Equatorial Guinea: Addressing Economic Challenges through…

The World Bank’s 2024 Economic Update for Equatorial Guinea details the country’s economic contraction of 5.7% in 2023, driven by declines in the hydrocarbon sector. It emphasizes the urgent need for effective fiscal instruments to support sustainable forestry and encourage economic diversification, highlighting the challenges of deforestation and the underutilization of the forestry sector.

On October 8, 2024, the World Bank released the 2024 Economic Update for Equatorial Guinea, highlighting critical economic developments and emphasizing the necessity for effective fiscal strategies aimed at promoting sustainable forestry and economic diversification. After two years of recovery, the country’s economy contracted by 5.7% in 2023, largely due to a downturn in the hydrocarbon sector. Positive trends in inflation were noted, with a decrease to 2.4% in 2023 from 4.9% in the previous year, attributed to stringent monetary policies, an agreement for food imports from Serbia, and a reduction in specific import tariffs. The report emphasizes the importance of developing effective fiscal tools to support sustainable forestry initiatives as part of the broader strategy for economic diversification. With forests covering approximately 87% of Equatorial Guinea’s land, they are crucial for the ecosystem; however, deforestation and degradation rates have escalated recently. Since the 1990s, the forestry sector’s contribution to the Gross Domestic Product (GDP) has significantly diminished, primarily due to inadequate local processing capabilities for wood products. This decline follows a historical reliance on agriculture and timber, with the current economy now predominantly dependent on hydrocarbon resources. The forestry sector, encompassing commercial logging and wood processing, has yet to harness its full economic potential regarding job creation and value addition. Aissatou Diallo, Resident Representative for Equatorial Guinea, remarked, “Developing a sustainable commercial forestry sector that focuses on domestic value-added processing would help Equatorial Guinea meet both its economic diversification and forest preservation commitments.” To align with its commitment to sustainable development, as reflected in the national sustainable development plan (AGENDA 2035) and the national REDD+ plan aimed at reducing carbon emissions from deforestation, the country must enhance domestic revenue mobilization and increase external financing. Despite a rise in international funding for sustainable forestry in the Congo Basin, the available commitments remain inadequate. The report outlines various strategies to tackle the challenges confronting Equatorial Guinea’s forestry sector, focusing on fiscal reforms and sustainable forest management practices. Key recommendations include: 1. Design effective fiscal instruments by modifying forest tax rates based on timber production methods, incentivizing forest certification, and implementing long-term forest management plans. 2. Improve forest governance to enhance transparency and traceability of forest products, and establish a robust wood-processing industry that supports sustainable forestry, boosts forest revenues, creates jobs, and encourages inclusive economic participation. 3. Secure additional financial and technical assistance from the international community to uphold forest preservation and recognize forests as vital ecosystems within the Congo Basin and globally. Djeneba Doumbia, Country Economist for Equatorial Guinea, stated, “Fiscal policies that support forest preservation and the sustainable use of forest resources, combined with improved forest governance and investment climate, will not only help to improve domestic revenue mobilization, but could also help attract more financing, including international and private amid a shrinking fiscal space in Equatorial Guinea.”

The article discusses the pressing economic challenges faced by Equatorial Guinea, particularly following a contraction in its economy due to a decline in the hydrocarbon sector. It emphasizes the significance of forests, which cover a substantial portion of the country, in supporting ecological balance and economic diversification. The recent economic update by the World Bank serves as a critical analysis tool, aiming to provide insights into necessary fiscal tools for enhancing sustainable forestry practices while addressing the urgent need for economic resilience amidst declining traditional sectors.

In conclusion, the 2024 Equatorial Guinea Economic Update presents a comprehensive overview of the challenges and opportunities within the country’s forestry sector amidst economic contraction. The World Bank underscores the importance of implementing effective fiscal instruments and governance reforms to promote sustainable forestry, which can aid in economic diversification and job creation. The cooperative efforts of both the government and international community are essential in fostering a sustainable future for Equatorial Guinea’s rich forest resources, with commitments to fiscal policies and international financing likely to play pivotal roles in this transformation.

Original Source: www.miragenews.com