Press Release No. 18/287

Statement at the End of an IMF Visit to Conduct the First Review of Equatorial Guinea’s Staff-Monitored Program

July 11, 2018

• Program implementation through April has been broadly satisfactory; IMF Management expected to consider program review in August;
• A revised 2018 budget, tighter control and tracking of spending along with enhanced revenue administration is guiding fiscal adjustment;
• Economic prospects in the near term remain difficult, with falling hydrocarbon production, but there are signs of a slight recovery of the non-oil sector.

An International Monetary Fund (IMF) mission led by Lisandro Ábrego, IMF Mission Chief for Equatorial Guinea, visited Malabo on July 2–11 to conduct discussions on the first review of Equatorial Guinea’s Staff-Monitored Program (SMP), approved by Management in May 2018 (see Press Release No. 18/218). At the end of the visit, Mr. Ábrego issued the following statement in Malabo:

“Despite substantial economic difficulties, the authorities have made progress in implementing their reform program, and are contributing to the regional adjustment strategy. They have met all but one (owing to technical reasons) quantitative performance (PM) measures and indicative targets for the first review under the SMP. Although the structural benchmark for end-April on having a revised 2018 budget approved by Parliament was not met, the authorities have operated within the parameters of the revised budget. This improved framework has contributed to higher non-resource tax revenues, and a lower non-resource primary deficit in the first four months of 2018. Good progress is also being made on delivering on some of the structural measures programed for end-July, including the ratification of the UN Convention against Corruption in May, and better control and tracking of public spending. Progress is also being made on improving revenue administration and the environment for investment. The revised 2018 budget was approved by the Council of Ministers, and it is now scheduled to be approved by Parliament later this month.

“Against this background, the mission reached a staff-level agreement for the completion of the first review under the SMP. A report is expected to be submitted for IMF’s Management consideration in early August 2018.

“Economic prospects in the near term, as in the rest of the CEMAC region, are difficult. While the non-oil sector has started to show signs of recovery, posting modest growth in 2017, overall economic growth remains in negative territory, owing to declining hydrocarbon output. Inflation remains low, reflecting economic slack and contained international food prices. The external current account has improved, both because of fiscal adjustment and higher oil prices, but Equatorial Guinea still needs to rebuild its foreign assets and raise its contribution to BEAC’s international reserves.

“The mission and the authorities agreed that continued strong implementation of the government’s reform strategy is essential to keep stabilizing the public finances, contain the growth of public debt and set the basis for sustainable, inclusive growth within a more diversified economy. In this context, it is important to shield the poor and vulnerable from any adverse effects of economic adjustment and generally to strengthen social protection.

“The mission supported the ongoing efforts to strengthen the public financial-management framework to support fiscal discipline. It also welcomed the authorities’ commitment to enhancing governance and transparency in public administration and the hydrocarbon sector. In this regard, it is important to complete the process to adhere to EITI, by building on the work already done. Launching the process for the audit of the state-owned hydrocarbon companies and government internal arrears is also important. The mission also supports the publication of a broader set of fiscal data through a new Ministry of Finance website ( www.minhacienda.gob.gq), and suggests the authorities to turn this into a regular practice.

“The mission met with His Excellency, the Minister of Finance, Economy and Planning, Mr. Lucas Abaga Nchama; His Excellency, the Minister of Mines and Hydrocarbons, Mr. Gabriel Obiang Lima; other senior government officials; members of the diplomatic community; and representatives of the private sector and civil society.

“The team wishes to thank the Equatoguinean authorities and other interlocutors that it held discussions with for their excellent collaboration and warm hospitality.”