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Republic of Equatorial Guinea: Staff Report for the 2010 Article IV Consultation—Informational Annex

Author(s):
International Monetary Fund
Published Date:
May 2010
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Annex I. Equatorial Guinea— Relations with the Fund (as of February 28,2010)

I. Membership Status: Joined 12/22/69; Article VIII

II. General Resources Account:

SDR MillionsPercent Quota
Quota32.60100.00
Fund holdings of currency32.61100.02
Reserve Position0.000.00

III. SDR Department:

SDR MillionsPercent Allocation
Net cumulative allocation31.29100.00
Holdings25.9482.89

IV. Outstanding Purchases and Loans: None

V. Latest Financial Arrangements:

ApprovalExpirationAmountAmount
TypeDateDateApprovedDrawn
(SDR Millions)(SDR Millions)
ECF (formerly PRGF)02/03/199302/02/199612.884.60
SAF12/07/198812/06/199112.889.20
Stand-by06/28/198506/27/19869.205.40

VI. Projected Payments to the Fund

(SDR millions; based on existing use of resources and present holdings of SDRs):

Forthcoming
20102011201220132014
Principal
Charges/Interest0.010.020.020.020.02
Total0.010.020.020.020.02

VII. Implementation of HIPC Initiative: Not Applicable

VIII. Implementation of Multilateral Debt Relief Initiative (MDRI): Not Applicable

Exchange Rate Arrangement and Safeguard Assessments

The Bank of the Central African States (BEAC) is the regional central bank of the Central African States, of which Equatorial Guinea is a member. The safeguards assessment completed on August 30, 2004 found that the BEAC has implemented a number of measures to strengthen its safeguards framework since an earlier 2001 safeguards assessment, but further progress needs to be made in key areas. The main recommendations of the 2004 assessment were reported in IMF Country Report No. 05/3.

Equatorial Guinea’s currency, the CFA franc, is pegged to the euro at the fixed exchange rate of CFAF 655.957 per euro.

Equatorial Guinea maintains an exchange system free of restrictions on the making of payments and transfers for current international transactions. A 2007 temporary ministerial order requires authorization of the General Directorate of Banking prior to rapid money transfers abroad by non-bank financial institutions.

Article IV Consultations

Equatorial Guinea is on the standard 12-month Article IV consultation cycle.

The last Article IV consultation with Equatorial Guinea was concluded by the Executive Board on November 3, 2008 (IMF Country Report No. 09/102).

Technical Assistance

FAD provided an 18-month technical assistance during 1992-94 to reorganize the tax department and personnel training.

FAD conducted a review of PEM and tax administration systems in 1997.

FAD conducted a diagnostic mission on key deficiencies and training needs in public finance in May 2003.

FAD conducted a diagnostic mission on modernization of public expenditure management processes and steps for reforming the system in July 2005.

STA evaluated the collection of monetary statistics and proposed steps to adopt the methodology of the 2000 Manual on Monetary and Financial Statistics in December 2002.

STA conducted a diagnostic mission on real sector statistics in July 2005.

STA conducted a diagnostic mission on government finance statistics in January 2006.

STA conducted a follow-up mission in real sector statistics in January 2006.

A macrofiscal advisor, backstopped by AFR, and paid for by the government through a reimbursement agreement with the Fund, was in residence in Equatorial Guinea from June 2006 to early May 2007.

A public financial management advisor, backstopped by FAD, and paid for by the government through a reimbursement agreement with the Fund, was in residence in Equatorial Guinea from June 2006 to early May 2007.

STA conducted a technical assistance mission in real sector statistics in March 2007.

AFRITAC Central has conducted a technical assistance mission in national accounts statistics in 2007.

AFRITAC Central has conducted a technical assistance mission in public financial management statistics in February 2008.

AFRITAC Central has conducted a technical assistance mission in price statistics in March 2008 and June 2008.

AFRITAC Central has conducted technical assistance missions in national accounts statistics in June and July 2008.

AFRITAC Central has conducted a technical assistance mission on trade statistics in July 2008.

AFRITAC Central has conducted a technical assistance mission on budget classifications in February 2009.

