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Republic of Equatorial Guinea

Author(s):
International Monetary Fund
Published Date:
May 2010
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I. Introduction

1. Oil has brought great wealth and growth to the Equatoguinean economy, but challenges remain. Real GDP has increased forty-fold since 1995, and large oil revenues have allowed the government to embark on an ambitious infrastructure investment program while amassing foreign savings. Basic infrastructure is being developed, and although achievements in social areas have been muted, expenditure in this area is programmed to rise. However, with crude oil production on the decline and still-large development needs, preparations for the post-oil period outside of infrastructure should not be delayed. Long-term prospects will depend on the ability to develop a thriving non-oil sector which provides growth and employment opportunities.

2. The discussions focused on policies to safeguard macroeconomic and external stability as oil revenues wane, while at the same time making progress toward achieving the wide-ranging goals set forth in the National Development Plan 2008-20 (NDP).

II. Economic Developments

Background

In 2009, performance of Equatorial Guinea’s oil-based economy was mixed. Oil prices and production declined, while unprecedented public sector investment buoyed non-oil growth but sent the fiscal deficit soaring. The external position weakened.

3. Economic developments continue to be underpinned by hydrocarbon sector activity and public investment (Figure 1).

Figure 1.Equatorial Guinea: Recent Economic Developments, 2004–10

Sources: National authorities, and IMF staff estimates.

  • Growth in 2009 was driven mainly by continued strong activity in hydrocarbon derivatives (mostly liquefied natural gas, LNG) and a surge in public investment (construction, utilities, housing), which more than offset the effect of falling crude oil production.1 Real GDP is estimated to have expanded by about 5 percent.

  • Inflation continued to rise to about 7¾ percent, despite falling global food and oil prices, due to lack of competition in the retail sector, rising public sector wages, and strong domestic demand.

  • The external position weakened. The stock of government savings—the relevant proxy for the international investment position—declined moderately, but remained large, propped up in part by renewed foreign borrowing. The current account plummeted, with rising hydrocarbon derivatives exports insufficient to offset falling crude production, the plunge in oil prices, and the surge in public investment-related imports. The deficit of about 16 percent of GDP was financed mostly by FDI and public debt.

  • The real effective exchange rate appreciated by 4 percent in the 12 months through December 2009 as late-year weakening of the euro to which the CFA franc is pegged mitigated the effect of inflation above that of trading partners.

4. In 2009, over-execution of budgeted capital expenditure led to a substantial deterioration of the fiscal position, while official foreign assets held at the Bank for Central African States (BEAC) declined (Figure 2).

Figure 2.Equatorial Guinea: Fiscal Developments, 2004–10

Sources: National authorities, and IMF staff estimates.

  • The overall fiscal balance shifted into a deficit of 8.0 percent of GDP (versus a surplus of 1.7 percent of GDP in the original budget), while the non-oil primary deficit (NOPD) plummeted to over 100 percent of non-oil GDP (80 percent of non-oil GDP in the budget). Foreign borrowing and a drawdown of government savings of near equal parts financed the deficit.2

  • Revenue came in nearly on budget as lower oil royalties were offset by customary over-performance in other areas resulting from conservative budgeting.

  • Expenditure surged over the course of the year as oil prices recovered, and the revised budget targets adopted in March were abandoned. Unprecedented spending under the public investment program (PIP) surpassed the original budget by some 25 percent. Current expenditure rose moderately reflecting a slightly higher wage bill, some additional spending on goods and services, and the start of implementation of spending—albeit small—under the Social Needs Fund.

  • Notwithstanding the relatively modest decline in government savings, government assets held at BEAC declined by half, with the share held outside the regional central bank rising to over 70 percent (50 percent in 2008). Gross official reserves of BEAC are estimated to have declined by about $1.5 billion to $14.2 billion at end-2009, broadly reflecting the reduction in Equatorial Guinea’s deposits.

5. Liquidity remained ample, rising toward end year as government spending increased. Interest rates edged down, in line with declining international rates and an increase in competition amongst banks for big customers.

6. The underdeveloped financial system was unscathed by the global financial turmoil, and appears generally sound. Total outstanding credit at end-2009 was small at 3½ percent of GDP. There is no evidence of capital repatriation by foreign banks, and exposure to complex derivatives by local subsidiaries was nil. Identified problems in a small, weaker bank have been broadly resolved by a new strategic partner, and banks report having no difficulty in meeting new capital requirements.3 While financial sector soundness indicators do not raise red flags, they are volatile due to the fact that credit to the private sector is concentrated in very short-term lending to government contractors.4 Increasing use of certification-prior-to-payment on public projects starting in January 2009 led to a temporary rise in nonperforming loans, most of which were resolved within six months as project completion progressed and the government made payments to contractors.

Outlook and Risks

7. The medium-term outlook is clouded by the onset of declining hydrocarbon production and a nascent non-oil sector, with policies posing additional risks. With a negative contribution from oil, overall growth is expected to be significantly lower in the future than during the oil boom, averaging about 1½ percent (Figure 3). The authorities expect robust growth in the small nonhydrocarbon sector, as investments in basic infrastructure begin to bear fruit and new public investments support continued construction activity. Transportation is projected to grow steadily (ports, roads), with construction of a second LNG train and hosting of two official regional events providing an additional boost over the next few years. However, as the PIP winds down and hydrocarbon production tapers off, activity will increasingly need to be driven by private sector activity, which depends on the ability to strengthen productivity and improve the business climate. With prospects for rapid export diversification low, the current account would remain in deficit, mostly reflecting the large import component of the public investment program. The external position would weaken, with government savings dropping sharply as falling oil revenues fail to cover strong planned spending. With the PIP winding down, public external debt would resume a downward trend post-2012 and remain robust to standard shocks.

Figure 3.Equatorial Guinea: Medium-Term Projections, 2007–15

Sources: National authorities, and IMF staff estimates.

Equatorial Guinea: Medium Term Macroeconomic Framework 1/in percent of GDP unless otherwise indicated
200720082009201020112012201320142015
Est.Projection
Real GDP (percent change)21.410.75.30.92.11.52.70.80.7
External current account balance4.19.1-16.0-4.6-12.4-10.1-8.9-8.1-7.6
Overall fiscal balance18.415.4-8.00.8-6.4-8.9-8.4-7.7-7.5
in percent of non-oil GDP-49.7-67.2-102.0-53.7-65.9-61.0-41.7-35.2-31.5
revenue38.337.041.029.127.725.021.320.719.5
of which: hydrocarbon related31.632.133.823.722.419.714.111.910.8
expenditure19.921.649.028.334.133.929.728.427.0
of which: capital15.416.943.022.127.025.520.518.516.5
Government savings (in bn CFAF)2,6323,5603,3363,6293,3862,7971,91498540
in percent of GDP43.743.257.852.343. 734.022.311.20.4
External public debt1.10.75.17.49.912.110.78.65.5
Sources: Data provided by the Equatoguinean authorities; and IMF staff estimatas and projections.

The baseline scenario is based on the authorities’ stated policies.

Sources: Data provided by the Equatoguinean authorities; and IMF staff estimatas and projections.

The baseline scenario is based on the authorities’ stated policies.

8. The outlook is subject to significant risks.

  • The economy will continue to be reliant on oil. A negative oil price shock relative to the baseline would further weaken the external position and/or necessitate a sharp fiscal adjustment. Heightened political risk could depress foreign direct investment.

  • High public investment may not translate into non-oil growth—with over 1,000 projects in the PIP, implementation and absorptive capacity may become strained, leading to lower investment efficiency than assumed under the baseline.

  • Diversification of the economy may stall under slow progress on key structural reforms to improve the business climate, reducing growth prospects.

  • On the upside, new oil discoveries would increase oil wealth and growth over the production period, but the fiscal and external sectors would remain highly vulnerable to oil price volatility.5

III. Policy Discussions

With the economy transitioning to what is projected to be the post-oil period, discussions focused on policy adjustments aimed at achieving fiscal sustainability, raising investment efficiency, improving public financial management, and supporting economic diversification.

A. Strengthening external stability through sustainable fiscal policy

9. Given current projections for oil prices and production, the authorities concurred, in principle, on the need for expenditure rationalization. Staff calculations indicate that planned expenditure would exceed expected revenue over the medium term, leading to a near depletion of the stock of government savings by 2015 and a significant weakening of external stability. Moreover, investment of such a magnitude may spur inflationary pressures and drag on competitiveness. With few prospects to increase revenue markedly over the near term, a reduction in investment expenditure would be needed.

10. In recognition of large development needs, the authorities noted that social expenditure should not only be protected but increased, and investment efficiency safeguarded. On expenditure outside of the social area, high-return projects should continue, with staff noting apparent scope to further prioritize, re-phase and/or right-size lower productivity investments to be closer in line with expected medium-term activity. Non-priority investments should be eliminated.

