Abstract
Economic growth in Equatorial Guinea recovered sharply in 2007. The opening of a new oil field in late 2006 and a liquefied natural gas facility in mid-2007, supported by increased public infrastructure spending, lifted 2007 economic growth to an estimated 21.4 percent. Executive Directors have welcomed Equatorial Guinea’s recent robust economic performance and sound macroeconomic policies that have strengthened fiscal sustainability. Directors have also welcomed the National Development Plan, which provides an appropriate framework for economic and institutional reforms to diversify the economy and enhance external competitiveness.
1. The following information has become available since the staff report was issued. It does not alter the thrust of the staff appraisal.
2. Staff have revised the projections for Equatorial Guinea to reflect the significant changes in hydrocarbons prices and exchange rates in the WEO projections of October 28, 2008 compared to those in September 2008, which were used in preparation of the staff report. The revised projections show a weaker overall fiscal balance, relative to GDP, and non-oil fiscal balance, relative to non-oil GDP, and a weaker external current account balance and balance of payments, relative to GDP. However, foreign asset cover remains ample over the projection period. The revised estimates reinforce a key message on the need to scale back the proposed large increase in 2009 capital spending.
3. This revision incorporates revised price projections for 2008 to 2013 for oil, natural gas, and hydrocarbon derivatives, and for key bilateral exchange rates, chiefly the U.S. dollar-euro exchange rate. Oil prices have been lowered by 7 percent for 2008 (annual average) and by 24 percent for 2009–13. Other hydrocarbons prices have also been reduced. The U.S. dollar-euro exchange rate shows an average 9 percent more appreciated U.S. dollar over the projection period. Given the conservative price assumptions that hydrocarbons investors had incorporated into their investment profiles, staff have left foreign direct investment and hydrocarbons sector growth assumptions unchanged. In combination with largely unchanged public spending assumptions, non-oil growth should be little affected.
4. Table 1 presents the revised key projections. The fiscal surplus is now projected at 16.9 percent of GDP in 2008, declining to a deficit of 4 percent of GDP in 2009, compared to an estimated surplus of 17.1 percent and 3.2 percent of GDP, respectively. The non-oil deficit is projected to remain at 47.4 percent of non-oil GDP in 2008 and worsen to 78.4 percent of non-oil GDP in 2009 compared to 73.1 percent of non-oil GDP. Similarly, the external current account balance is projected to weaken to 10.2 percent of GDP in 2008 and -15.8 percent of GDP in 2009 and the overall balance of payments would decline to 2.7 percent of GDP in 2008 and -3.0 percent of GDP in 2009. Given the high foreign asset cover, it is projected to decline to a still ample 12.7 months of next year’s imports in 2008 and to 11.5 in 2009 and remain at comfortable levels through the medium-term projection.
Equatorial Guinea: Revised Key Projections1
(percent of GDP, unless otherwise specified)
These revised projections reflect WEO price projections as of Tuesday, October 28.
Equatorial Guinea: Revised Key Projections1
(percent of GDP, unless otherwise specified)
| 2008 | 2008 | 2009 | 2009 | Average 2009–13 | Average 2009–13 | |
|---|---|---|---|---|---|---|
| Staff Report | updated | Staff Report | updated | Staff Report | updated | |
| Overall fiscal balance | 17.1 | 16.9 | 3.2 | -4.0 | 3.9 | 0.1 |
| Non-oil primary balance (percent of non-oil GDP) | -47.4 | -47.4 | -73.1 | -78.4 | -50.5 | -52.1 |
| Current account balance | 11.4 | 10.2 | -2.2 | -15.8 | -0.9 | -10.0 |
| Overall balance of payments | 3.7 | 2.7 | 2.1 | -3.0 | 2.6 | -1.7 |
| Gross official foreign assets (months of next year’s imports) | 13.2 | 12.7 | 15.0 | 11.5 | 20.2 | 11.7 |
These revised projections reflect WEO price projections as of Tuesday, October 28.
Equatorial Guinea: Revised Key Projections1
(percent of GDP, unless otherwise specified)
| 2008 | 2008 | 2009 | 2009 | Average 2009–13 | Average 2009–13 | |
|---|---|---|---|---|---|---|
| Staff Report | updated | Staff Report | updated | Staff Report | updated | |
| Overall fiscal balance | 17.1 | 16.9 | 3.2 | -4.0 | 3.9 | 0.1 |
| Non-oil primary balance (percent of non-oil GDP) | -47.4 | -47.4 | -73.1 | -78.4 | -50.5 | -52.1 |
| Current account balance | 11.4 | 10.2 | -2.2 | -15.8 | -0.9 | -10.0 |
| Overall balance of payments | 3.7 | 2.7 | 2.1 | -3.0 | 2.6 | -1.7 |
| Gross official foreign assets (months of next year’s imports) | 13.2 | 12.7 | 15.0 | 11.5 | 20.2 | 11.7 |
These revised projections reflect WEO price projections as of Tuesday, October 28.