Two macrofiscal advisors, backstopped by AFR, and paid for by the government through a reimbursement agreement with the Fund, were redeployed in April 2008 for a one-year period. Their contract was extended in 2009, and is expected to be renewed in April 2010 for another year.

Resident Representative: None.

Annex II. Equatorial Guinea— Relations with the World Bank Group

TitleProductsProvisional timing of missionsExpected delivery date
A. Mutual information on relevant work programs
The World Bank work program in the next 12 months
  • Extractive Industries Transparency Initiative (EITI) assistance

  • Technical assistance to statistics office (national accounts)

  • Public Expenditure Review

Participation in National EITI Committee meeting and discussion of PER’s recommendations (January 2010)



February 2010: Consultant 1-year contract 2010-11



Draft completed and sent to the authorities for comment
March 2010





February 2011





By end 2010
The IMF work program in the next 12 months
  • TA mission from AFRITAC on public financial management

  • TA mission from AFRITAC on national accounts

  • IMF/AFR back-stopped macrofiscal advisors

  • Article IV consultation

Q2 2010 (tentative)







Q2 2010





March 2010-February 2011 February/March mission
April Board
B. Requests for work program inputs
Fund request to Bank
Bank request to FundUpdate on macroeconomic information
C. Agreement on joint products and missions
Joint products in the next 12 months

ANNEX III.

Equatorial Guinea— Statistical IssuesAs of March 17, 2010
I. Assessment of Data Adequacy for Surveillance
General: Data provision has serious shortcomings that significantly hamper surveillance. The deficiencies in quality, timing, and coverage in most macroeconomic data are related to insufficient administrative and technical capacity. Poor centralization of information between the island and continental regions is also an issue. Technical assistance has resulted in some progress but there is still a need to consolidate these gains, including through participation in the General Data Dissemination System and significant strengthening of the capacity of the National Institute of Statistics (NIS).
National Accounts: National accounts are compiled at current and constant prices, but often contain significant inconsistencies. A 2007 STA mission provided assistance to prepare a business register/sample frame and a database on employment and compensation of employees, basic source data for improving the coverage of the national accounts. The mission revised estimates on oil and non-oil GDP for the period 2000-06 with 2000 as base year, and reclassified manufacturing of oil and gas derivatives in the non-oil sector following the UN International Standard Industrial Classification of all Economic Activities (ISIC,) Rev. 3. A pilot Agricultural Production Survey (APS) 2005-06 was conducted with the support of the UN Food and Agriculture Organization, and a Quick Household Survey (QHS), with national coverage, was conducted between December 2006 and February 2007 in a sample of 5,240 households. Even though the QHS did not collect data on income and the collected expenditure data reflect seasonality, the results of the QHS, if adjusted, would have been valuable in updating the basket and weights of the CPI (currently, corresponding to 1986) and compile poverty and other social indicators. However, these data have become unavailable and are not being used. The World Bank has recently identified a resident advisor on national accounts statistics under its current service agreement, with work scheduled to begin soon. The World Bank is also assisting the government in drafting a grant proposal for a Household Expenditure Survey to be used for updating the CPI weights and compiling poverty indicators. A census scheduled for 2011 should serve to clarify long-standing misunderstandings on population statistics.
Price statistics: Compilation of the official CPI resumed in January 2009, with data collected in six major cities. However, a number of deficiencies remain, including outdated weights and composition of the basket of goods and services, and gaps in the time series corresponding to the period for which data was not collected (June 2005 - February 2006, and 2008). Imputations for missing data do not always reflect underlying trends. In general, the CPI tends to underestimate inflation.
Government finance statistics: Two macrofiscal advisors (backstopped by the IMF but paid for by the government) in place since 2008 have made progress in tracking government expenditure under the large public investment program, and following technical assistance from France, there have been some improvements in fiscal accounting. Further improvements are needed, including on coverage. Equatorial Guinea does not report fiscal data to STA for publication in International Financial Statistics and the Government Finance Statistics Yearbook. However, the authorities do provide budget execution data to AFR, although full information on the reconciliation with the monetary accounts is still lacking. The fiscal data are not subject to any internal process of verification as internal and external audit capability remains weak. There is no functional classification of expenditure, and dissemination practices needed improvement. Gains in transparency have been made through the EITI process, with reconciliation reports posted on the World Bank website in March 2010, including information on state owned oil companies.
Monetary statistics: The BEAC regularly reports monetary, interest rates, and exchange rate statistics for publication in IFS, but delays occur in the submission of data to STA. In mid-2007 the BEAC started a project to migrate monetary statistics of member countries of the CEMAC to the methodology in the MFSM. As a part of this project, a regional workshop was organized by the BEAC in December 2007 to finalize the mapping of source data from commercial banks to the MFSM concepts and framework. STA participated in this workshop to provide guidance and advice. Submission of data by the BEAC using the standardized report forms is pending.
The accuracy of monetary statistics may be affected by large cross-border movements of BEAC-issued banknotes among Communaute Economique et Monetaire de l’Afrique Centrale (CEMAC) member countries. About 60 percent of banknotes issued in Equatorial Guinea by the BEAC national directorate circulate in Cameroon and only 26 percent remain in the country, while currency in circulation in Equatorial Guinea includes some 18 percent of banknotes from Cameroon and as much from Gabon.
Balance of payments: Although the BEAC produces balance of payments data, delays are long and the data suffer from significant inconsistencies with other datasets. At present, BOP data are often not derived from records of current stocks or flows. Statistics are still largely constructed on a historical basis from estimates rather than actual financial and customs records, including information on the hydrocarbons sector available to some parts of the government. Customs data have improved since the implementation of the Central African Customs and Economic Union reform and the deployment of customs brigades. However, data analysis is still hampered by the lack of computerization. While some progress has been made in compiling current and financial account items, the lack of current source data is a key concern.
II. Data Standards and Quality
Not a General Data Dissemination System participant.No data ROSC is available.
III. Reporting to STA (Optional)
Real sector statistics reported to STA (International Financial Statistics, IFS) are limited to GDP (without breakdown by sector or expenditure category), exports, and imports. The February 2010 issue of IFS includes data for GDP through 2005 and exports and imports through 2008; the latest year for which balance of payments data is available is 1996. Equatorial Guinea does not report fiscal data to STA for publication in IFS or the Government Finance Statistics Yearbook. The Banque des Etats de l’Afrique Centrale (BEAC) regularly reports monetary, interest rate, and exchange rate statistics for publication in IFS, but the timeliness of these data needs improvement.
Equatorial Guinea: Table of Common Indicators Required for Surveillance(As of March 16, 2010)
Date of