11. The authorities saw little scope to reduce spending over the near-term due to upcoming commitments made when oil prices were high. Construction of facilities to host the African Leader’s Summit (2011) and African Cup of Nations (2012) are underway, and basic infrastructure projects in both social and productive areas must be completed in order to support future economic activity.

12. Nonetheless, the authorities are taking actions aimed at increasing savings over the medium term. They noted that while expenditure is expected to decline significantly once basic infrastructure is complete, there is growing awareness of the desirability of adjustment over the near term. A high-level committee has been formed to study project prioritization, and a supervisory body is being established, whose role will be to strengthen expenditure quality and control, including through reducing collusion between project managers and construction companies. Moreover, they envisioned that revenues from any new oil fields would go toward increasing savings.

13. Staff recommended that starting in 2010, initial steps be taken to place fiscal policy on a sustainable path through reversing the loosening that occurred in 2009. Targeting a NOPD of around 40 percent of GDP is feasible and desirable, as frontloading the adjustment would reduce vulnerability, strengthen the external position and lessen the need for a sharper adjustment down the road. Near-term adjustment of such a magnitude would also address the risk of large budgetary overruns in 2010-11, which the authorities agree could be potentially large.6 In contrast, staff agreed with the authorities that moving immediately to a position consistent with a constant annuity under a permanent income model (PIM) would imply an undesirably large fiscal adjustment which leaves insufficient space to address pressing development needs. Such an adjustment would imply a reduction in capital expenditure by some 75 percent, and abandonment of many projects already in train.

14. Staff recommended an alternative expenditure scenario which provides sufficient fiscal space for priority projects while placing the fiscal position on a path to sustainability. Specifically, staff suggested limiting investment expenditure over 2010-12 to 1,200 billion CFAF—somewhat above the level contained in the authorities’ 2009 revised budget—which places the NOPD firmly on a declining path. This amounts to a reduction of about 25 percent in planned expenditure, but fully covers investments in train with room for new priority projects. Post-2012, as projects are completed, expenditure should be reduced further. Somewhat lower construction activity and growth may result from eliminating inefficient projects, but the impact going forward is expected to be limited due to rising investment efficiency.7 Under such an expenditure path, the NOPD would be reduced significantly, with government savings rising over the medium term.

Equatorial Guinea: Fiscal Sustainability Assessment
Overall balance

percent of GDP
Non-oil primary balance

percent of non-oil GDP
20102011201220152010201120122015
Baseline projection (authorities’ policies)
Fiscal balance0.8-6.4-8.9-7.5-53.7-65.9-61.0-31.5
Stock of gross government savings52.343.734.00.4122.9100.573.30.71
Staffs alternative expenditure scenario
Fiscal balance5.65.42.50.6-42.7-39.9-38.1-20.7
Stock of gross government savings57.261.465.768.9134.7142.8144.3114.3
Required adjustment versus baseline4.811.811.48.111.026.022.910.8
Permanent Income Model (constant annuity)
Overall fiscal balance17.216.814.15.8-15.2-14.2-13.3-10.8
Stock of gross government savings65.375.385.098.9153.4173.1183.2161.1
Required adjustment versus baseline16.423.222.913.338.551.747.720.7
Source: Staff estimates.
Source: Staff estimates.

15. The fiscal adjustment under the staff’s expenditure scenario also addresses concerns regarding external stability. The exchange rate peg has served the economy well, but falling oil production and unsustainable planned expenditure would weaken the external position over time. All specifications and approaches employed to assess external stability point to the need for a substantially higher current account balance than under the policy-dependent baseline. The macroeconomic balance and external sustainability approaches (under various allocation rules) both yield a (minimum) required current account adjustment of some 15 percentage points of GDP in 2015—a magnitude which could not be achieved without fiscal adjustment. With non-oil private sector imports stable at about 7 percent of GDP over the medium term and oil accounting for 99 percent of exports, policies should aim to lower public expenditure-related imports (75 percent of total imports) and support successful economic diversification. This result is consistent with the findings for the CEMAC region as a whole, which indicate that external stability requires regionally higher public savings and structural reforms to bring the real effective exchange rate in line with medium-term fundamentals (IMF Country Report No. 09/267).

16. Discussions also centered on ways to strengthen non-oil revenue. The authorities shared staffs concern about sharply falling oil revenues in the context of increasing current expenditure pressures—notably, on operations and maintenance of sizeable public investments. They saw scope for further improvements in tax administration, including through modernization of the tax and customs departments. They are also creating autonomous public agencies charged with upkeep of public investment, such as roads and buildings. As diversification progresses, road maintenance would become increasingly self-financing through tolls, while additional revenue from growing port services and possible export of electricity is also envisioned. Staff highlighted that going forward tax holidays should be limited, while increased government savings over the medium term would provide an additional source of financial income down the road.

B. Public Financial Management: Strong institutions and governance

17. The large over-execution of investment expenditure in 2009 points to weak budgetary control, while apparent under-budgeting of 2010 spending is indicative of deficiencies in the budget process.8 The authorities noted that current spending is well controlled and progress in tracking PIP expenditure has been made with the assistance of two macrofiscal advisors backstopped by the IMF, but agreed that insufficient coordination among departments and between ministries surrounds the PIP.

18. The authorities noted that capacity constraints and other hurdles would need to be overcome to improve PFM. Unreliable electricity supply and communication networks would have to be resolved to ensure uninterrupted processing and recordation of fiscal transactions. However, basic infrastructure should be in place by 2012; collaboration on developing appropriate software to record transactions is ongoing; and technical assistance is serving to improve capacity. Moreover, investment efficiency should be enhanced by the new supervisory body charged with overseeing disbursement of payments to contractors and planned use of outside experts for pre-project analysis in areas which the relevant line ministry does not have expertise.

19. The authorities have demonstrated their commitment to improved transparency through progress on the Extractive Industries Transparency Initiative (EITI). After initial delays, the EITI process is progressing rapidly, as previously confidential information on state oil companies has been released. The final reconciliation report has been posted on the internet and validation is underway. An extension past the March 9, 2010 deadline was requested to complete validation and tie up loose ends.

20. On reserve holdings, the authorities reiterated their commitment to CEMAC but noted that in light of the losses incurred in the recent fraud scandal they would not increase holdings in BEAC until the situation had been fully resolved. At an operational level, financing the fiscal deficit through running down BEAC deposits while increasing offshore holdings is financially advantageous, given BEAC’s lower remuneration. Nonetheless, the authorities reaffirmed their readiness to switch deposits into BEAC to strengthen support for the exchange rate peg, if necessary.

C. Economic diversification and private sector-led growth

With hydrocarbon production expected to taper off, Equatorial Guinea will need to advance other sources of value added if development is to be sustained. Successful diversification requires strong human capital, financial intermediation, and an enabling business environment.

21. Guided by the framework in their NDP, the authorities aim to graduate to emerging country status by 2020. In view of the exhaustible nature of oil resources, sustained growth would be achieved through economic diversification (Box 1). In the current phase (2008-12), oil wealth is being used to build up basic infrastructure. Longer-term policies will aim to strengthen the business climate and foster identified sectors of potential growth and employment creation. Current business climate indicators point to a wide-ranging structural reform agenda.9

Box 1.National Development Plan 2020: Potential Sources of Growth and Diversification

The authorities’ NDP identifies key areas ofpotential growth and employment creation based on resource allocation and geographic location. Diversification is expected to be further supported by increasing regional integration and investment in basic infrastructure. Identified sectors of potential growth include:

  • Fishing and aquaculture, as well as agriculture aimed at food security and import substitution, with limited scope for export of traditional agricultural commodities;

  • Transport services, via both ports and roads;

  • Tourism, including officially sanctioned events and eco-tourism; and

  • Financial services.

22. In recognition of the important role to be played by small- and medium-enterprises (SMEs), the authorities are beginning to work with the banking sector on improving access to financing. Modalities are yet to be decided but proposals include creation of a credit fund (i.e., a long-term government deposit) which banks could loan out at concessional rates, a guarantee fund, or a direct interest rate subsidy.

23. More broadly, the authorities support regional initiatives to strengthen financial sector development. Improvements over the past year include real-time interbank clearance and ATM machines at the individual bank level. The fiber-optic cable to the mainland should be operational by end-year, allowing faster and more reliable real-time information transfer from the island. Work is also ongoing on introducing an ATM network, use of credit cards, and a government debt market to facilitate liquidity management.

24. Outside of the financial sector, the authorities’ diversification strategy envisions the government facilitating, not competing with, the private sector. The national strategy should be seen in the context of the larger regional strategy to strengthen CEMAC integration and graduate to emerging market status by 2025—ports and highways in Equatorial Guinea are a key pillar to increased trade. Over the near-term, the authorities will also continue to orient the economy toward identified key sectors (agriculture, fishing, tourism), filling the void left by an unwilling private sector through creation of public companies and agencies, as they have done in the management of public investment (highways, real estate).

