IMF Management Approves a Staff Monitored Program for Equatorial Guinea

IMF News, July 24, 2024

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Management of the International Monetary Fund approved a 12-month Staff Monitored Program (SMP) for Equatorial Guinea.
SMP approval date: June 24, 2024.
Page/press date: July 24, 2024.
Press Release No. 24/278.
SMP type: non-financing Staff Monitored Program; SMP staff reports are issued to the Board for information and do not entail endorsement by the IMF Executive Board.

Hydrocarbon production has fallen 56 percent since its peak in 2008.
Hydrocarbon production is expected to fall a further 32 percent by 2029.
Driven by contraction in hydrocarbons, Equatorial Guinea re-entered recession in 2023, with real GDP estimated to have contracted by 5.8 percent.
Persistent decline in hydrocarbon production has strained fiscal and external accounts and is expected to leave the economy stagnating in the medium term, underscoring the urgent need for economic diversification.

Objective: deliver stronger, sustainable, and more inclusive private sector-led growth in the face of a contracting hydrocarbon sector.
Key pillars:
- Reinforcing fiscal sustainability.
- Restoring the soundness of the banking sector.
- Implementing structural reforms to facilitate economic diversification.
- Improving social outcomes.
- Promoting better governance.

Authorities are targeting fiscal adjustment in 2024 and 2025 consistent with safeguarding public debt sustainability in the medium term.
Fiscal adjustment measures expected to underpin the effort:
- Phasing out fuel subsidies.
- Rationalizing capital expenditure.
- Improving domestic revenue mobilization.
Despite fiscal adjustment, authorities will prioritize social spending and aim to increase current social spending, especially for healthcare and education.

Authorities are preparing a plan for clearing domestic arrears, including those to the banking sector.
Authorities will take steps to ensure the health of a systemic public bank.

Planned structural reforms include improving the quality and cost of internet access.
SMP is designed to support implementation of a home-grown reform strategy to rebuild a track record of policy implementation as a steppingstone to a potential Fund-supported financing arrangement.

Authorities committed to a broad range of reforms to promote better governance:
- Approve implementing regulation for the anti-corruption commission, enabling the commission to begin carrying out its mandate, including overseeing the asset declaration regime.
- Publish extractive sector contracts and expenditure audits to foster transparency.
- Prepare a national AML/CFT strategy to reinforce confidence in the financial system.

Successful implementation of the SMP reforms will help establish a requisite policy implementation track record for a potential Fund financing arrangement.
The SMP aims to deliver stronger, sustainable, and more inclusive private sector-led growth while addressing fiscal, banking, structural, social, and governance vulnerabilities arising from a contracting hydrocarbon sector.

International Monetary Fund — Press Release No. 24/278 (June 24, 2024; page dated July 24, 2024).