Equatorial Guinea’s fiscal woes are likely to mount

Subject

Equatorial Guinea fiscal challenges

Significance

Equatorial Guinea is experiencing a persistent economic crisis. The economy is almost wholly dependent on hydrocarbons; low oil prices have led to significant contractions in economic growth over the past two years. In response, President Teodoro Obiang's government has sharply reduced capital spending. The president also faces significant challenges abroad with his son, Vice-President Teodorin Obiang, the target of a public corruption investigation in French courts.

Impacts

• The government will move quickly to sign and ratify new production-sharing contracts after the current licensing round concludes.
• Dramatic cuts in public spending will increase unemployment and exacerbate popular unrest.
• Obiang could position another son -- Minister of Mines, Industry and Energy Gabriel Mbaga Obiang Lima -- as his successor.
• Government deficit increases will further strain the country's banking system.