25. There was broad agreement that not all conditions were yet in place which would allow for rapid emergence of a predominantly non-oil economy. Increased spending on human capital development at all levels is underway, although much more is required, especially on increasing the number of teachers and healthcare professionals. Given the large reform agenda and capacity constraints, the authorities noted that once basic infrastructure is sufficiently advanced work in other areas would be stepped up, including in some cases on needed legal reforms.

IV. Data Issues

26. The authorities are fully aware of severe data deficiencies, and are seeking to ramp up technical assistance (Informational Annex). The World Bank recently identified a resident national accounts consultant who should begin work soon, and a grant request is being prepared to fund technical assistance to prepare and supervise the implementation of a household survey. Long-awaited improvements in population data should result from the census slated for 2011.

V. Staff Appraisal

27. Equatorial Guinea faces immense challenges. The outlook is clouded by declining oil production, but policies pose significant risks to macroeconomic and external stability. Policy adjustment is needed but must balance risks against development needs. A large fiscal adjustment is required but feasible, and should be frontloaded. Over the medium term, oil dependence will continue, with longer-term prospects dependant on the ability to develop alternative sources of value added through economic diversification.

28. Moving toward a sustainable fiscal position starting in 2010 would halt the projected near-depletion of the stock of government savings and strengthen external stability. The NOPD should be brought down to around 40 percent of non-oil GDP in 2010 and be placed on a downward path thereafter—a spending envelope which fully covers projects in train with space for additional priority projects aimed at improving living standards and productivity today and in the future. With few near-term prospects for a sizeable increase in non-oil revenue, adjustment would have to come through lower expenditure. Significant scope may also exist to rationalize and right-size productive investment in line with expected future economic needs. Non-priority projects should be scrapped and new sources of non-oil revenue should be sought.

29. Strengthening public financial management is critical. Improved budget planning and control, particularly over public investment, are urgently required to ensure the effective spending of oil wealth and improve macroeconomic management. Investment efficiency would also be strengthened by redoubled efforts at prioritization, increased use of project appraisals and better coordination across agencies.

30. EITI should be viewed as part of an on-going commitment to improved transparency and governance. With initial reconciliation complete, efforts should be broadened, including through publication of contract awards and audit reports. More generally, increased dissemination of information on government operations, including foreign asset holdings, would demonstrate commitment in this area.

31. The exchange rate regime has served the country well, however, unsustainable planned fiscal spending poses risks to external stability. The projected near-depletion of the stock of government savings has stark implications for the stability of the region, given the nation’s considerable weight in regional foreign asset holdings. More broadly, for the CEMAC region as a whole, external stability requires regionally higher public savings and productivity-enhancing structural reforms to bring the real effective exchange rate in line with medium-term fundamentals.

32. In this context, the authorities should comply with their obligations under CEMAC. The recent shift in reserve management not only implies a smaller contribution to the CEMAC common pool of reserves, it marks an increase in exposure to oil price volatility, rising future debt service, and lower holding of risk-free assets. Government savings should be strengthened and the decline in the share of foreign assets held in BEAC reversed. Overexposure to oil and risky assets should be avoided, as should contractual debt obligations which are not warranted on financial grounds.

33. The wide-ranging goals of the NDP necessitate a comprehensive approach to development and poverty alleviation. Notwithstanding capacity constraints, the time has come to move beyond infrastructure and focus increasing attention on actions to strengthen human capital and improve the business climate. Collaboration with the banking sector on facilitating lending to SMEs should continue, but it will be key to limit potential contingent liabilities. Support for regional initiatives aimed at financial market development should also continue, especially those aimed at lengthening loan maturity and reducing reliance on implicit government guarantees. The integrity of the system would be enhanced by operationalizing the national financial investigation agency (ANIF) charged with anti-money laundering and combating the financing of terrorism (AML-CFT). Outside of the financial sector, removal of barriers to private sector activity and reducing regulatory discretion are crucial, and will allow lagged growth effects from infrastructure investment to play out more fully. More competitive goods markets would also serve to bring down prices, increasing the purchasing power of Equatoguineans, while improvements in productivity will help raise competitiveness.

34. Data deficiencies are severe and hamper assessment of economic developments and policy formulation. The 2011 Census should resolve longstanding discrepancies on population figures and should be complemented by a household expenditure survey which could inform future social policies. Capacity building through technical assistance should continue, with the aim of participating in GDDS as improvements are made.

35. It is recommended that the next Article IV consultation with Equatorial Guinea take place on the standard 12-month cycle.

Table 1.Equatorial Guinea: Selected Economic and Financial Indicators, 2006-10
20062007200820092010
Prel.Proj.
(Annual percentage change, unless otherwise specified)
Production, prices, and money
Real GDP1.321.410.75.30.9
Oil and gas GDP (excluding hydrocarbons secondary production)-6.411.97.1-6.6-6.3
Non-oil GDP (including hydrocarbons secondary production)29.847.218.127.610.8
GDP deflator14.4-1.223.7-33.619.1
Oil and gas GDP (excluding hydrocarbons secondary production)18.00.429.0-40.925.3
Non-oil GDP (including hydrocarbons secondary production)8.80.912.8-11.312.1
Hydrocarbons production (thousands of boe per day)382.0459.8488.6461.9434.5
Oil and gas primary production 1344.8356.8358.3318.7292.1
Hydrocarbons secondary production 237.3103.0130.3143.2142.4
Oil price (U.S. dollars per barrel) 360.367.193.358.573.0
Consumer prices (annual average)4.52.84.37.17.1
Consumer prices (end of period)3.83.76.27.76.9
Broad money14.141.330.131.313.5
External sector
Exports, f.o.b.16.623.641.1-41.315.1
Hydrocarbons exports16.723.541.5-41.615.2
Oil primary exports14.714.338.5-44.614.0
Hydrocarbons secondary exports44.5126.458.7-27.219.6
Imports, f.o.b.-4.817.165.334.5-26.9
Non-oil sector imports57.915.683.847.1-29.4
Terms of trade16.22.621.3-25.113.3
Nominal effective exchange rate (depreciation -)0.45.04.8-2.6
Real effective exchange rate (depreciation -)7.85.83.54.2
Government finance
Revenue and grants36.112.832.2-22.4-14.6
Total expenditure and net lending42.342.244.658.5-30.5
(Percent of GDP, unless otherwise specified)
Investment and savings
Gross investment32.535.325.946.729.2
Public15.116.916.943.022.1
Private17.318.49.03.67.1
Gross national savings39.539.634.930.724.6
Government finance
Revenue and grants40.838.337.041.029.1
Hydrocarbons revenue37.533.934.637.226.3
Expenditure and net lending17.220.321.649.028.3
Overall balance after grants (cash basis)23.419.215.4-8.00.8
Non-oil primary balance (cash basis, percent of non-oil GDP) 4-54.6-49.7-67.2-102.0-53.7
Gross government savings (billions of CFAs)1,821.72,632.33,560.33,335.83,628.7
External sector
Current account balance (including official transfers; deficit -)7.14.39.1-16.0-4.6
Outstanding medium- and long-term public debt1.51.00.74.97.4
Debt service-to-exports ratio (percent)116.836.10.70.20.4
External debt service/government revenue (percent)4.71.60.30.81.7
(Millions of U.S. dollars, unless otherwise specified)
External Sector
Exports, f.o.b.8,29010,25114,4658,4959,781
Hydrocarbons exports8,21710,15014,3668,3869,661
Oil primary exports7,5398,61511,9296,6127,539
Hydrocarbons secondary exports6781,5352,4371,7742,122
Imports, f.o.b.-2,020-2,365-3,909-5,258-3,845
Current account balance (deficit -)6795411,673-1,950-714
Overall balance of payments686397834-1,467894
Outstanding medium- and long-term public debt1561361206201,153
Gross official foreign assets5,0787,5798,1188,4639,417
Reserve assets at the BEAC3,0673,8464,4313,1464,100
Government bank deposits abroad2,0113,7333,6865,3175,317
Gross official reserves of BEAC (millions of U.S. dollars)12,08715,688
Gross official reserves of BEAC (months of next year’s imports)5.08.0
Nominal GDP (billions of CFA francs)5,0216,0278,2505,7716,937
Non-oil GDP (including hydrocarbons secondary production)1,0621,5782,1022,3772,952
Exchange rate (average; CFA francs/U.S. dollar)523479448472
Sources: Data provided by the Equatoguinean authorities; and staff estimates and projections.

Including oil and natural gas.

Including LNG, LPG, butane, propane, and methanol.

The price of oil is the average of three spot prices: dated Brent, West Texas Intermediate, and Dubai Fateh; and includes a discount for quality.

Excluding oil revenues, oil-related expenditures, and interest earned and paid.

Sources: Data provided by the Equatoguinean authorities; and staff estimates and projections.

Including oil and natural gas.

