The World Bank stresses the necessity for Equatorial Guinea to diversify its economy beyond oil due to declining oil revenues and prolonged recession. The Country Economic Memorandum suggests enhancing human capital and strengthening institutions to achieve sustainable growth. Key recommendations include improving public financial management, investing in human capital, and enhancing the business environment.
Recent insights from the World Bank stress the urgent need for Equatorial Guinea to diversify its economy beyond oil. The Country Economic Memorandum highlights that declines in oil revenue, coupled with insufficient economic diversification, have led to a lingering recession. Once a high-income nation, Equatorial Guinea has faced six years of economic downturn since 2015, with recent growth proving transient, causing per capita income to diminish significantly.
To nurture sustainable and inclusive growth, the report emphasizes enhancing human capital and reinforcing institutional frameworks. “Equatorial Guinea has the potential to transform its economy and improve the lives of its citizens. However, this requires bold policy actions to build the foundations for renewed, diversified, and more inclusive growth,” stated Aissatou Diallo, the World Bank’s Resident Representative.
Despite the hydrocarbon sector accounting for 39% of GDP and 76% of exports, it falls short of generating sufficient employment opportunities. Without transformative reforms, per capita income risks a continued decline as hydrocarbon reserves dwindle. The report proposes a comprehensive roadmap aimed at addressing economic challenges through human capital development and robust governance enhancements.
Key recommended actions include:
1. Reducing fiscal instability by exploring the establishment of a stabilization fund to mitigate oil price fluctuations while improving transparency within the Sovereign Wealth Fund.
2. Enhancing public financial management by optimizing tax processes and reassessing subsidies for state enterprises.
3. Strengthening governance through effective operations of the Anti-Corruption Commission and bolstering statistical capabilities.
4. Investing in human capital, prioritizing education and healthcare, to elevate the nation’s standing on the Human Development Index.
5. Enhancing the business climate to stimulate private investment by addressing legal uncertainties and barriers to market entry.
6. Accelerating digital transformation and promoting initiatives like eco-tourism to foster diversification.
“The recent decrease in Equatorial Guinea’s hydrocarbon production and the volatility of oil prices are a strong reminder of the need for the country to reduce its exposure to global commodity markets. Sustained policy actions can help promote resilient, sustained, and inclusive growth,” remarked Djeneba Doumbia, lead author of the report.
In summary, the World Bank emphasizes that for Equatorial Guinea to overcome its ongoing economic challenges, strategic diversification away from oil is essential. The roadmap outlined focuses on improving human capital, reinforcing governance, and creating a conducive environment for private sector growth. Without significant reform, the nation risks a continued economic recession and declining living standards for its citizens.
Original Source: www.miragenews.com