Latest

Observation
Date

Received
Frequency

of

Data7
Frequency

of

Reporting7
Frequency

of

Publication7
Exchange Rates03/16/1003/16/10DDD
International Reserve Assets and Reserve

Liabilities of the Monetary Authorities1
Oct 200901/25/10MMI
Reserve/Base MoneyOct 200901/25/10MMM
Broad MoneyOct 200901/25/10MMM
Central Bank Balance SheetOct 200901/25/10MMM
Consolidated Balance Sheet of the Banking

System
Oct 200901/25/10MMM
Interest Rates2Oct 200902/26/10MMI
Consumer Price IndexSept 200902/27/10MMM
Revenue, Expenditure, Balance and Composition of Financing3—General

Government4
Dec 200902/24/10MMI
Stocks of Central Government and Central Government-Guaranteed Debt5,7Dec 200902/24/10AAI
External Current Account BalanceQ3 200902/25/10QQI
Exports and Imports of Goods and ServicesQ3 200902/25/10QQI
GDP/GNP200902/25/10AAI
Gross External DebtDec 200902/24/10QQI
International Investment Position6NANANA

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially-determined, including discount rates, money market rates, and rates on treasury bills, notes and bonds.

Foreign and domestic bank, nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Includes currency and maturity composition.

Includes external gross financial asset and liability positions vis-a-vis nonresidents.

Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially-determined, including discount rates, money market rates, and rates on treasury bills, notes and bonds.

Foreign and domestic bank, nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Includes currency and maturity composition.

Includes external gross financial asset and liability positions vis-a-vis nonresidents.

Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).

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