The pandemic continues to strike Equatorial Guinea like most countries in the region. To add to the ongoing health crisis, a series of massive accidental explosions at a military compound ravaged Bata, its largest city, this year, killing more than 100 people and causing massive damage (around 2.5% of GDP ). The double shock of the pandemic and the explosions was too difficult to overcome without emergency help.
On September 15, the IMF’s Executive Board approved funding of $ 67.38 million under the Quick Financing Instrument. This is an important first step in closing a large financing gap in Equatorial Guinea resulting from the double shock. In a conversation with IMF Country Focus, Valentin Ela Maye, Equatorial Guinea’s Minister of Finance, Economy and Planning describes how the government will use aid in a transparent manner, providing essential resources to meet immediate humanitarian needs and pursue economic reforms.
How will emergency funding be used to support the economy?
With the collapse of international oil prices and the emergence of COVID-19, Equatorial Guinea’s economic indicators have deteriorated sharply since the launch of the government financial program supported by the IMF Extended Fund Facility (EFF) signed in December 2019. These unforeseen events, coupled with the recent disaster in the city of Bata produced a significant funding gap in the national budget and balance of payments, limiting the government’s ability to fully cope with the effects of crises.
The government plans to use the emergency funds provided by the IMF to continue economic support to the many victims of the explosions in Bata, rehabilitate social and economic infrastructure, including residential housing, schools and power lines destroyed by them. explosions, and continue to fund the pandemic containment plan. It is important to note that despite efforts to prevent COVID-19, the country’s capacity to continue to manage the health emergency remains limited. It is imperative to strengthen hospital infrastructure and increase medical staff at all levels, especially after the recent increase in the number of infections monitored by the Ministry of Health.
It is also essential that we allocate resources to support a post-COVID-19 strategy to help the recovery of small and medium-sized enterprises (SMEs) in the non-oil sector, which are the main engine of job creation in the country.
What steps have the authorities taken during this difficult time?
A public health emergency was declared in March last year and economic measures were adopted to strengthen social protections and support SMEs. They included temporary tax breaks for non-oil companies, a social assistance program for the most vulnerable populations, and reforms to contain the budget deficit, despite the increased public spending needed to cope with the pandemic.
The measures also included the formulation of a healthcare plan to prevent and mitigate COVID-19, the suspension of in-person education activities, the closure of borders, retail and non-essential services, and strong measures. preventive measures for essential sectors, which had also seen a contraction in activity.
Despite the negative impact on the economy, the government managed to effectively contain the pandemic, mainly thanks to the early start of the vaccination campaign, and strict contact tracing despite the geography of the country.
In response to the Bata disaster, an assessment of the damage and the number of people affected was undertaken with the assistance of international experts, and work started on the design and evaluation of a reconstruction plan for the city. city. Senior government officials have taken the initiative to provide economic assistance to victims to cover basic housing and subsistence expenses as well as medical assistance.
We have also continued to make progress on the structural reform program agreed with the IMF, despite the radical change in macroeconomic and financial conditions that the country has been facing since early 2020. One example is our commitment to improve governance and fight against corruption. corruption with the adoption in May of the Law on Preventing and Combating Corruption, drafted with technical assistance from the IMF and in line with international standards.
At the same time, we have made progress in other areas of the utmost importance for the management of public finances, in particular the electronic customs system currently operational in the capital Malabo, the establishment of expenditure execution and control software. current, and capital expenditure tracking system developed with technical assistance from the World Bank. We have also made progress in publishing national laws online.
What are the government’s priorities to support the recovery?
The adoption of the anti-corruption law is a fundamental step to improve governance, attract foreign investment, promote tax transparency and prevent embezzlement of public funds, which will benefit the economic recovery. The government plans to approve regulations that will require senior officials to report their assets and publish this information as soon as possible, in addition to establishing an anti-corruption commission.
At the same time, we are determined to pursue other structural reforms such as domestic arrears clearance, which will not only strengthen the private enterprise sector but also benefit the national banking system by improving financial indicators. We also continue to work on strengthening the tax and customs administration, modernizing the public finance management framework and advancing all actions that will allow us to increase revenue collection and improve the climate. Business. Another priority on our agenda is to promote economic diversification outside the hydrocarbon sector. Indeed, the new Sustainable Development Strategy “Equatorial Guinea Agenda 2035” has just been approved.
How will the government ensure the transparent use of funds? How will the government’s Good Governance and Anti-Corruption Plan come into play?
We are determined to take the necessary actions to improve governance and fight corruption. This commitment is supported by the implementation of prior actions concerning the transparent use of the resources necessary for access to the IMF emergency loan.
The adoption of the anti-corruption law, aligned with the highest international standards, is a key step towards stronger management and increased transparency of public resources. The commitment of international audit firms to ensure the proper use of spending related to both COVID-19 and the Bata emergency response is a testament to our government’s commitment. The terms of reference for the audits are published on the website of the Ministry of Finance. To increase transparency in the hydrocarbon sector, we are finalizing an information report on this sector and audits of state-owned oil and gas companies, and we will publish all such reports.
Finally, I would like to stress that we are continuing our efforts on the actions defined in the Good Governance and Anti-Corruption Plan approved at the end of 2019.