Equatorial Guinea: Staff Concluding Statement of the 2022 Article IV Mission

May 20, 2022

A Concluding Statement describes the preliminary findings of IMF staff at the end of an official staff visit (or ‘mission’), in most cases to a member country. Missions are undertaken as part of regular (usually annual) consultations under Article IV of the IMF's Articles of Agreement, in the context of a request to use IMF resources (borrow from the IMF), as part of discussions of staff monitored programs, or as part of other staff monitoring of economic developments.

The authorities have consented to the publication of this statement. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF Executive Board for discussion and decision.

Washington, DC: An International Monetary Fund mission, led by Mariana Colacelli, conducted discussions on the 2022 Article IV consultation with Equatorial Guinea during May 12-19, 2022.


The COVID-19 pandemic in 2020, and Bata explosions in 2021, struck Equatorial Guinea at a time when its economic vulnerabilities had already been aggravated by a prolonged period of depressed hydrocarbon prices, and seven consecutive years of decline in real GDP. As a result, the shocks further adversely impacted economic activity, the banking system, fiscal revenue, and social outcomes. While non-hydrocarbon GDP is estimated to have increased by 1.3 percent in 2021 due to a deceleration in COVID-19 cases and easing of pandemic containment measures, real GDP is estimated to have declined by 3.5 percent.

The authorities reacted swiftly to the fallout from the pandemic and Bata explosions. The government deployed a health spending plan focused on COVID-19 prevention and mitigation, together with a social assistance scheme for the most vulnerable. Limited and temporary tax relief was provided to the private sector, which helped address cash-flow pressures and cushioned adverse effects on economic activity and employment. In addition, the authorities delayed the execution of capital spending plans and other non-priority expenditures. For the Bata emergency, they provided support to about 5,000 vulnerable households, including via eight shelters for over 500 orphaned children and a shelter for the elderly.


Despite recent negative shocks, the near-term outlook has improved considerably. Real GDP is projected to grow by about 6 percent in 2022 due to base effects from the lower-than-expected gas production in 2021, and the start of Bata reconstruction. The recent relaxation of pandemic containment measures and higher international oil prices are helping boost government revenues, along with export earnings, narrowing the external current account deficit. However, high non-performing loans (driven by the government arrears with construction firms) and undercapitalization in the domestic banking system, are a hinderance to private credit expansion, limiting further growth in private domestic investment and non-hydrocarbon sector. Inflation is projected to rise to 4 percent in 2022, driven by international oil and food prices, owing to global recovery from the pandemic and supply shocks caused by Russia’s invasion of Ukraine.

Over the medium term, growth is projected to decline. Hydrocarbon output is expected to fall as major fields mature and investments in exploration slow. With a stalled structural reform agenda and reduced hydrocarbon revenues, the non-hydrocarbon sector would remain weak and living standards would fall.

The balance of risks to the outlook is tilted to the downside. On the upside, a further sustained increase in hydrocarbon prices would boost export earnings, improve fiscal balances, and the NFA. On the negative side, a further sustained surge in international food and fertilizer prices would further increase domestic inflation, negatively impacting food security of already vulnerable segments of the population, rising the prospects of social tensions. Additional downside risks arise from a resurgence of the pandemic, a spike in marine piracy incidents, further delays in addressing governance and corruption vulnerabilities, or continued worsening of banking sector stability indicators.


Policies need to balance short-term urgencies including to support food security and the banking system with long-lasting overarching reforms to ensure macroeconomic stability, improved social outcomes, and strengthened governance and transparency, delivering sustainable and inclusive economic growth. Specifically:

Reducing macroeconomic imbalances and maintaining fiscal sustainably

  • Rebuild macroeconomic buffers using hydrocarbon revenue windfall. The government’s near-term fiscal priority of stabilizing the economy—including with continued support for the banking system and vulnerable population—is appropriate. The non-hydrocarbon primary fiscal balance is projected to deteriorate to about 19.5 percent of non-hydrocarbon GDP in 2022—despite improved non-hydrocarbon revenues and tax administration, with a projected neutral fiscal stance in 2022. The authorities should use the revenue windfall from higher hydrocarbon prices to rebuild macroeconomic buffers, including foreign reserves, to help protect the economy from future adverse shocks.
  • Maintain fiscal sustainability over the medium term. As hydrocarbon production is in secular decline, policy adjustments are needed to maintain fiscal sustainability whilst stimulating the non-hydrocarbon sector and pursuing inclusive growth over the medium-term. A fuel subsidy reform implemented in March—generating savings of 0.1 percent of GDP in 2022—is a step in the right direction after fixed retail fuel prices for the past fifteen years. Further, given volatile hydrocarbon prices, the authorities should strengthen adherence to their fiscal policy framework that targets a reduction in the non-hydrocarbon primary deficit. In this endeavor, the authorities should adopt measures to increase non-hydrocarbon revenues and improve the efficiency of public spending. Prioritized capital spending should focus on water and sanitation, and the reconstruction of Bata infrastructure. Public procurement needs strengthening.
  • Strengthen public debt management. Equatorial Guinea’s public debt is assessed to be sustainable over the medium term, but subject to substantial risks—namely the volatility of international oil prices and the continuation of fiscal discipline. The planned settlement of domestic and external arrears is welcome. The authorities should also subject any newly-discovered domestic arrears to verification, including via a robust external independent audit, before final settlement is made. To avoid the emergence of future payment arrears, the authorities’ need to keep implementing a multi-annual expenditure tracking and control system, and also closely monitor the current stock of arrears.