Including LNG, LPG, butane, propane, and methanol.

The price of oil is the average of three spot prices: dated Brent, West Texas Intermediate, and Dubai Fateh; and includes a discount for quality.

Excluding oil revenues, oil-related expenditures, and interest earned and paid.

Table 2.Equatorial Guinea: Summary of Real Sector Developments, 2006-10
2006200720082009

Est.
2010

Proj.
GDP by sector of origin
(Billions of CFA francs at 2000 prices)
GDP3,018.33,665.24,056.94,273.04,313.3
Non-oil GDP814.41,198.71,415.71,805.82,001.3
Primary sector2,312.72,586.12,759.32,588.72,445.8
Non-oil108.8119.6118.1121.6133.8
Oil2,203.92,466.42,641.22,467.12,312.0
Secondary sector584.1945.31,150.31,511.01,571.9
Oil derivatives254.1516.9615.1669.3660.6
Non-derivatives330.0428.5535.2841.8911.4
Tertiary sector101.4112.9124.0148.7270.6
Import duties and subsidies20.020.923.324.525.0
(Annual percentage change in constant prices)
GDP1.321.410.75.30.9
Non-oil GDP29.847.218.127.610.8
Primary sector-5.911.86.7-6.2-5.5
Non-oil3.710.0-1.33.010.0
Oil-6.411.97.1-6.6-6.3
Secondary sector42.161.821.731.44.0
Oil derivatives14.9103.419.08.8-1.3
Non-derivatives73.829.824.957.38.3
Tertiary sector8.111.39.919.882.0
Import duties and subsidies14.04.211.45.52.0
(Percent of GDP)
GDP100.0100.0100.0100.0100.0
Non-oil GDP27.032.734.942.346.4
Primary sector76.670.668.060.656.7
Non-oil3.63.32.92.83.1
Oil73.067.365.157.753.6
Secondary sector19.425.828.435.436.4
Oil derivatives8.414.115.215.715.3
Non-derivatives10.911.713.219.721.1
Tertiary sector3.43.13.13.56.3
Import duties and subsidies0.70.60.60.60.6
GDP by use of resources
(Billions of CFA francs at current prices)
GDP5,021.46,026.88,250.25,771.26,937.1
Net factor income from abroad-2,321.6-2,828.7-3,113.4-1,573.0-2,193.4
Gross national product2,699.83,198.15,136.84,198.14,743.6
Unrequited transfers-17.6-21.9-36.1-49.9-56.4
Gross disposable income2,682.23,176.25,100.74,148.34,687.2
Consumption696.3790.72,218.12,376.92,978.8
National savings1,986.02,385.52,882.61,771.31,708.4
Gross capital formation1,630.72,126.02,133.52,692.32,026.3
External current account355.2259.5749.1-920.9-317.9
(Percent of GDP)
GDP at market prices100.0100.0100.0100.0100.0
Net factor income from abroad-46.2-46.9-37.7-27.3-31.6
Gross national product53.853.162.372.768.4
Unrequited transfers-0.4-0.4-0.4-0.9-0.8
Gross disposable income53.452.761.871.967.6
Consumption13.913.126.941.242.9
National savings39.539.634.930.724.6
Gross capital formation32.535.325.946.729.2
External current account7.14.39.1-16.0-4.6
Trade balance53.751.647.312.227.8
Sources: Equatoguinean authorities; and staff estimates and projections.
Sources: Equatoguinean authorities; and staff estimates and projections.
Table 3.Equatorial Guinea: Balance of Payments, 2006-10 1(Millions of U.S. dollars, unless otherw ise specified)
2006200720082009

Est.
2010

Proj.
Current account6795411,673-1,950-714
Trade balance6,2707,88610,5553,2375,936
Exports of goods, f.o.b.8,29010,25114,4658,4959,781
Hydrocarbons exports8,21710,15014,3668,3869,661
Imports of goods, f.o.b.-2,020-2,365-3,909-5,258-3,845
Petroleum sector-525-636-733-587-548
Petroleum products-114-149-253-177-212
Public sector equipment-1,189-1,319-2,486-3,943-2,408
Other 2-192-260-437-551-677
Services (net)-1,117-1,397-1,849-1,750-1,598
Income (net) 3-4,440-5,902-6,953-3,331-4,925
Current transfers-34-46-81-106-127
Capital and financial account109-101-1,2634541,608
Capital account00000
Financial account109-101-1,2634541,608
Direct investment1,7391,716-5701,3041,369
Portfolio investment (net)00000
Other investment (net)-1,630-1,817-693-850239
Medium- and long-term transactions-84-22-10502532
General government-95-36-9503533
Of which: Amortization-95-36-9-5-6
Banks00000
Other sectors1113-1-2-2
Short-term transactions-1,546-1,794-682-1,351-293
General government 4,5-1,203-1,831812-1,4370
Banks49-84-14492-221
Other sectors-392120-1,351-6-71
Errors and omissions-103-44424290
Overall balance686397834-1,467894
Financing-686-397-8341,467-894
Change in net international reserves 6 (increase -)-686-397-8341,467-894
Memorandum items:
Gross official foreign assets4,2476,6518,0128,4639,417
Reserve assets at the BEAC3,0673,8464,4313,1464,100
Of which: Government deposits at BEAC2,4783,1033,9732,1342,832
Government bank deposits outside of BEAC1,1802,8053,5815,1925,294
Gross government savings3,6585,9077,5547,3268,126
Gross official reserves of BEAC (millions of U.S. dollars)9,03212,08715,688
Gross official reserves of BEAC (months of next year’s imports)4.75.08.0
Current account balance (percent of GDP; deficit -)7.14.39.1-16.0-4.6
Overall balance (percent of GDP; deficit -)7.13.24.5-12.05.7
Growth of oil exports, including petroleum dervatives (percent)16.723.541.5-41.615.2
Growth of non-oil exports, excluding petroleum dervatives (percent)0.137.1-1.69.410.7
Growth of other imports2(percent)23.735.368.326.022.7
Sources: Equatoguinean authorities; and staff estimates and projections.

The BOP data in this table are not compiled in accordance with the IMF’s Balance of Payments Manual, fifth edition. The historic data have not been derived from customs’ and bank records’ data, but from estimates of BEAC. Fund staff have made ad hoc adjustments to the data.

Including private sector consumption and investment imports.

Including investment income of oil companies, which includes reinvested earnings (with an offsetting entry in foreign direct investment).

Includes purchase of Devon’s share of oil fields in 2008 by Equatorial Guinea.

Since 2000, entries represent changes in government deposits in commercial banks abroad.

Consists only of items on the balance sheet of the BEAC (i.e., excluding government bank deposits abroad).

Sources: Equatoguinean authorities; and staff estimates and projections.

The BOP data in this table are not compiled in accordance with the IMF’s Balance of Payments Manual, fifth edition. The historic data have not been derived from customs’ and bank records’ data, but from estimates of BEAC. Fund staff have made ad hoc adjustments to the data.

Including private sector consumption and investment imports.

Including investment income of oil companies, which includes reinvested earnings (with an offsetting entry in foreign direct investment).

Includes purchase of Devon’s share of oil fields in 2008 by Equatorial Guinea.

Since 2000, entries represent changes in government deposits in commercial banks abroad.

Consists only of items on the balance sheet of the BEAC (i.e., excluding government bank deposits abroad).

Table 4a.Equatorial Guinea: Summary of Central Government Financial Operations, 2006-10(Billions of CFA francs, unless otherwise specified)
20062007200820092010

