The 2024 Economic Update for Equatorial Guinea by the World Bank highlights recent economic contractions due to reduced hydrocarbon production while emphasizing the potential for sustainable forestry as a means of economic diversification. The report recommends the implementation of effective fiscal instruments to promote forest preservation and processing, amidst calls for increased international support for sustainable development.
On October 8, 2024, the World Bank released the 2024 Economic Update for Equatorial Guinea, which provides an analysis of the country’s recent economic performance and outlines the necessity of developing effective fiscal tools for sustainable forestry and economic diversification. Following two years of recovery, Equatorial Guinea’s economy faced a contraction of 5.7% in 2023, primarily due to a downturn in the hydrocarbon sector. However, inflation rates decreased significantly from 4.9% in 2022 to 2.4% in 2023, attributed to the central bank’s stringent monetary policies, food import agreements, and tariff reductions on certain imports. The report emphasizes the urgent need for effective fiscal frameworks to promote sustainable forestry and diversify the economy. Equatorial Guinea’s forests cover approximately 87% of its land area and serve as a critical ecological asset. Despite this, the country has seen rising rates of deforestation and forest degradation in recent years. The forestry sector’s contribution to the nation’s GDP has diminished since the 1990s, largely due to the inability to process wood products domestically. What was once an economy reliant on agriculture and timber has transitioned to a heavy dependence on hydrocarbons. The current forestry landscape, including commercial logging and wood processing, has not yet achieved its full economic potential in terms of job creation and value addition. Aissatou Diallo, the 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.” The nation’s commitment to sustainable development, which is articulated in the national sustainable development plan (AGENDA 2035) and the REDD+ plan aimed at reducing carbon emissions from deforestation and degradation, will necessitate enhanced domestic revenue mobilization alongside increased external financing. Despite a rise in international funding for sustainable forest management in the Congo Basin, overall commitments remain inadequate. The report delineates several strategies aimed at resolving the complex challenges confronting Equatorial Guinea’s forestry sector. These include: 1. Designing effective fiscal instruments – This entails adjusting forest tax rates commensurate with timber production methods, promoting forest certification, and implementing long-term forest management strategies. 2. Enhancing forest governance – This can be achieved by bolstering transparency and traceability of forest products and establishing a robust commercial wood-processing industry that fosters sustainable management, generates forest revenue, creates jobs, and facilitates inclusive economic participation. 3. Increasing international financial and technical support – This is crucial for preserving forests and recognizing them as vital ecosystems both within the Congo Basin and on the global stage. Djeneba Doumbia, the Country Economist for Equatorial Guinea, articulated, “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.” This comprehensive review underscores the importance of integrating fiscal reforms with sustainable forest management efforts in Equatorial Guinea to strengthen the economy and enhance ecological integrity.
Equatorial Guinea, a nation rich in natural resources, has faced economic challenges in recent years, particularly stemming from its reliance on the hydrocarbon sector. The forestry sector, once a significant contributor to the economy, has seen a sharp decline in its GDP contribution since the 1990s. This change has coincided with increasing rates of deforestation and forest degradation, prompting both local and international calls for better sustainable management of forest resources. The World Bank’s recent report highlights the necessity of implementing fiscal policies that can revitalize this important sector while promoting economic diversification in alignment with global sustainability commitments.
In summary, the 2024 Economic Update for Equatorial Guinea underlines the critical need for innovative fiscal tools that promote sustainable forestry. The report details significant economic contraction due to over-reliance on hydrocarbons while outlining the immense potential of the forestry sector for job creation and economic diversification. By adopting effective fiscal reforms and governance improvements, Equatorial Guinea can advance its commitment to sustainability and economic resilience.
Original Source: www.miragenews.com
