## 1gabea2021001

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### Executive summary and program objectives
- Context:
  - The Gabonese economy was gradually recovering from the 2014 oil price shock when it was hit by the Covid-19 pandemic.
  - Emergency IMF Rapid Financing Instrument: US$299.61 million in 2020.
  - Authorities requested a three-year Extended Fund Facility (EFF) arrangement of 180 percent of quota or SDR 388.8 million.
- Program aims:
  - Bolster the country’s response to the pandemic.
  - Reduce fiscal and debt vulnerabilities.
  - Foster a high, sustainable, green, and inclusive private sector-led growth.
  - Frontload governance measures to increase domestic revenue collection and improve public resource management.
  - Strengthen financial sector soundness, promote financial inclusion, and enhance the business environment.
  - Support broader CEMAC regional strategy and catalyze donor support.
- Implementation timeline:
  - Mission preparing the report met senior officials during May 3−June 7, 2021 (video and teleconference).
  - Letter of Intent and MEFP dated July 15, 2021; staff team prepared report on July 16, 2021.

### Recent economic developments — key findings
- Growth and production:
  - Real GDP declined by 1.8 percent in 2020.
  - Oil production declined by 1.2 percent due to partial compliance with OPEC quotas.
  - Manganese output increased by 24 percent.
  - Real non-oil GDP declined by 1.7 percent; the service sector fell by 11 percent.
  - Q1 2021 recovery signals: manganese production +4 percent; logging +19 percent; wood industries +13 percent; manganese processing +28 percent.
  - Average inflation: 1.6 percent in May (y-o-y).
- Labor and poverty:
  - Authorities estimate loss of 12,000 private sector jobs as of February 2021.
- Fiscal developments:
  - Total revenue declined by 20 percent.
  - Additional Covid-related spending: 0.9 percent of GDP.
  - Overall balance: surplus 1.4 percent of GDP in 2019 → estimated deficit -2.1 percent in 2020.
  - Text Table 1 (percent of non-oil GDP) selected entries:
    - Non-oil revenue: 17.8 → 14.4 (difference -3.4)
    - Current expenditure: 21.4 → 22.5 (difference 1.1)
    - Covid-19 current expenditure: 0.0 → 0.7 (difference 0.7)
    - Capital expenditure: 4.4 → 3.8 (difference -0.6)
    - Covid-19 capital expenditure: 0.0 → 0.4 (difference 0.4)
    - Net lending: 1.1 → -0.1 (difference -1.2)
    - Non-oil primary balance: -5.8 → -7.4 (difference -1.6)
    - Oil revenue (percent of GDP): 7.6 → 6.8 (difference -0.8)
    - Overall balance (percent of GDP): 1.4 → -2.1 (difference -3.5)
- External sector:
  - Current account deficit widened to an estimated 6 percentage points of GDP in 2020.
  - Central bank net foreign assets declined by CFAF 154 billion.
  - Regional international reserves declined by $0.2 billion to $7,445 billion by end-2020.
  - External position in 2020: broadly in line with level implied by medium-term fundamentals and desirable policies.
- Public debt and arrears:
  - Public debt: estimated 77.4 percent of GDP in 2020.
  - Validated past domestic arrears: FCFA 575 billion (6.5 percent of GDP) included.
  - Outstanding external arrears: CFAF 98 billion (US$182 million) as of end-May 2021.
  - National issuance of $1 billion Eurobond in January 2020.
  - Sovereign bond spreads: 350 basis points (Jan 2020) → 1500 basis points (early Apr 2020) → around 431 basis points (June 10, 2021).
- Banking sector:
  - Solvency ratio: close to 18 percent (minimum 9.5 percent).
  - Short-term liquidity ratio: above 160 percent (minimum 100 percent).
  - Overdue loans and NPL ratio: 10 percent and 8 percent respectively (same as end-2019); COBAC temporary measures expected to end end-2021.
  - Banks’ sovereign exposure: almost a fifth of bank assets at end-2020.
  - New commercial court in Libreville: 15 judges and 8 bailiffs.

