Pull Quote: Oil was discovered in Equatorial Guinea in the 1990s. Revenues from offshore oil fields have supported investments in large infrastructure programs over the years, but left little room for social projects. Less than half of the 1.3M population has access to clean drinking water and 20 percent of children die before the age of five, according to United Nations data.
Obiang, accused for years of squandering the nation’s oil wealth, will have to declare his assets to the country’s development partner if the IMF is to grant more financial support. (Bloomberg Business – December 27, 2019)
The President of Equatorial Guinea, Teodoro Obiang Nguema Mbasogo, has ruled the Central African nation for 41 years, since he ousted his uncle in a 1979 military coup. He was able to take control of the country’s oil assets soon after the first discovery was made in 1995 in the Gulf of Guinea. Since then, oil has become the nation’s most important asset, catapulting it into the ranks of the wealthiest nations in the world per capita.
While one would expect the people of such a nation to be well off, that cannot be said for Equatorial Guinea. Its people are suffering, and the country has found itself in a crisis so dire that it needs the International Monetary Fund (IMF) to give it financial support.
Although it was as rich per capita as its former colonial master, Spain, according to a December 27 report in Bloomberg’s Business section, Equatorial Guinea’s economy shrunk by a third to US$13B dollars a year later.
Starting with an oil price collapse in 2014 that it was not resilient enough to withstand, the country’s export earnings and foreign assets took hits, according to the IMF’s mission chief, Lisandro Abrego. He said that those issues have been compounded by governance and corruption issues.
It is struggling to pay off its debts after oil prices collapsed in 2014, and the government’s arrears to construction firms have piled up so high that the total equates to nearly 19 percent of its Gross Domestic Product, according to the World Bank.
Revenues from offshore oil fields have supported investments in large infrastructure programs over the years, but left little room for social projects. Less than half of the 1.3M population has access to clean drinking water and 20 percent of children die before the age of five, according to United Nations data.
According to Bloomberg, Obiang, accused for years of squandering the nation’s oil wealth, will have to declare his assets to the country’s development partner if the IMF is to grant more financial support. The demand is part of a wider asset declaration regime the IMF has included in its program requirements for all senior government officials, the IMF’s mission chief, Lisandro Abrego said in an interview.
Lisandro said that the program, agreed to in December, will require increased transparency, improved governance and the implementation of a string of anti-corruption reforms.
Audits have already begun, with completion dates about mid 2020, the IMF Chief said. The anti-corruption advocate has also mandated that all oil and gas contracts be made public. That is expected to come to fruition by next month.
IMF will require the central African nation to join the Extractive Industries Transparency Initiative (EITI) to improve the governance of its extractive industries. Initially applying for membership in 2008, the country has implemented reforms to meet the membership requirements, and a new application was filed in November last.
Bloomberg also reported that in December last, the IMF gave the go-ahead for a US$280M loan to the country, and at least US$40M has been dispersed already. The money is just about the same as was spent by Obiang’s eldest son and Equatorial Guinea Vice President, Teodoro Nguema Obiang Mangue, in the decade following 2000 before he got into trouble for money laundering.
He had been buying up properties on several continents and assets including Michael Jackson memorabilia, documents filed in a 2013 U.S. Department of Justice money-laundering case show. The case was settled the following year.
The president’s son received a three-year suspended jail term and a US$35M fine from a French court in 2017 for spending tens of millions of dollars in public funds on a mansion, sports cars and jewelry. In September last, Swiss authorities raised US$27M in an auction of exclusive cars they had seized from him, including a limited-edition Lamborghini Veneno roadster that sold for US$8.4M. He has denied any wrongdoing.
Human-rights and anti-corruption advocates have questioned why the IMF is lending its credibility to “a regime with no previous record of serious reform,” Sarah Saadoun, a researcher with Human Rights Watch, said in an interview.
“With no external pressure, besides the IMF, there’s a risk that the loan will fund the same lifestyle that the oil wealth has upheld for 25 years,” Saadoun said by phone from New York.
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