Budget
2010

Proj.
Total revenue and grants2,047.12,308.53,051.82,368.11,763.22,021.6
Revenue2,047.12,308.53,051.82,368.11,763.22,021.6
Tax revenue510.0472.8688.6905.7555.1523.6
Taxes on income, profits, and capital gains466.9424.6647.2847.4494.2456.2
Personal income tax34.462.338.859.053.650.2
Corporate income tax432.3361.8607.8787.2440.2406.0
Other income taxes0.20.50.51.20.40.0
Domestic taxes on goods and services128.830.330.344.049.843.8
Taxes on international trade and transactions10.212.87.310.17.719.4
Other taxes4.05.23.94.23.44.3
Nontax revenue1,537.11,835.72,363.21,462.41,208.11,498.0
Hydrocarbons sector1,476.01,702.02,267.71,392.01,159.61,441.3
Royalties969.91,130.61,618.11,095.2370.2402.0
Profit sharing500.3469.5648.6296.4785.41,029.7
Bonuses and rents5.8101.91.00.44.09.5
Non hydrocarbons sector61.1133.795.570.548.556.7
Nontax revenue excluding interest on saving funds43.994.463.054.142.542.5
Interest on saving funds17.239.432.516.36.014.3
Grants0.00.00.00.00.00.0
Total expenditure and net lending869.71,152.21,783.52,827.51,875.11,966.2
Current expenditure199.4214.5392.0345.3343.2434.3
Wages and salaries40.652.580.570.771.7124.9
Goods and services87.585.4139.2154.2116.6142.7
Interest payments1.20.82.53.41.513.4
Transfers and subsidies70.275.9169.7117.0153.3153.3
Other current expenditure0.00.00.00.00.00.0
Capital expenditure667.6928.51,391.52,482.31,531.91,531.9
Net lending0.00.00.00.00.00.0
Domestic arrears payments 22.69.10.00.00.00.0
Overall balance1,177.41,156.41,268.3-459.4-111.955.4
Total financing-1,177.4-1,156.4-1,268.3459.4111.9-55.4
Foreign financing-49.8-18.70.0237.5237.6237.5
Budget support loans0.00.00.00.00.00.0
Loans0.00.00.0240.0240.0240.0
Amortization (-)-49.8-9.60.0-2.5-2.4-2.5
Exceptional financing0.0-9.10.00.00.00.0
Domestic financing-953.0-929.5-183.5167.2-125.7-292.9
Change in government deposits abroad (- =increase)-626.4-759.5363.8-733.30.00.0
Government deposits outside BEAC (- =increase)-533.6-659.9363.8-733.30.00.0
Gepetrol/Sonagas deposits abroad (- =increase)-92.8-99.60.00.00.00.0
Other Domestic Financing-326.6-170.0-547.3900.5-125.7-292.9
Monetary sector-326.6-170.0-547.3900.5-125.7-292.9
Deposits at BEAC-326.6-170.0-547.3900.5-125.7-292.9
Deposits at domestic banks0.00.00.00.00.00.0
Net acquisition of non-financial assets3-127.7-90.3-1,084.80.00.00.0
Errors and omissions/financing gap4-46.9-117.80.054.70.00.0
Memorandum items:
Overall balance1,177.41,156.41,268.3-459.4-111.955.4
percent of GDP23.419.215.4-8.0-1.60.8
Non oil primary balance5-580.1-784.9-1,412.2-2,425.1-1,494.6-1,586.5
percent of non-oil GDP-54.6-49.7-67.2-102.0-50.6-53.7
Total Government Savings1,821.72,632.33,560.33,335.83,461.53,628.7
Of which: Government treasury accounts abroad587.61,249.91,687.92,363.92,363.92,363.9
Nominal GDP5,021.46,026.88,250.25,771.26,937.16,937.1
Nominal non-oil GDP1,062.31,577.92,102.12,377.32,952.52,952.5
Sources: Data provided by the Equatoguinean authorities; and staff estimates and projections.

The VAT was legislated in early 2005; previously this was a sales tax.

Related to the crash of the banking system during the early 1980s.

Includes all equity purchases of the government.

Errors and omissions financing gap for 2007 is partly influenced by lack of data on deposits abroad for that year.

Equal to the overall balance excluding grants minus hydrocarbons sector corporate income tax and non tax revenue plus hydrocarbons revenue generated in projects, minus interest on saving funds plus interest expenditure.the secondary LNG, LPG and methanol production and purchase of share in hydrocarbons.

Sources: Data provided by the Equatoguinean authorities; and staff estimates and projections.

The VAT was legislated in early 2005; previously this was a sales tax.

Related to the crash of the banking system during the early 1980s.

Includes all equity purchases of the government.

Errors and omissions financing gap for 2007 is partly influenced by lack of data on deposits abroad for that year.

Equal to the overall balance excluding grants minus hydrocarbons sector corporate income tax and non tax revenue plus hydrocarbons revenue generated in projects, minus interest on saving funds plus interest expenditure.the secondary LNG, LPG and methanol production and purchase of share in hydrocarbons.

Table 4b.Equatorial Guinea: Summary of Central Government Financial Operations, 2006-10(percent of GDP, unless otherwise specified)
200620072008200920102010
Est.BudgetProj.
Total revenue and grants40.838.337.041.025.429.1
Revenue40.838.337.041.025.429.1
Tax revenue10.27.88.315.78.07.5
Taxes on income, profits, and capital gains9.37.07.814.77.16.6
Personal income tax0.71.00.51.00.80.7
Corporate income tax8.66.07.413.66.35.9
Other income taxes0.00.00.00.00.00.0
Domestic taxes on goods and services10.60.50.40.80.70.6
Taxes on international trade and transactions0.20.20.10.20.10.3
Other taxes0.10.10.00.10.00.1
Nontax revenue30.630.528.625.317.421.6
Hydrocarbons sector29.428.227.524.116.720.8
Royalties19.318.819.619.05.35.8
Profit sharing10.07.87.95.111.314.8
Primary oil and gas production7.25.45.41.88.512.2
Secondary LNG, LPG, methanol production2.82.32.53.32.92.6
Bonuses and rents0.11.70.00.00.10.1
Non hydrocarbons sector1.22.21.21.20.70.8
Nontax revenue excluding interest on saving funds0.91.60.80.90.60.6
Interest on saving funds0.30.70.40.30.10.2
Grants0.00.00.00.00.00.0
Total expenditure and net lending17.319.121.649.027.028.3
Current expenditure4.03.64.86.04.96.3
Wages and salaries0.80.91.01.21.01.8
Goods and services1.71.41.72.71.72.1
Interest payments0.00.00.00.10.00.2
Transfers and subsidies1.41.32.12.02.22.2
Other current expenditure0.00.00.00.00.00.0
Capital expenditure13.315.416.943.022.122.1
Net lending0.00.00.00.00.00.0
Domestic arrears payments 20.10.20.00.00.00.0
Overall balance23.419.215.4-8.0-1.60.8
Total financing-23.4-19.2-15.48.01.6-0.8
Foreign financing (net)-1.0-0.30.04.13.43.4
Loans0.00.00.04.23.53.5
Amortization (-)-1.0-0.20.00.00.00.0
Exceptional financing0.0-0.20.00.00.00.0
Domestic Financing-19.0-15.4-2.22.9-1.8-4.2
Change in government deposits abroad-12.5-12.64.4-12.70.00.0
Government deposits outside BEAC (_=increase)-10.6-10.94.4-12.70.00.0
Other domestic financing-6.5-2.8-6.615.6-1.8-4.2
Monetary sector-6.5-2.8-6.615.6-1.8-4.2
Deposits at BEAC-6.5-2.8-6.615.6-1.8-4.2
Deposit money banks0.00.00.00.00.00.0
Net acquisition of non-financial assets3-2.5-1.5-13.10.00.00.0
Errors and omissions/financing gap-0.9-2.00.00.90.00.0
Memorandum items:
Overall balance1,177.41,156.41,268.3-459.4-111.955.4
as percent of GDP23.419.215.4-8.0-1.60.8
Non oil primary balance4-580.1-784.9-1,412.2-2,425.1-1,494.6-1,586.5
percent of non-oil GDP-54.6-49.7-67.2-102.0-50.6-53.7
Total Government Savings36.343.743.257.849.952.3
Of which: Government treasury accounts abroad11.720.720.541.034.134.1
Nominal GDP5,021.46,026.88,250.25,771.26,937.16,937.1
Nominal non-oil GDP1,062.31,577.92,102.12,377.32,952.52,952.5
Sources: Data provided by the Equatoguinean authorities; and staff estimates and projections.

The VAT was legislated in early 2005; previously this was a sales tax.

Related to the crash of the banking system during the early 1980s.

Includes all equity purchases of the government; in 2008 this is mainly related to the $2.2 billion purchase of Devon Energy’s assets in Equatorial Guinea.

Equal to the overall balance excluding grants minus hydrocarbons sector corporate income tax and non tax revenue plus hydrocarbons revenue generated in the secondary LNG, LPG and methanol production and purchase of share in hydrocarbon projects, minus interest on saving funds plus interest expenditure.

Sources: Data provided by the Equatoguinean authorities; and staff estimates and projections.

The VAT was legislated in early 2005; previously this was a sales tax.

Related to the crash of the banking system during the early 1980s.

Includes all equity purchases of the government; in 2008 this is mainly related to the $2.2 billion purchase of Devon Energy’s assets in Equatorial Guinea.

Equal to the overall balance excluding grants minus hydrocarbons sector corporate income tax and non tax revenue plus hydrocarbons revenue generated in the secondary LNG, LPG and methanol production and purchase of share in hydrocarbon projects, minus interest on saving funds plus interest expenditure.

