually (A); Irregular (I); Not Available (NA).

### Revised projections and fiscal/external implications (staff statement, November 3, 2008)
- Staff revised projections to reflect changes in hydrocarbons prices and exchange rates in the WEO projections of October 28, 2008 compared to those in September 2008.
  - Revised projections show a weaker overall fiscal balance, relative to GDP, and non-oil fiscal balance, relative to non-oil GDP, and a weaker external current account balance and balance of payments, relative to GDP.
  - Foreign asset cover remains ample over the projection period.
  - Revision reinforces the need to scale back the proposed large increase in 2009 capital spending.
- Price and exchange rate adjustments incorporated:
  - Oil prices lowered by 7 percent for 2008 (annual average) and by 24 percent for 2009-13.
  - Other hydrocarbons prices also reduced.
  - U.S. dollar-euro exchange rate shows an average 9 percent more appreciated U.S. dollar over the projection period.
- Given conservative price assumptions that hydrocarbons investors had incorporated into their investment profiles, staff left foreign direct investment and hydrocarbons sector growth assumptions unchanged; in combination with largely unchanged public spending assumptions, non-oil growth should be little affected.
- Key projections (revised):
  - Fiscal surplus projected at 16.9 percent of GDP in 2008, declining to a deficit of 4 percent of GDP in 2009 (previously estimated surplus of 17.1 percent and 3.2 percent of GDP, respectively).
  - Non-oil deficit projected to remain at 47.4 percent of non-oil GDP in 2008 and worsen to 78.4 percent of non-oil GDP in 2009 (previously 73.1 percent of non-oil GDP).
  - External current account balance projected to weaken to 10.2 percent of GDP in 2008 and -15.8 percent of GDP in 2009.
  - Overall balance of payments projected to decline to 2.7 percent of GDP in 2008 and -3.0 percent of GDP in 2009.
  - Given the high foreign asset cover, it is projected to decline to a still ample (projection truncated in source).

*Source: _cr09102 - 1. Extractive Industries*

### 12.7 months of next year’s imports in 2008 and to 11.5 in 2009 and remain at comfortable levels

### _cr09102 - 12.7 months of next year’s imports in 2008 and to 11.5 in 2009 and remain at comfortable levels

### Revised key projections and headline indicators
- Table 1 (Revised Key Projections) — selected items (percent of GDP, unless otherwise specified):
  - Overall fiscal balance: 17.1 16.9 3.2 -4.0 3.9 0.1
  - Non-oil primary balance (percent of non-oil GDP): -47.4 -47.4 -73.1 -78.4 -50.5 -52.1
  - Current account balance: 11.4 10.2 -2.2 -15.8 -0.9 -10.0
  - Overall balance of payments: 3.7 2.7 2.1 -3.0 2.6 -1.7
  - Gross official foreign assets (months of next year's imports): 13.2 12.7 15.0 11.5 20.2 11.7
- Note: These revised projections reflect WEO price projections as of Tuesday, October 28.

### Recent economic developments (2007–2008)
- Growth and production:
  - Real GDP grew to an estimated 21.4 percent in 2007 following a new oil field (late 2006) and a liquefied natural gas facility (mid 2007).
  - 2008: a small decrease in primary oil extraction but a full year of liquefied natural gas production expected to lead to moderate growth.
- Inflation and prices:
  - Consumer prices (end of period): 3.7 in 2007; inflation expected to rise to 6 percent in 2008, driven by rising import, food, and fuel prices.
- External sector and reserves:
  - Gross official foreign assets rose to about 21 months of non-oil imports by end-2007.
  - For 2008, gross official foreign assets projected to drop to 12.7 months of imports cover.
  - Current account surplus revised from 11.4 percent of GDP to 10.2 percent of GDP in 2008.
- Fiscal developments:
  - Fiscal surplus was high in 2007 but narrowed due to increased capital spending and some weakening of revenues relative to GDP.
  - Non-oil primary deficit improved to about 49.7 percent of non-oil GDP in 2007 (from 64 percent in 2006).
  - Strategic purchase of petroleum assets from Devon for a total amount of USD 2 billon increased government share from 5.0 to 23.75 percent in the Zafiro field.
- Financial sector:
  - Financial soundness indicators in 2007 show a reduction in nonperforming loans and increased returns on both assets and equity.
  - Broad money increased by 41.5 percent and private credit by 40.5 percent in 2007.
  - Lending is mainly concentrated in public infrastructure projects; consumer credit remains modest.
- Social Development Fund (SDF):
  - About 12 projects were identified (education, health, water and sewerage, gender equality, and community development); funds allocated in the 2008 budget but government approval for disbursement pending.

