Equatorial Guinea Economic Update 2024: Designing Fiscal Instruments for Sustainable Forestry
Overview
This second edition of the Equatorial Guinea Economic Update focuses on designing fiscal instruments for sustainable forestry. It provides an analysis of recent economic developments and the medium-term outlook, emphasizing the role of forests in the country's economy and climate actions.
Recent Economic Developments and Outlook
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Recent Economic Developments
- Equatorial Guinea re-entered a recession in 2023 due to a decline in hydrocarbon production and domestic demand.
- The fiscal position deteriorated with a decline in commodity revenues, but public debt remained sustainable.
- The external position worsened due to declining export earnings, and credit to the economy decreased amid banking sector vulnerabilities and monetary tightening.
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Economic Outlook, Risks, Challenges, and Policies
- Global economic activity is expected to slow while Sub-Saharan African (SSA) growth is forecast to accelerate in 2024.
- The Equatoguinean economy is projected to remain in recession over the medium term.
- Key risks include a faster-than-expected decline in the hydrocarbon sector.
- Policy priorities focus on strengthening macroeconomic management and addressing structural challenges.
Designing Fiscal Instruments for Sustainable Forestry
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Introduction
- Emphasizes the importance of forests in Equatorial Guinea’s economy and climate actions.
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The Importance of Forests
- State and trends of forests in Equatorial Guinea.
- Role of forests in the economy and climate actions.
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Regional and International Context
- Financing for sustainable forest management.
- Implementation of the CEMAC log export ban and the EU law on deforestation-free products.
- Potential solutions like increasing value-added in the wood industry.
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Role of Environmental Fiscal Policy
- Trade-offs in the forestry sector.
- Survey of forest-fiscal policy instruments.
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Opportunities for Climate-Smart Forest Fiscal Policy Reform
- Aligning tax rates with sustainable timber production methods.
- Implementing a ‘bonus-malus’ system to finance tax benefits for sustainable practices.
Key Data and Charts
- Macroeconomic Projections: Table 1 compares projections of key macroeconomic variables.
- Structural Indicators: Table 2 shows structural indicators for Equatorial Guinea.
- Policy Recommendations: Table 3 lists short-term policy recommendations.
- Approaches and Instruments: Table 4 outlines selected approaches and policy instruments for sustainable forest management.
- Fiscal Mechanisms: Table 5 details selected fiscal mechanisms and their impact on incentives for sustainable forest management.
Charts and Figures
- Real GDP Growth: Figure 1 shows real GDP growth from 2021 to 2025.
- Oil and Non-Oil GDP Growth: Figure 2 illustrates oil and non-oil GDP growth from 2013 to 2023.
- Hydrocarbon Production: Figure 4 depicts hydrocarbon production from 2022 to 2023.
- Government Spending: Figure 8 shows the composition and evolution of government spending from 2019 to 2023.
- Public Debt: Figure 10 illustrates public debt as a percentage of GDP from 2019 to 2023.
- Fiscal Balance: Figure 9 displays the fiscal balance from 2019 to 2023.
- Export Value Composition: Figure 12 shows the composition of export value from 2022.
- Credit to the Economy: Figure 13 indicates the growth of credit to the economy from 2014 to 2023.
- Global and Regional Growth: Figures 14 and 15 show global and regional GDP growth from 1990 to 2025 and 2021 to 2025, respectively.
- Labor Force Participation: Figure 16 shows labor force participation rates from 2000 to 2022.
- Electricity Access: Figure 18 indicates electricity access from 2000 to 2021.
- Logistics Performance Index: Figure 19 shows the Logistics Performance Index from 2018.
- Deforestation Trends: Figures 22 and 23 depict deforestation trends from 2010 to 2020 and 2000 to 2022, respectively.
- GHG Emissions: Figure 27 shows GHG emissions by sector from 2020.
- Wood Product Export Value: Figure 26 shows the value of wood product exports from 2000 to 2022.
- CAF Budget: Figure 28 shows the CAFI budget