Table 5a.Equatorial Guinea: Monetary Survey, 2006-10(Billions of CFA francs, unless otherwise specified; end of period)
20062007200820092010
Dec.Dec.Dec.Sep.Dec.Dec.
Est.Proj.
Net foreign assets1,573.91,804.32,241.81,713.01,505.72,002.5
(millions of U.S. dollars)3,160.14,049.24,756.33,823.93,306.84,484.3
Net domestic assets-1,255.4-1,322.4-1,655.7-1,022.6-717.0-898.0
Domestic credit-1,224.6-1,340.4-1,687.0-778.4-752.1-942.8
Claims on government (net)-1,354.0-1,524.0-2,071.3-1,096.9-1,170.8-1,463.7
Claims on non-government129.5183.7384.3318.5418.7520.9
Other items (net)-30.818.031.3-244.235.144.8
Broad money (M2)318.5449.9585.4689.6768.8872.4
Currency68.280.990.1106.098.1110.7
Deposits250.3369.0495.3583.6670.7761.6
Memorandum items:
CPI inflation (average annual)4.52.84.37.17.1
Broad money (M2)14.141.330.1-12.531.313.5
Reserve money (RM)5.428.15.1-6.164.219.8
Credit to the private sector34.840.515.00.30.111.6
Credit to the private sector (percent of non-oil GDP, excluding oil derivatives)17.619.833.622.519.4
Broad money (percent of overall GDP)6.37.57.113.312.6
Velocity (overall GDP/end-of-period M2)15.813.414.17.58.0
Velocity (non-oil GDP excluding oil derivatives/end-of-period M2)2.22.01.82.12.4
Reserve money multiplier (M2/RM)1.11.21.80.91.41.4
Currency/M2 ratio0.20.20.20.20.10.1
Lending rate115.015.015.0n.a.
Deposit rate4.34.33.3n.a.
Sources: BEAC and staff estimates and projections.

Lending rates are not regulated by BEAC, beginning July 2008.

Sources: BEAC and staff estimates and projections.

Lending rates are not regulated by BEAC, beginning July 2008.

Table 5b.Equatorial Guinea: Central Bank and Commercial Banks, 2006-10(Billions of CFA francs, unless otherwise specified; end of period)
20062007200820092010
Dec.Dec.Dec.Sep.Dec.Dec.
Prel.Est.Proj.
Central Bank
Net foreign assets1,523.01,713.22,086.41,684.71,393.61,791.9
(millions of U.S. dollars)3,057.93,844.74,426.63,760.73,060.74,012.6
Net domestic assets-1,240.8-1,351.6-1,762.8-936.7-862.3-1,155.2
Claims on government (net)-1,243.0-1,401.6-1,807.6-923.8-907.1-1,200.0
Claims on commercial banks (net)0.00.00.00.00.00.0
Claims on rest of the economy0.00.00.00.00.00.0
Other items (net)2.349.944.8-12.944.844.8
Reserve money282.3361.5323.6748.0531.4636.7
Currency outside banks68.280.990.1106.098.1110.7
Bank reserves213.4279.8232.8641.3432.5525.3
Cash11.013.114.613.614.214.6
Deposits202.3266.8218.2627.7418.3510.7
Nonbank deposits0.70.80.70.70.70.7
Deposit money banks
Net foreign assets50.991.1155.428.3112.1210.6
(millions of U.S. dollars)102.2204.5329.763.1246.2471.7
Net domestic assets198.7277.9339.9555.3647.8832.4
Reserves213.4248.6232.8641.3432.5525.3
Cash11.013.114.613.614.214.6
Deposits with central bank202.3235.6218.2627.7418.3510.7
Required reserves37.064.486.699.1105.9119.4
Excess reserves165.3171.1131.6528.6312.5391.2
Domestic credit18.461.2120.6145.4224.9307.1
Claims on central bank (net)0.00.00.00.00.00.0
Claims on government (net)-111.0-122.5-263.7-173.1-193.7-213.7
Claims3.71.72.51.82.73.0
Deposits-114.8-124.2-266.2-174.8-196.5-216.7
Claims on non-government129.5183.7384.3318.5418.7520.9
Public enterprises4.98.722.218.256.1116.4
Private sector124.5174.9362.2300.3362.5404.5
Other items (net)-33.1-31.9-13.5-231.4-9.70.0
Deposit liabilities to nonbank residents250.3369.0495.3583.6670.7761.6
Sources: Data provided by Equatoguinean authorities; and staff estimates and projections.
Sources: Data provided by Equatoguinean authorities; and staff estimates and projections.
Table 6.Equatorial Guinea: Financial Soundness Indicators for the Banking Sector, 2002-09(Percent)
2002200320042005200620072008 Oct. 2009
Capital
Regulatory capital to risk-weighted assets 1,27.211.012.49.213.08.65.311.5
Tier 1 capital to risk-weighted assets 26.09.811.18.011.87.44.010.3
Capital to total assets 37.87.98.95.67.05.86.28.7
Asset quality
Nonperforming loans (gross) to total loans (gross)8.713.517.214.411.39.97.4
Nonperforming loans (net of provisions) to regulatory capital 123.938.315.95.227.0-18.7
Loan loss provisions to nonperforming loans71.467.079.894.077.3131.8
Earnings and Profitability
Return on assets 42.42.21.91.91.73.32.62.0
Return on equity 529.427.622.127.526.552.843.626.6
Liquidity
Ratio of net loans to total deposits 648.335.343.629.137.337.450.947.6
Source: Staff estimates based on COBAC data and FSI definitions from IMF’s “Compilation Guide on Financial Soundness Indicators”.

Current year profits are excluded from the definition of regulatory capital, following the Basel I capital accord guidelines. General provisions are included in Tier 2 capital up to an amount equal to 1.25% of risk-weighted assets. Regulatory capital is the sum of Tier 1 capital, and the minimum of Tier 1 and Tier 2 capital.

The risk-weighted assets are estimated using the following risk weights: 0% - cash reserves in domestic and foreign currency and claims on the central bank; 100% -all other assets.

Current year profits are excluded from the definition of capital (i.e., shareholders’ funds).

The ratio of after-tax profits to the average of beginning and end-period total assets. The numbers for 2007 are preliminary and to be confirmed by the authorities.

The ratio of after-tax profits to the average of beginning and end-period shareholders’ funds (excluding current-year profits). The numbers for 2008 are preliminary and to be confirmed by the authorities.

Including government deposits.

Source: Staff estimates based on COBAC data and FSI definitions from IMF’s “Compilation Guide on Financial Soundness Indicators”.

Current year profits are excluded from the definition of regulatory capital, following the Basel I capital accord guidelines. General provisions are included in Tier 2 capital up to an amount equal to 1.25% of risk-weighted assets. Regulatory capital is the sum of Tier 1 capital, and the minimum of Tier 1 and Tier 2 capital.

The risk-weighted assets are estimated using the following risk weights: 0% - cash reserves in domestic and foreign currency and claims on the central bank; 100% -all other assets.

Current year profits are excluded from the definition of capital (i.e., shareholders’ funds).

The ratio of after-tax profits to the average of beginning and end-period total assets. The numbers for 2007 are preliminary and to be confirmed by the authorities.

The ratio of after-tax profits to the average of beginning and end-period shareholders’ funds (excluding current-year profits). The numbers for 2008 are preliminary and to be confirmed by the authorities.

Including government deposits.

