Press Release: IMF Executive Board Completes Fourth Review and Financing Assurances Review Under Gabon's Stand-By Arrangement
July 12, 2005
The Executive Board of the International Monetary Fund (IMF) has concluded the fourth review of Gabon's economic performance under a 14-month SDR 69.4 million (about US$104.9 million) Stand-By Arrangement to support the country's economic program (see Press Release No. 05/68) and granted a waiver for non-observance of a performance criterion in connection with the delay of an external payment. The Board also approved a review of the country's financing assurances.
Total drawings under the Stand-By Arrangement have amounted to SDR 41.7 million (about US$ 63.0 million). Completion of the fourth review makes available an amount equivalent to SDR 13.9 million (about US$ 21.0 million). However, because of a strong balance of payments position, the authorities are now treating the arrangement as precautionary and a disbursement is not contemplated at this time.
Following the Executive Board's discussion on July 8, 2005 of Gabon's economic performance, Ms. Anne O. Krueger, First Deputy Managing Director and Acting Chair, stated:
"The Gabonese authorities are to be commended for the successful implementation of their economic reform program. Fiscal discipline resulting from improved tax collection and strict expenditure control have helped to restore macroeconomic stability. Moreover, important structural reforms were launched, which could form the basis for the economic diversification needed to ensure long-term sustainable growth.
"Looking ahead, significant challenges remain to reduce Gabon's dependence on oil, diversify the economy, and make decisive progress in poverty reduction. Continued fiscal discipline will be needed to address the medium-term decline in oil production, and will involve sustained efforts to bolster non-oil revenue and improve the efficiency of public spending. By using the bulk of windfall oil revenues in the coming years to reduce domestic and external debt Gabon has the opportunity to place its public finances on a permanently sounder footing. At the same time, continued macroeconomic discipline needs to be accompanied by reinvigorating the structural reform process to accelerate the diversification of Gabon's economy and boost growth and employment in the non-oil sector.
"The Poverty Reduction Strategy Paper currently under preparation is a key building block for a medium-term program aiming at reducing poverty and diversifying the Gabonese economy. Its sectoral strategies will need to be translated into concrete spending plans in the context of a well-prepared three-year public investment plan and reflected in the 2006 budget. The public expenditure reviews currently underway will assist in this effort.
"Strengthening governance and increasing transparency are key ingredients of a better investment climate. Progress has been achieved, notably the publication of the first report of the National Commission Against Illicit Enrichment, the establishment of the public tender office, the steps to increase transparency in the forestry sector, and Gabon's adherence to the Extractive Industries Transparency Initiative (EITI). Looking ahead, the objective should be to reinforce the culture of good governance and transparency by ensuring the regular release of reliable information in the context of a sound institutional structure. The forthcoming assessment of fiscal transparency in Gabon will provide an important basis for strengthening budgetary institutions and practices.
"Against the background of the satisfactory completion of the Stand-By Arrangement, discussions will continue over the coming months on Gabon's desire for a multi-year successor arrangement with the Fund," Ms. Krueger said.
A Stand-By Arrangement is a decision of the IMF by which a member is assured that it will be able to make purchases (drawings) from the General Resources Account up to a specified amount and during a specified period of time, normally between 12 and 18 months, provided that the member observes the terms of the arrangement.