Press Release: IMF Executive Board Completes Third Review and Financing Assurances Review Under Gabon's Stand-by Arrangement
March 29, 2005
The Executive Board of the International Monetary Fund (IMF) today concluded the third review of Gabon's economic performance under a 14-month SDR 69.4 million (about US$104.9 million) Stand-By Arrangement to support the country's economic program (see Press Release No. 04/277). The Board also approved a review of the country's financing assurances.
Total drawings under the Stand-By Arrangement have amounted to SDR 41.7 million (about US$ 63.0 million). Completion of the third 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 March 29, 2005 on Gabon's economic performance, Ms. Anne O. Krueger, First Deputy Managing Director and Acting Chair, stated:
"Gabon's implementation of the program supported by the stand-by arrangement continues to be satisfactory. All quantitative performance criteria and the majority of structural benchmarks for end-December 2004 were met. The authorities' strong ownership of the program is welcome.
"With the economy still highly dependent on a declining oil sector and with continuing widespread poverty, Gabon now faces a dual challenge: first, to consolidate and extend the gains of macroeconomic stabilization in order to ensure a durable basis for future growth; and second, to reinforce the ongoing structural reform process so as to establish the foundations for the diversification of the Gabonese economy, raise the growth rate of the non-oil sector, and vigorously address poverty reduction.
"By continuing to apply part of the oil revenue windfall to paying down government debt, Gabon can set in motion a virtuous cycle that significantly reduces the weight of debt service on the public finances and the vulnerability of the economy to swings in oil prices. Gabon should seize this opportunity to address the legacy of past fiscal slippages and place the public finances on a permanently sounder footing.
"A vigorous implementation of the structural reform agenda is essential to stimulate private sector-led non-oil growth and accelerate economic diversification. With the aim of reinforcing competitiveness, it will be important to improve the investment climate. To this end, a key role falls to strengthening governance and transparency. The establishment of the National Commission Against Illicit Enrichment and Gabon's adherence to the Extractive Industries Transparency Initiative (EITI) are welcome, and can make a valuable contribution to increasing transparency and accountability. These objectives are equally important in the far-reaching reforms in the forestry sector currently under way. Making progress in the privatization program, strengthening the legal and regulatory framework, and developing micro-finance institutions will also be essential for strengthening the business environment," 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.