Why Did The IMF Loan $280 Million To The Brutal, Corrupt African Dictatorship Of Equatorial Guinea?

The International Monetary Fund has come under fire from human rights groups and others for approving a $280 million loan to Equatorial Guinea, an oil-rich nation in central Africa that has been run by a brutal dictator since 1979.

President Teodoro Obiang Nguema has been criticizedn repeatedly for corruption, suppression of opponents, extrajudicial killings, and torture, among other crimes. He has been the subject of corruption investigations in Switzerland, one of which led to the confiscation of various luxury cars owned by his son, who is also the country’s vice president.

Nguema is in fact the world’s longest serving president.

Human Rights Watch and Oxfam both asked IMF not to grant the loan, citing the government’s systemic corruption and its relative prosperity.

In a report, Human Rights Watch said the country's vast oil revenues "funded lavish lifestyles for political elite, while little progress was made improving access to healthcare and primary education.” The rights group added the “mismanagement of public funds, credible allegations of high-level corruption, and serious human rights violations persist, including repression of civil society groups and opposition politicians, torture and unfair trials.”

But the IMF responded the three-year loan program will enable it to watch the country closely, thereby helping it fight corruption while improving its financial stability, noting the local economy has been hurt by falling oil prices.

“Priority should be given to strengthening the anti-corruption framework by addressing conflict of interests and adopting and enforcing a robust asset declaration regime for senior public officials,” said Tao Zhang, the IMF’s deputy managing director.

Due to the billions of dollars it generates from crude oil production, Equatorial Guinea’s has one of the highest gross domestic product per capita ratios in Africa – even higher than Iraq, Iran, Brazil and Argentina. But despite its oil wealth, about 40% of Equatorial Guinea’s 1 million population lives in poverty.

Moreover, Equatorial Guinea has no legal structures that would prevent corruption or punish senior government officials who engage in misconduct.

Human Rights Watch wrote that President Nguema’s “intolerance for dissent has also enabled him, his family members, and other associates to evade accountability for abusing their positions of power to amass enormous personal fortunes, even in the face of numerous international investigations.”

Some critics charge that the IMF is undermining its own reputation and integrity by funding such corrupt regimes.

“Knowing the penchant for corruption in this country, knowing about the human rights violations, I don’t see how [IMF] can justify bailing this country out with millions of dollars that they should know will be squandered once again,” said Tutu Alicante, executive director of EG Justice. Alicante is a native of Equatorial Guinea who lives in exile.

Sarah Saadoun, a researcher at Human Rights Watch, warned the IMF loan could serve to legitimize the corrupt regime in Equatorial Guinea.

“The IMF [will be giving] them the imprimatur of reform and that signals something to investors,” Saadoun said. “In a country where rule of law and corruption are perennial issues for investors, that signal is very, very valuable for them.”

Indeed, even Gabriel Obiang Lima, the minister of mines and hydrocarbons and one of the president’s sons, conceded the only reason his country took the IMF loan was to have solidarity with other nations in the region which have also been hurt by weak oil prices. “Equatorial Guinea is not a country that needs $200 million,” he said. “We make that in two months.”

IMF has approved loans to other Central Africa states in recent years.

In 2017, Gabon received a $642 million loan, while Republic of Congo got $450 million this past summer. Both countries have long been accused of widespread corruption, graft and human rights violations.