IMF Staff Concludes Visit to Equatorial Guinea for the Staff-Monitored Program and Program Negotiations under the Extended Fund Facility

IMF News, September 27, 2019

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Canonical URL: IMF Staff Concludes Visit to Equatorial Guinea for the Staff-Monitored Program and Program Negotiations under the Extended Fund Facility

IMF mission led by Lisandro Ábrego visited Malabo during Sep 16-27 to conduct the second and final review of the Staff-Monitored Program (SMP) and negotiate a three-year program supported by the Extended Fund Facility (EFF).
The authorities and IMF staff reached staff-level agreement to complete the second and final review of the SMP.
Substantial progress was made on discussions of a three-year EFF-supported program; discussions would continue next month during the Annual Meetings in Washington, D. C.
Goal: bring an IMF-supported program for Board consideration before the end of this year.
The mission will not result in a Board discussion; once concluded, the IMF team would submit a report in support of the conclusion of the second SMP review and Equatorial Guinea’s request for a three-year arrangement under the EFF for consideration to the Executive Board.

The authorities met all the quantitative fiscal and monetary targets for end-July 2018, except for one.
Fiscal balances:
- Government recorded an overall surplus of 0.5 percent of GDP in 2018.
- This is a significant improvement from the deficit of 2.5 percent of GDP posted in 2017.
- Fiscal balance has continued to improve in the first half of 2019.
Reserves at the BEAC have increased during the first half of 2019.
Economic activity:
- Economic activity continued to contract in 2018, driven by lower oil production.
- The non-oil sector is estimated to have experienced some modest growth in 2018 but remains constrained by weak private sector confidence and low credit growth.
- The non-oil sector is projected to strengthen in 2019 but overall growth would remain negative.

Implementation status of structural measures for the second review:
- Three out of five structural measures for the second review have been implemented.
- Implemented measures include:
- Parliament ratified the UN Convention Against Corruption.
- Government hired internationally recognized firms to audit GEPetrol and Sonagas and to conduct an audit of domestic arrears.
- Work on presenting a membership application to the Extractive Industries Transparency Initiative (EITI) has advanced but has not been completed; it was agreed the application would be submitted before IMF Board consideration of the EFF-supported program.
IMF staff prepared a governance diagnostic report in collaboration with the authorities; this report will provide the basis for a strategy to foster good governance to be implemented as part of the EFF program.
Authorities have taken measures to improve the business climate and support economic diversification, including reprogramming the long-term development strategy Horizonte 2020 based on conclusions of the Third National Economic Conference.

Overarching goal: support the recovery of economic activity and foster sustainable inclusive economic growth.
Program seeks to:
- Sustain macroeconomic stability while promoting social protection.
- Strengthen the banking sector.
- Promote economic diversification.
- Foster good governance and transparency.
- Support the fight against corruption.
Expected program effects:
- Facilitate economic policy implementation.
- Bolster investor confidence.
- Catalyze resources from other multilateral institutions.
- Contribute to the CEMAC strategy.
- Facilitate adoption of reforms to address structural problems.

To maintain macroeconomic and financial stability:
- Further strengthen fiscal balances.
- Design and adopt a credible plan to repay domestic arrears.
Agreement on accompanying policy measures, some already being implemented.
Consensus on changing composition of expenditures to create room for higher social spending to foster inclusive growth and mitigate effects of adjustment on low-income groups.
Agreement on reforms to:
- Stimulate non-hydrocarbon growth.
- Increase transparency.
- Improve governance and anti-corruption frameworks.

Discussions to continue in Washington D.C. during the Annual Meetings, with the goal of reaching agreement on a Fund-supported program during 2019.
Upon conclusion of negotiations, IMF staff would submit the report supporting the conclusion of the second SMP review and the request for a three-year EFF arrangement to the Executive Board.

The mission met with:
- H.E. President Teodoro Obiang Nguema Mbasogo.
- Prime Minister Francisco Pascual Obama Asue.
- Minister of Finance, Economy and Planning, César Mba Abogo.
- Minister of Mines and Hydrocarbons, Gabriel Obiang Lima.
- BEAC National Director, Genoveva Obiang.
- Other senior government officials, members of the diplomatic community, representatives of the private sector and civil society.
Media relations contact: PRESS OFFICER: Meera Louis; Phone: +1 202 623-7100; Email: MEDIA@IMF.org

IMF Staff press release No. 19/357, Sep 27, 2019 — statement issued by mission chief Lisandro Ábrego in Malabo.