Statement of the IMF Mission in GabonPress Release No. 07/226
October 11, 2007
A mission of the International Monetary Fund (IMF) led by Mr. Cyrille Briançon visited Libreville from September 27th until October 9th to discuss the first review of the three-year Stand-By Arrangement supported by the IMF, and issued the following statement:
"Over the last two weeks, the IMF mission held constructive discussions with Mr. Paul Toungui, State Minister, in charge of Economy, Finance, Budget and Privatization, Mr. Casimir Oye Mba, State Minister in charge of Planning, and Development, and other ministers, as well as Mr. Hervé Nze-Nong, National Director of the Central Bank of Central African States (BEAC), and other senior government officials. The mission also met with representatives of the private sector and donors.
"The performance of the Gabonese economy was satisfactory during the first half of 2007 thanks to the implementation of prudent macroeconomic policies and structural reforms. All performance criteria under the program at end-June 2007 were met, except for the application of the automatic adjustment mechanism for fuel prices.
"Real GDP growth is expected to exceed 5 percent in 2007 because of brisk activity in mining, forestry, services, and food-processing industries. However, oil production is likely to be slightly lower than anticipated. Regarding fiscal policy, higher revenue and control over expenditure led to a narrower non-oil primary deficit than set in the program.
"Inflation subsided in the past few months after increasing during the second quarter because of a rise in the prices of food and fuel products. In this context, the mission urged the authorities to lift the recently introduced price controls, noting that they could trigger shortages and exacerbate distortions in the economy. The mission encouraged the government to continue implementing prudent fiscal and monetary policies and improve competition to reduce inflation further.
"Significant progress was achieved in the implementation of structural reforms. In particular, the mission noted that the recent difficulties faced by the state-owned energy and water company Société d'énergie et d'eau du Gabon (SEEG) were resolved and that following the privatization of Gabon Telecom, the transfer of assets is still underway. Pursuing the implementation of structural reforms is essential for improving the business climate and promoting private investment, the source of economic growth and diversification.
"The mission agreed with the authorities on measures to support the implementation of the program for the remainder of 2007 and for 2008. In light of the gradual decline in oil production, the mission urged the authorities to continue implementing fiscal policies consistent with reaching a sustainable fiscal position by 2011. For 2008, a first step toward this goal calls for addressing the high level of current spending, which constrains investment in infrastructure and the social programs of the government.
"The Executive Board of the IMF is expected to discuss the first review of the program in December 2007."