Table 7.Equatorial Guinea: Selected Medium-Term Economic and Fnancial Indicators, 2009-15
2009201020112012201320142015
Est.Proj.Proj.Proj.Proj.Proj.Proj.
(Annual percentage change, unless otherwise specified)
Production, prices, and money
Real GDP5.30.92.11.52.70.80.7
Oil and gas GDP (excluding hydrocarbons secondary production)-6.6-6.3-1.8-3.5-12.0-9.7-4.3
Non-oil GDP(including hydrocarbons secondary production)27.610.86.76.916.98.53.8
GDP deflator-33.619.19.34.61.81.73.2
Oil and gas GDP (excluding hydrocarbons secondary production)-40.925.311.84.43.90.90.9
Non-oil GDP(including hydrocarbons secondary production)-11.312.16.95.92.53.95.2
Hydrocarbons production (thousands of boe per day)461.9434.5430.3419.6447.4447.3434.6
Oil and gas primary production 1318.7292.1285.2271.9228.2197.1184.6
Hydrocarbons secondary production 2143.2142.4145.1147.7219.1250.2250.0
Oil price (U.S. dollars per barrel) 358.573.079.081.883.584.585.5
Consumer prices (annual average)7.17.16.66.46.16.16.1
Consumer prices (end of period)7.76.96.46.36.05.65.5
Broad money31.313.526.716.514.413.612.8
External sector
Exports, f.o.b.-41.315.15.9-0.1-2.6-4.9-3.2
Hydrocarbons exports-41.615.25.9-0.3-2.7-5.1-3.3
Oil primary exports-44.614.05.6-1.5-14.8-13.2-5.6
Hydrocarbons secondary exports-27.219.66.94.137.611.60.2
Imports, f.o.b.34.5-26.927.4-1.8-8.5-18.7-0.6
Non-oil sector imports47.1-29.431.13.2-9.2-19.50.3
Terms of trade-25.113.35.21.9-0.1-1.6-1.2
Government finance
Revenue and grants-22.4-14.66.0-4.2-10.8-0.3-2.3
Total expenditure and net lending58.5-30.534.25.6-8.3-1.9-1.1
(Percent of GDP, unless otherwise specified)
Investment and savings
Gross investment46.729.234.926.824.320.918.9
Public43.022.127.025.520.518.516.5
Private3.67.17.91.33.82.52.4
Gross national savings30.724.622.516.715.412.911.2
Government finance
Revenue and grants41.029.127.725.021.320.719.5
Hydrocarbons revenue37.226.324.922.118.416.615.4
Expenditure and net lending49.028.334.133.929.728.427.0
Overall balance after grants (cash basis)-8.00.8-6.4-8.9-8.4-7.7-7.5
Non-oil primary balance (cash basis, percent of non-oil GDP) 4-102.0-53.7-65.9-61.0-41.7-35.2-31.5
Gross government savings (billions of CFAs)3,3363,6293,3862,7971,91498540
External sector
Current account balance (including official transfers; deficit -)-16.0-4.6-12.4-10.1-8.9-8.1-7.6
Outstanding medium- and long-term public debt4.97.49.912.110.78.65.5
Debt service-to-exports ratio (percent)0.20.40.72.74.86.96.9
External debt service/government revenue (percent)0.81.73.113.426.536.035.8
(Millions of U.S. dollars, unless otherwise specified)
External Sector
Exports, f.o.b.8,4959,78110,36210,34710,0829,5909,285
Hydrocarbons exports8,3869,66110,23010,2019,9269,4229,107
Oil primary exports6,6127,5397,9627,8406,6775,7975,475
Hydrocarbons secondary exports1,7742,1222,2692,3613,2493,6253,631
Imports, f.o.b.-5,258-3,845-4,899-4,808-4,401-3,576-3,555
Current account balance (deficit -)-1,950-714-2,141-1,837-1,694-1,569-1,540
Overall balance of payments-1,467894-83-143-332-312-433
Outstanding medium- and long-term public debt6201,1531,7152,2002,0251,6661,108
Gross official foreign assets8,4639,4178,9067,8016,0574,2662,444
Reserve assets at the BEAC3,1464,1003,9543,7873,4273,1292,697
Government bank deposits abroad5,3175,3174,9514,0142,6291,136-252
Gross official reserves of BEAC (millions of U.S. dollars)
Gross official reserves of BEAC (months of next year’s imports)
Nominal GDP (billions of CFA francs)5,7716,9377,7458,2228,5978,8179,163
Non-oil GDP (including hydrocarbons secondary production)2,3772,9523,3673,8144,5695,1495,624
Sources: Data provided by the Equatoguinean authorities; and staff estimates and projections.

Including oil equivalent of gas.

Including oil equivalent of LNG, LPG, butane, propane, and methanol.

The price of oil is the average of three spot prices: dated Brent, West Texas Intermediate, and Dubai Fateh; and includes a discount for quality.

Excluding oil revenues, oil-related expenditures, and interest earned and paid.

Sources: Data provided by the Equatoguinean authorities; and staff estimates and projections.

Including oil equivalent of gas.

Including oil equivalent of LNG, LPG, butane, propane, and methanol.

The price of oil is the average of three spot prices: dated Brent, West Texas Intermediate, and Dubai Fateh; and includes a discount for quality.

Excluding oil revenues, oil-related expenditures, and interest earned and paid.

Table 8.Equatorial Guinea: Balance of Payments, 2010-15 1(Millions of U.S. dollars, unless otherwise specified)
201020112012201320142015
Proj.Proj.Proj.Proj.Proj.Proj.
Current account-714-2,141-1,837-1,694-1,569-1,540
Trade balance5,9365,4635,5385,6816,0155,730
Exports of goods, f.o.b.9,78110,36210,34710,0829,5909,285
Hydrocarbons exports9,66110,23010,2019,9269,4229,107
Imports of goods, f.o.b.-3,845-4,899-4,808-4,401-3,576-3,555
Petroleum sector-548-575-345-349-314-283
Petroleum products-212-223-245-257-270-284
Public sector equipment-2,408-3,272-3,256-2,718-1,797-1,665
Other 2-677-828-962-1,076-1,194-1,323
Services (net)-1,598-1,874-1,878-1,856-2,163-2,038
Income (net) 3-4,925-5,579-5,320-5,324-5,206-4,997
Current transfers-127-152-178-196-215-236
Capital and financial account1,6082,0581,6951,3621,2571,108
Capital account000000
Financial account1,6082,0581,6951,3621,2571,108
Direct investment1,3691,438863776699629
Portfolio investment (net)000000
Other investment (net)239621832586558479
Medium- and long-term transactions532560317-355-549-549
General government533562316-359-558-563
Of which: Amortzation-6-5-174-359-558-563
Banks000000
Other sectors-2-215914
Short-term transactions-293615169401,1071,028
General government 4,503669371,3851,4931,389
Banks-221-129-103-104-111-118
Other sectors-71-177-319-341-275-242
Errors and omissions000000
Overall balance894-83-143-332-312-433
Financing-89483143332312433
Change in net international reserves 6 (increase -)-89483143332312433
Memorandum items:
Gross official foreign assets9,4178,9067,8016,0574,2662,444
Reserve assets at BEAC4,1003,9543,7873,4273,1292,697
Of which: Government reserve assets at BEAC2,8322,6412,2551,6781,128433
Government bank deposits outside BEAC5,2944,9013,9352,5261,043-345
Gross government savings8,1267,5416,1904,2042,17188
Current account balance (percent of GDP; deficit -)-4.6-12.4-10.1-8.9-8.1-7.6
Overall balance (percent of GDP; deficit -)5.7-0.5-0.8-1.8-1.6-2.1
Growth of oil exports, including petroleum derivatives (percent)15.25.9-0.3-2.7-5.1-3.3
Growth of non-oil exports, excluding petroleum derivatives (percent)10.79.710.57.67.66.1
Growth of other imports 2 (percent)22.722.416.211.911.010.8
Sources: Equatoguinean authorities; and staff estimates and projections.

The BOP data in this table are not compiled in accordance with the IMF’s Balance of Payments Manual, fifth edition. The historic data have not been derived from customs’ and bank records’ data, but from estimates of BEAC. Fund staff have made ad hoc adjustments to the data.

Including private sector consumption and investment imports.

Including investment income of oil companies, which includes reinvested earnings (with an offsetting entry in foreign direct investment).

Includes purchase of Devon’s share of oil fields in 2008 by Equatorial Guinea.

Since 2000, entries represent changes in government deposits in commercial banks abroad.

Consists only of items on the balance sheet of the BEAC (i.e., excluding government bank deposits abroad).

Sources: Equatoguinean authorities; and staff estimates and projections.

The BOP data in this table are not compiled in accordance with the IMF’s Balance of Payments Manual, fifth edition. The historic data have not been derived from customs’ and bank records’ data, but from estimates of BEAC. Fund staff have made ad hoc adjustments to the data.

Including private sector consumption and investment imports.

Including investment income of oil companies, which includes reinvested earnings (with an offsetting entry in foreign direct investment).

Includes purchase of Devon’s share of oil fields in 2008 by Equatorial Guinea.

Since 2000, entries represent changes in government deposits in commercial banks abroad.

Consists only of items on the balance sheet of the BEAC (i.e., excluding government bank deposits abroad).