Improving social outcomes and protecting food security

In light of worsened social outcomes during the pandemic and the recent surge in food prices, temporary measures should be considered in the near term to protect food security for the most vulnerable population. Over the medium term, a comprehensive set of measures would be key to improve social outcomes and human capital, including to enhance food security. To achieve this goal, there is a need for a social protection strategy with clear objectives, measures and timelines, within a streamlined administrative structure. The strategy would include the development of a single beneficiary registry with evidence-based eligibility criteria for social assistance. In the meantime, an expansion of the Bata mobile cash transfer initiative and the “Distritos Sanitarios” healthcare services (per the Baney model) could provide needed country-wide coverage. These efforts should be supported by improvements to the collection and reporting of social spending data and outcomes.

Strengthening the banking sector

Longstanding vulnerabilities in the banking sector were further aggravated by the pandemic. Key concerns are the high non-performing loans (driven by the government arrears with construction firms ), and the revelation of undercapitalized banks (following COBAC’s alignment of capital definitions with Basel II at end-2019). Prompt steps are needed to strengthen banking sector soundness. To this end, the government should accelerate its plan for clearing domestic arrears and work with COBAC towards prompt recapitalization of any insolvent bank. Beyond this, the government should accelerate the implementation of new mechanisms to resolve commercial and credit disputes, with a view to reducing non-performing loans. Finally, the government should continue to work closely with COBAC to improve other identified deficiencies in the banking system over the medium term, and work with BEAC to improve access to financial services and strengthen financial inclusion.

Supporting inclusive growth, economic diversification, and a climate resilient economy

  • Intensify actions to improve governance, enhance transparency and the fight against corruption. The authorities have implemented several macro-critical governance reforms, including an anti-corruption framework and revenue administration reforms. However, reform efforts need to be accelerated to address remaining severe governance and corruption vulnerabilities, via a comprehensive and credible implementation of the structural reform agenda to yield substantial macroeconomic dividends. The reform agenda is detailed in the government’s 2019 action plan for addressing governance weaknesses, increasing transparency and fighting corruption. Efforts are also needed to fully implement related measures contemplated as commitments under the 2021 Rapid Financing Instrument request, along with outstanding measures from the Extended Fund Facility.
  • Boost efforts to ignite non-hydrocarbon growth. An updated Development Plan 2035 appropriately contemplates private sector-led economic diversification and environmental sustainability. Key initiatives implemented include the establishment of a one-stop shop for investment to help improve the business environment, the removal of the domestic partner requirement for foreign investors, and the new commission to improve port operations. A list of state assets for privatization through outright sale or through management contracts has been published. Additionally, plans to develop tourism are being contemplated to contribute to inclusive growth. Additional measures are needed, including the preparation of an asset-sales plan based on open and transparent international tenders, the establishment of an investment promotion agency, establishing a tourism strategy, and a comprehensive plan to enhance skills of the local workforce. Simplification of business procedures, and implementation of the 2018 AfCFTA agreement should be pursued to promote trade, especially within the CEMAC region, using the country’s well-developed road and port infrastructure.

  • Facilitate the building of a climate resilient economy. The authorities have ratified the UN Framework Convention on Climate Change and launched the REDD+ program with the key goal of limiting deforestation and forest degradation. Towards this end, work has started on a Land Use Plan with FAO. These efforts need to be scaled up while carefully managing the secular decline in the hydrocarbon sector, including by avoiding incentives for early shutdown of declining wells.

The IMF team met with Prime Minister Francisco Pascual Obama Asue, Minister of Finance, Economy and Planning Valentin Ela Maye Mba, Treasury Secretary Milagrosa Obono Angue, other senior government officials, as well as representatives of the private sector and civil society. The IMF team would like to thank the authorities and other interlocutors in Malabo, Bata, Oyala, and Mongomo for their gracious hospitality and candid discussions.

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