Equatorial Guinea wants to secure $700 million in support from the International Monetary Fund by January as the country seeks to help shore up central Africa’s common currency.
The Organization of Petroleum Exporting Countries’ smallest member will host an IMF mission later this month for talks on a possible deal, the minister of economy, finance and planning, Cesar Mba Abogo, said in an interview at the World Economic Forum on Africa in Cape Town.
The talks are part of the lender’s reform programs with the six member nations of the Central African Economic and Monetary Community, whose oil-dependent economies have been hit by the collapse of prices since 2014.
Lower crude prices stymied economic growth and led to external reserves dropping by almost two-thirds over three years to about two months of import cover by the middle of 2017 as foreign inflows dwindled. It also raised fears that the Central Africa CFA franc, whose peg to the euro is guaranteed by France, was at risk of devaluation.
“The point is to make sure we can increase our amount of reserves to defend our currency,” Mba Abogo said in a report filed by worldoil.com.
“Some of the countries have already had financial assistance, now it’s the time for Equatorial Guinea to get it.”
While member nations such as Cameroon, Gabon and Chad already agreed to economic reforms as part of financial support programs with the IMF, Equatorial Guinea hasn’t yet finalized a deal. Despite its oil riches and boasting one of the highest rates of gross domestic product per capita in Africa, Equatorial Guinea has some of the continent’s worst social indicators as President Teodoro Obiang Nguema Mbasogo enters his fifth decade in office.
Less than half of the population of about 1.3 million people has access to clean water, and 20% of children die before reaching the age of 5, United Nations data show. More than half of all children of primary age aren’t in school.
The IMF has made support for Equatorial Guinea subject to membership of the Extractive Industries Transparency Initiative, which requires the support of civil-society groups.
Groups in the country are part of the discussions, Mba Abogo indicated. “Some groups, civil society or whatever, are contaminated by stereotypes. They do not even give Equatorial Guinea the opportunity to showcase itself, to prove to them what we are.”
Equatorial Guinea has already started to implement financial reforms and will record its first budget surplus this financial year since at least 2014, Mba Abogo noted. The turnaround was made possible by the use of a conservative price estimate of $50 per barrel for oil, he said. Crude closed at $60.95 on Thursday.
“We learned the hard way,” Mba Abogo said. “We’ve done some tremendous fiscal adjustments when it comes to capital expenditure and also when it comes to our ability to mobilize resources by ensuring our tax collection can be better.”
Debt is at 42% of GDP and the country will target to have the lowest level in the sub-region, he said.