IMF: Delay Vote on Equatorial Guinea Loan

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Equatorial Guinea

Risk of Subsidizing Systemic Abuses, Corruption

(Washington, DC) – The International Monetary Fund (IMF)’s Executive Board should delay a planned December 2019 vote on a US$280 million loan agreement with Equatorial Guinea, eight human rights and good governance organizations and eight prominent experts said today in a letter to the IMF Executive Board. The program preceding the loan agreement and planned conditions for the loan are insufficient to address deep-rooted rights violations, corruption, and related impunity in Equatorial Guinea in line with IMF requirements.

The organizations are Center for Development Studies and Initiatives in Equatorial Guinea (CEIDGE), EG Justice, Human Rights Watch, Natural Resource Governance Institute, Global Witness, Amnesty International, Publish What You Pay, and Oxfam. They are joined by all eight Extractive Industries Transparency Initiative (EITI) Civil Society Board members.

“Oil-rich Equatorial Guinea is requesting a loan after the country’s political elite allowed human rights abuses, corruption, and mismanagement to flourish in the country for years,” said Sarah Saadoun, business and human rights researcher at Human Rights Watch. “The IMF bailout should require Equatorial Guinea to carry out deep-seated reforms to its handling of natural resources that result in rights improvements, accountability, and transparency.”

The government of Equatorial Guinea reached an agreement with IMF staff for a three-year Extended Fund Facility loan. An IMF spokesperson said that its board of directors will consider the $280 million loan in December. The IMF is funded by member governments using public funds.

Any loan agreement would need to be consistent with the IMF’s new framework for addressing corruption, adopted by the board in April 2018 to remedy past gaps and inconsistencies. It requires the IMF to assess potential corruption and its macroeconomic implications for each member country, and candidly integrate these assessments into its surveillance and conditions.

“Equatorial Guinea is a crucial, public test of the IMF’s anti-corruption strategy and could be a model for how the institution tackles this issue in the future,” said Isabel Munilla, policy lead for extractive industries transparency at Oxfam America. “The government’s continued attacks on good governance activists and organizations throughout the loan negotiation process is one of many indicators that a vote is premature.”

Equatorial Guinea’s vast oil wealth and small population place it among the countries with highest per capita income in Africa, yet endemic mismanagement and corruption have left it financially unprepared for a slump in oil prices and production. Corruption investigations in the United States, Spain, France, Switzerland, South Africa, and elsewhere have exposed how the president and his inner circle have siphoned off hundreds of millions of dollars in public funds, even as the government spent little on meeting its obligations on rights to health, education, or water to improve the lives of ordinary citizens.

“An international trail of staggering corruption follows the president’s son, who is still vice president, including a recent Swiss corruption investigation that turned up two yachts worth $250 million that he uses as pleasure boats but the government said it owns,” said Tutu Alicante, executive director of EG Justice, which promotes human rights and good governance in Equatorial Guinea. “The fact that Equatorial Guinea’s government would rather saddle the public with debt than sell these yachts says a lot about its spending priorities and the real risk that the IMF money will help subsidize the lavish lifestyles of the elite.”

Prior to beginning loan negotiations, the IMF required Equatorial Guinea to implement several governance-related measures. That included ratifying the United Nations Convention Against Corruption in 2018 and hiring an independent firm to audit its state oil company, GEPetrol.

However, it has been unable to complete a requirement to apply to join the EITI, a global standard that requires member countries to advance transparency and allow free civil society participation and public debate around natural resource governance issues. It appears that meeting the requirement will be a loan precondition.

Meanwhile, government authorities continued their campaign against CEIDGE, the country’s leading good governance organization, formally dissolving it in July. They also continued to harass its vice president, Alfredo Okenve. These and other instances of repression and rights violations signal that the government is unwilling to make the necessary reforms to become a viable candidate for EITI. In 2010, the EITI Board rejected Equatorial Guinea’s membership because of repression. Since then, the EITI standard has adopted even more rigorous requirements for governments to respect civil society participation as a key element of its goal of advancing accountability in the natural resource sector.

“Over the past year, while my government has been promising the IMF it is working on an application to EITI, I was beaten up, prevented from leaving the country, and placed under house arrest, and my NGO was formally dissolved,” Okenve said. “Submitting an EITI application means nothing if the government doesn’t need to prove it has reformed enough to become a candidate country.”

“Joining the EITI is not a box-ticking exercise,” said Elisa Peter, executive director of Publish What You Pay. “The EITI Standard sets the bar high for transparency in the extractive sector, and for free and meaningful civil society participation. Equatorial Guinea should embrace this opportunity to reform its natural resource sector, tackle corruption, and allow everyone to speak out without harassment or threat. Only then can extraction bring positive change to the lives of its people.”

Equatorial Guinea also lacks a basic legal framework for preventing corruption and holding corrupt officials accountable. The vice president has frequently defended himself against international money laundering accusations by arguing Equatorial Guinea has no laws preventing conflicts of interest by senior officials, a position the government has echoed. The government awards valuable contracts without any transparency regarding the companies and individuals who reap millions of dollars, and officials do not need to publicly declare their assets or stakes in companies.

“The IMF has a rare opportunity to bring real reform to a government that has been scamming its citizens for decades,” said Marta Colomer, Amnesty International West and Central Africa senior campaigner. “This should be an opportunity to promote human rights and good governance in Equatorial Guinea – in particular to protect freedom of association for independent civil society organizations like CEIDGE and demonstrate support for human rights defenders.”

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