Table 9a.Equatorial Guinea: Summary of Central Government Financial Operations, 2010-15(Billions of CFA francs, unless otherwise specified)
201020112012201320142015
Proj.Proj.Proj.Proj.Proj.Proj.
Total revenue and grants2,021.62,143.32,053.51,832.51,827.31,785.9
Revenue2,021.62,143.32,053.51,832.51,827.31,785.9
Tax revenue523.6532.2541.6395.3375.5377.8
Taxes on income, profits, and capital gains456.2455.6455.7300.5271.3263.6
Personal income tax50.250.851.637.735.835.9
Corporate income tax406.0404.8404.1262.8235.5227.6
Other income taxes0.00.00.00.00.00.0
Domestic taxes on goods and services143.848.253.258.363.869.6
Taxes on international trade and transactions19.423.727.630.834.237.9
Other taxes4.34.75.25.76.26.8
Nontax revenue1,498.01,611.11,511.81,437.21,451.81,408.1
Hydrocarbons sector1,441.31,550.81,442.71,352.41,268.31,221.6
Royalties402.0428.9392.1423.9368.0347.6
Profit sharing1,029.71,112.41,041.1919.0889.7864.1
Bonuses and rents9.59.59.59.510.59.9
Non hydrocarbons sector56.760.369.284.8183.5186.5
Nontax revenue excluding interest on saving funds42.542.546.951.456.261.3
Interest on saving funds14.317.822.333.4127.3125.1
Grants0.00.00.00.00.00.0
Total expenditure and net lending1,966.22,638.02,784.52,552.22,503.82,475.1
Current expenditure434.3545.0689.5791.5874.4965.0
Wages and salaries124.9170.4240.8275.5312.9353.0
Goods and services142.7168.1196.6224.2253.0283.2
Interest payments13.428.646.157.845.435.2
Transfers and subsidies153.3177.9206.0234.0263.1293.6
Capital expenditure1,531.92,093.02,095.01,760.71,629.41,510.0
Net lending0.00.00.00.00.00.0
Domestic arrears payments0.00.00.00.00.00.0
Overall balance55.4-494.7-731.0-719.7-676.6-689.1
Total financing-55.4494.7731.0719.7676.6689.1
Foreign financing (net)237.5251.6142.1-162.9-253.1-255.3
Loans240.0253.9220.70.00.00.0
Amortization (-)-2.5-2.2-78.6-162.9-253.1-255.3
Domestic Financing-292.9243.1588.9882.6929.7944.5
Change in government deposits abroad0.0163.8422.1627.9676.9629.6
Treasury deposits abroad (-=increase)0.0163.8422.1627.9676.9629.6
Gepetrol/Sonagas deposits abroad (-=increase)0.00.00.00.00.00.0
Other domestic financing-292.979.2166.7254.7252.8314.8
Monetary sector-292.979.2166.7254.7252.8314.8
Deposits at BEAC-292.979.2166.7254.7252.8314.8
Net acquisitions of non-financial assets20.00.00.00.00.00.0
Errors and omissions/financing gap0.00.00.00.00.00.0
Memorandum items:
Overall balance55.4-494.7-731.0-719.7-676.6-689.1
percent of GDP0.8-6.4-8.9-8.4-7.7-7.5
Non oil primary balance3-1,586.5-2,220.1-2,325.8-1,903.9-1,810.1-1,772.2
percent of non-oil GDP-53.7-65.9-61.0-41.7-35.2-31.5
Total Government Savings3,628.73,385.72,796.81,914.2984.540.0
Of which: Government treasury accounts abroad2,363.92,200.11,778.01,150.1473.1-156.5
Nominal GDP6,937.17,744.68,222.18,597.18,817.39,162.7
Nominal non-oil GDP2,952.53,367.53,813.64,568.65,149.25,623.9
Sources: Data provided by the Equatoguinean authorities; and staff estimates and projections.

The VAT was legislated in early 2005; previously this was a sales tax.

Includes equity purchases of the government.

Equal to the overall balance excluding grants minus hydrocarbons sector corporate income tax and non tax revenue plus hydrocarbons revenue generated in the secondary LNG, LPG and methanol production and purchase of share in hydrocarbons projects, minus interest on saving funds plus interest expenditure.

Sources: Data provided by the Equatoguinean authorities; and staff estimates and projections.

The VAT was legislated in early 2005; previously this was a sales tax.

Includes equity purchases of the government.

Equal to the overall balance excluding grants minus hydrocarbons sector corporate income tax and non tax revenue plus hydrocarbons revenue generated in the secondary LNG, LPG and methanol production and purchase of share in hydrocarbons projects, minus interest on saving funds plus interest expenditure.

Table 9b.Equatorial Guinea: Summary of Central Government Financial Operations, 2010-15(percent of GDP, unless otherw ise specified)
201020112012201320142015
Proj.Proj.Proj.Proj.Proj.Proj.
Total revenue and grants29.127.725.021.320.719.5
Revenue29.127.725.021.320.719.5
Tax revenue7.56.96.64.64.34.1
Taxes on income, profits, and capital gains6.65.95.53.53.12.9
Personal income tax0.70.70.60.40.40.4
Corporate income tax5.95.24.93.12.72.5
Other income taxes0.00.00.00.00.00.0
Domestic taxes on goods and services10.60.60.60.70.70.8
Taxes on international trade and transactions0.30.30.30.40.40.4
Other taxes0.10.10.10.10.10.1
Nontax revenue21.620.818.416.716.515.4
Hydrocarbons sector20.820.017.515.714.413.3
Royalties5.85.54.84.94.23.8
Profit sharing14.814.412.710.710.19.4
Bonuses and rents0.10.10.10.10.10.1
Non hydrocarbons sector0.80.80.81.02.12.0
Nontax revenue excluding interest on saving funds0.60.50.60.60.60.7
Interest on saving funds0.20.20.30.41.41.4
Grants0.00.00.00.00.00.0
Total expenditure and net lending28.334.133.929.728.427.0
Current expenditure6.37.08.49.29.910.5
Wages and salaries1.82.22.93.23.53.9
Goods and services2.12.22.42.62.93.1
Interest payments0.20.40.60.70.50.4
Transfers and subsidies2.22.32.52.73.03.2
Other current expenditure0.00.00.00.00.00.0
Capital expenditure22.127.025.520.518.516.5
Net lending0.00.00.00.00.00.0
Domestic arrears payments0.00.00.00.00.00.0
Overall balance0.8-6.4-8.9-8.4-7.7-7.5
Total financing-0.86.48.98.47.77.5
Foreign financing (net)3.43.21.7-1.9-2.9-2.8
Loans3.53.32.70.00.00.0
Amortization (-)0.00.0-1.0-1.9-2.9-2.8
Domestic Financing-4.23.17.210.310.510.3
Change in government deposits abroad0.02.15.17.37.76.9
Other domestic financing-4.21.02.03.02.93.4
Monetary sector-17.014.115.6-1.8-4.21.0
Deposits at BEAC-17.014.115.6-1.8-4.21.0
Net acquisition of non-financial assets20.00.00.00.00.00.0
Errors and omissions/financing gap0.00.00.00.00.00.0
Memorandum items:
Overall balance55.4-494.7-731.0-719.7-676.6-689.1
as percent of GDP0.8-6.4-8.9-8.4-7.7-7.5
Non oil primary balance 3-1,586.5-2,220.1-2,325.8-1,903.9-1,810.1-1,772.2
percent of non-oil GDP-53.7-65.9-61.0-41.7-35.2-31.5
Total Government Savings52.343.734.022.311.20.4
Of which: Government treasury accounts abroad34.128.421.613.45.4-1.7
Nominal GDP6,937.17,744.68,222.18,597.18,817.39,162.7
Nominal Non-oil GDP2,952.53,367.53,813.64,568.65,149.25,623.9
Sources: Data provided by the Equatoguinean authorities; and staff estimates and projections.

The VAT was legislated in early 2005; previously this was a sales tax.

Includes all equity purchases of the government.

Equal to the overall balance excluding grants minus hydrocarbons sector corporate income tax and non tax revenue plus hydrocarbons revenue generated in the secondary LNG, LPG and methanol production and purchase of share in hydrocarbons projects, minus interest on saving funds plus interest expenditure.

Sources: Data provided by the Equatoguinean authorities; and staff estimates and projections.

The VAT was legislated in early 2005; previously this was a sales tax.

Includes all equity purchases of the government.

Equal to the overall balance excluding grants minus hydrocarbons sector corporate income tax and non tax revenue plus hydrocarbons revenue generated in the secondary LNG, LPG and methanol production and purchase of share in hydrocarbons projects, minus interest on saving funds plus interest expenditure.

After peaking in 2008, crude oil production fell by 11½ percent in 2009. Outside of oil production, severe statistical deficiencies call for caution in assessing economic developments.

The authorities drew $498 million from a $2 billion (nonconcessional) line of credit extended by the Chinese government in late 2006 to help finance infrastructure for electrification and port enlargement. A $380 million long-term loan on more concessional terms is being made available to finance housing construction.

By end-2012, banks must increase registered capital to 10 billion CFAF (5 billion minimum end-2009).

At end-2009, over 85 percent of lending was short term, with over three-quarters financing construction related to public investment, backed by what is perceived in most cases to be a government guarantee. Contractors place little of their own capital at risk as government provides an initial project advance. The distribution of bank assets between credit and excess reserves tends to swing sharply from month to month, mirroring advancement in the construction process.

Oil exploration is ongoing, but no new finds have been announced. Minerals may provide another source of income, however, lack of a mining law may hold back development in this sector.

In part reflecting weaknesses in the budget process, the 2010 budget envisions a large reduction in infrastructure spending which is inconsistent with the spending profile of existing and planned new projects Staff estimate potential overruns relative to budget of some 7 percentage points of GDP in 2010. Nonetheless, the baseline scenario does fully capture the authorities’ triennial spending plan for 2010–12.

Given the high import component of spending, under staff’s scenario, growth would average 1 percent per year over the medium term versus 1½ percent under the baseline due to lower construction activity.

In 2009, the World Bank conducted a public expenditure review (PER), which has been sent to the authorities for comment. The draft PER points to weaknesses in most areas of public financial management.

Despite much higher income, Equatorial Guinea ranks 170 of 183 countries on the World Bank’s Doing Business 2010, in line with sub-Saharan Africa peers. It ranks somewhat below regional peers on Transparency International’s Corruption Perceptions Index (2009).

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