## IMF Management Approves a Staff Monitored Program for Equatorial Guinea

_IMF News, July 24, 2024_

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## Bibliographic details
- Published: July 24, 2024

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### Overview
- 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.

### Context and macroeconomic backdrop
- 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 and key pillars of the SMP
- 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.

### Fiscal policy measures and social spending
- 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.

### Banking sector measures
- 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.

### Structural reforms to support diversification
- 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.

### Governance, transparency, and financial integrity measures
- 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.

### Expected outcomes and implications
- 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).*

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## References

- [Republic of Equatorial Guinea and the IMF](http://www.imf.org/external/country/GNQ/index.htm)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2024/07/17/pr24278-equatorial-guinea-imf-mgmt-approves-staff-monitored-program_