The World Bank’s 2024 Economic Update for Equatorial Guinea highlights the contraction of the economy by 5.7% in 2023 due to hydrocarbon sector declines and emphasizes the need for effective fiscal measures to foster sustainable forestry and economic diversification. Despite covering 87% of the nation, the forestry sector has not fulfilled its economic potential, prompting calls for fiscal reform and enhanced governance to leverage this critical resource effectively. International support remains a vital component for achieving these objectives.
On October 8, 2024, the World Bank released its 2024 Economic Update for Equatorial Guinea, providing a detailed analysis of the country’s recent economic trends and future prospects. The report particularly emphasizes the urgent necessity for the development of effective fiscal instruments aimed at fostering sustainable forestry as part of broader economic diversification initiatives. In 2023, Equatorial Guinea’s economy experienced a contraction of 5.7%, attributed primarily to a downturn in the hydrocarbon sector following two years of recovery. Inflation rates saw a reduction to 2.4% in 2023 from 4.9% in the previous year, influenced by the stringent monetary policies enacted by the Bank of Central African States (BEAC), the establishment of food import agreements with Serbia, and the lowering of certain import tariffs. The report further highlights that approximately 87% of Equatorial Guinea’s land area is covered by forests, which play a critical role in maintaining ecological balance. Nevertheless, the nation faces rising rates of deforestation and forest degradation. The contribution of the forestry sector to the national GDP has significantly declined since the 1990s, a trend linked to the insufficient capacity for local processing of timber products. Once heavily reliant on agriculture and timber, Equatorial Guinea’s economy is now predominantly focused on hydrocarbons, thus undermining the full economic potential of its forestry sector in terms of job creation and ancillary value generation. Aissatou Diallo, the Resident Representative for Equatorial Guinea, observed, “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.” Equatorial Guinea is committed to sustainable development, as evidenced by its national sustainable development plan, known as AGENDA 2035, and its endorsement of a national plan to Reduce Carbon Emissions from Deforestation and Degradation (REDD+). These commitments necessitate enhanced strategies for domestic revenue mobilization alongside increased external funding. Although there have been rises in international funding directed towards sustainable forest management in the Congo Basin, these resources remain inadequate. To tackle the challenges facing the forestry sector in Equatorial Guinea, the report outlines several strategic recommendations, which include: 1. Designing effective fiscal instruments: Adjusting tax rates on forest products based on harvesting methods, encouraging sustainable forest certification, and implementing long-term management strategies. 2. Improving forest governance: Enhancing transparency and traceability of forest products, ultimately fostering a robust wood-processing industry that contributes to sustainable forest management, while generating increased revenue, job opportunities, and wider economic inclusion. 3. Increasing financial and technical support from the international community: This support is critical for the preservation of forests, emphasizing their significance as integral ecosystems within the Congo Basin and as vital global resources. Djeneba Doumbia, Country Economist for Equatorial Guinea, remarked, “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.” To access the full Economic Update for Equatorial Guinea, please visit the [World Bank website].
Equatorial Guinea, a nation richly endowed with forest resources, has been grappling with the challenges of economic diversification and environmental sustainability. Historically, the country has depended heavily on hydrocarbons, sidelining other sectors such as forestry and agriculture. Amidst increasing rates of deforestation and declining economic output from the forestry sector, there is an urgent need for adaptive fiscal policies and strategic governance to revitalize this sector. The importance of sustainable forest management is underscored in light of both national aspirations for environmental preservation and the necessity for economic resilience, particularly as the global landscape continues to change, rendering previous economic models less viable.
The World Bank’s 2024 Economic Update for Equatorial Guinea accentuates the critical need for implementing effective fiscal tools and governance frameworks to support sustainable forestry and economic diversification. As the country contends with economic contraction and rising environmental challenges, prioritizing the forestry sector may serve as a dual benefit: enhancing economic growth and preserving vital ecosystems. With strategic international support and the commitment to sustainable practices, Equatorial Guinea stands to revitalize its forestry sector, foster job creation, and improve long-term economic stability.
Original Source: www.miragenews.com