### Executive Board assessment — findings and priorities
- Positive assessments:
  - Directors welcomed robust recent economic performance and sound macroeconomic policies that strengthened fiscal sustainability.
  - The National Development Plan (NDP, adopted 2007) is an appropriate framework for economic and institutional reforms.
  - Pegged exchange rate regime has served Equatorial Guinea well and remains an appropriate anchor for macroeconomic stability.
- Risks and concerns:
  - Economy remains susceptible to swings in the price of oil.
  - The proposed 2009 budget judged overly expansionary with only a small increase in the share of spending for social sectors.
  - Need to strengthen governance, transparency, and business environment to sustain growth, diversify the economy, generate employment, and reduce widespread poverty.
  - Public financial management reforms need to be accelerated; scope to strengthen fiscal management and transparency.
- Recommended policy directions:
  - Reign in capital spending on less pressing infrastructure projects; shift emphasis to human resource development to increase employment potential of nationals and reduce poverty.
  - Rapidly initiate SDF programs aimed at achieving the Millennium Development Goals; undertake public expenditure review with the World Bank.
  - Press ahead with Extractive Industries Transparency Initiative (EITI) and issue the first EITI report for Equatorial Guinea in 2009; work with World Bank and civil society to accelerate substantive compliance.
  - Remit Equatorial Guinea’s official offshore assets to the BEAC and develop a prudent strategy for managing the growing asset portfolio.
  - Intensify and extend financial intermediation; ensure small and medium-sized businesses gain access to needed credit.
  - Operationalize the National Agency for Financial Investigation in 2009 to counter money-laundering and financing of terrorism.
  - Foster a supportive climate for private sector and foreign direct investment, including legislation to reinforce investor confidence and competitiveness.
  - Establish speedily the National Statistical Institute and build capacity to collect and analyze data.

### Medium-term outlook and policy intentions (authorities’ perspective)
- Growth outlook:
  - Authorities expect growth to remain around 5 percent on average during the next five years, supported by new oil field and gas facilities and commercialization of oil and gas derivatives.
- Fiscal policy and public investment:
  - Commitment to reduce the non-oil primary deficit and to cautiously implement the budget, aligning it with the strategic framework and targeting expenditure on priority sectors to reduce poverty.
  - Plan to introduce a modest food subsidy in the 2009 budget to help vulnerable populations.
  - Upcoming expenditure review with the World Bank expected to guide public investment management.
- Revenue mobilization measures:
  - Broaden the tax base, expand taxpayer monitoring, use taxpayer identification numbers in main cities, strengthen customs administration through computerization, and adopt pre-shipment inspections.
  - Create a single unit in charge of large taxpayers and reduce the number of VAT exemptions.
  - Move the Social Security surplus from commercial banks to the central bank; transfer government deposits held in foreign banks to the BEAC.
- Monetary and financial policies:
  - Maintain pegged exchange rate regime; authorities note BEAC’s 2007 measures to mop up excess liquidity (negative auctions, increased reserve requirements).
  - Foster financial sector development to boost non-oil growth and diversification; abolition of the maximum lending rate to allow commercial pricing of lending risks.
  - Strengthen banks’ ability to enforce contracts.
- Structural reforms and social policies:
  - Continue structural reforms to improve business climate, external competitiveness, and poverty reduction.
  - Improve business environment via workforce training, access to credit, sound interpretation and implementation of the 2006 petroleum law, and improvements in financial services, labor quality, education, health care, utilities, and transport.
  - Implement NDP (Equatorial Guinea 2020 Vision) and SDF projects; 12 SDF projects incorporated in the 2008 budget.
- Statistics and capacity building:
  - Establish a National Statistical Institute; improve CPI coverage beyond Malabo and Bata and strengthen national accounts.
  - Authorities seek technical assistance from the IMF and other development partners to build capacity.

### Key numerical highlights (preserved exactly as in source)
- Months of imports coverage (gross official foreign assets): about 21 months by end-2007; projected 12.7 months in 2008; 11.5 months in 2009 (Table 1 shows 13.2 12.7 15.0 11.5 20.2 11.7 under Gross official foreign assets).
- Real GDP growth: 21.4 percent in 2007.
- Inflation (consumer prices, end of period): 3.7 in 2007; expected 6 percent in 2008.
- Non-oil primary deficit: improved to 49.7 percent of non-oil GDP in 2007 (from 64 percent in 2006).
- Strategic petroleum asset purchase: USD 2 billon; government share increased from 5.0 to 23.75 percent in Zafiro field.
- Broad money growth in 2007: 41.5 percent; private credit increase in 2007: 40.5 percent.
- Current account balance revisions for 2008: from 11.4 percent of GDP to 10.2 percent of GDP.
- National Agency for Financial Investigation: to be fully operational in 2009.
- SDF projects identified: 12 projects (education, health, water and sewerage, gender equality, community development).

*Source: IMF staff report and Public Information Notice (PIN) on the 2008 Article IV consultation with the Republic of Equatorial Guinea.*

---


_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2009/_cr09102.pdf_