### Outlook, projections, and risks
- Real GDP growth (selected years):
  - 2019: 3.9
  - 2020: -1.8
  - 2021 (Est.): 1.5
  - 2022 (Proj.): 3.9
  - 2023 (Proj.): 3.2
  - 2024 (Proj.): 3.4
  - 2025 (Proj.): 3.4
  - 2026 (Proj.): 3.5
- Sectoral projections (oil and non-oil growth, selected):
  - Oil growth sequence: 7.0; -2.4; -4.3; 8.8; -0.2; -0.2; -0.2; -0.2
  - Non-oil growth sequence: 3.3; -1.7; 2.7; 3.0; 3.9; 4.1; 4.1; 4.2
- Inflation (eop, y-o-y): 1.0 (2019); 1.6 (2020); 2.0 (2021) and 2.0 (2022–2026).
- Current account balance (percent of GDP): -0.9 (2019); -6.0 (2020); -4.8 (2021); improving toward -1.8 by 2026.
- Baseline assumptions and dependencies:
  - Recovery contingent on pandemic path, vaccine rollout, implementation of structural reforms, and commodity prices.
- Key risks (tilted to downside):
  - Further infection waves and slower vaccine rollout.
  - Volatility in oil prices.
  - Institutional capacity weaknesses and fragmented political landscape ahead of 2023 presidential elections.
  - Upside possible from faster global recovery and higher international oil prices.
- Authorities’ commitments on windfalls:
  - Save at least 50 percent of revenue windfalls to support BEAC reserves.
  - Use up to CFAF 15 billion (0.2 percent of nonoil GDP) for critical investment, including health infrastructure.
  - Use remainder to support private sector and faster clearance of domestic arrears.

### New EFF-supported program: design, financing, and conditionality
- Program access and design:
  - Proposed EFF: 180 percent of quota = SDR 388.8 million; three-year arrangement.
  - Significant frontloading: first two purchases totaling 75 percent of quota.
  - EFF financing: budget support; on-lent to the government via the Central Bank.
- Financing assurances and gaps:
  - External financing requirements (Billions of CFAF, 2021−24):
    - Financing needs by year: 2021: 860; 2022: 382; 2023: 309; 2024: 185; Total prog. period: 1,736.
    - Residual Gap by year: 2021: 126; 2022: 545; 2023: 467; 2024: 302.
  - Financing sources (selected, Billions of CFAF):
    - Official loans total prog. period: 935.
    - Project loans total prog. period: 719.
    - Budgetary loans total prog. period: 495.
    - Portfolio investment public (2021): 495.
    - IMF transactions total prog. period: -224.
  - Projected financing gaps for 2021−24: 5.1 percent of GDP.
  - IMF expected to provide financing of 3 percent of GDP (about 58 percent of exceptional financing).
  - Remaining gap expected to be covered by AFDB and France; indications BADEA and World Bank may provide support contingent on reforms.
  - Program described as fully financed with firm commitments for next 12 months and good prospects for remainder.
- Conditionality and monitoring:
  - Semiannual reviews; quantitative performance criteria (PCs), indicative targets (ITs), structural benchmarks (SBs).
  - PCs on primary fiscal balance excluding oil revenue (payment order basis), net domestic financing, central bank net claims on central government (excluding IMF credit), contracting/guaranteeing external debt, non-accumulation of new external arrears.
  - ITs on net reduction in stock of domestic arrears, tax revenues excluding oil, critical social spending.
  - TMU defines PCs/ITs and includes adjustors for oil revenue volatility, budget support, and new SDR allocation.
- Disbursement schedule (SDR millions and percent of quota):
  - July 28, 2021 — Approval: 81.000 (37.500)
  - December 1, 2021 — First review: 81.000 (37.500)
  - June 1, 2022 — Second review: 35.100 (16.250)
  - December 1, 2022 — Third review: 35.100 (16.250)
  - June 1, 2023 — Fourth review: 35.100 (16.250)
  - December 1, 2023 — Fifth review: 35.100 (16.250)
  - April 1, 2024 — Sixth review: 86.400 (40.000)
  - Total: 388.800 (180.000)

### Fiscal outlook, consolidation targets, and tax measures
- Fiscal trajectory (realizations and projections):
  - Overall fiscal balance (cash-basis, percent of GDP): 0.8 (2019); -2.5 (2020); -3.5 (2021); -0.3 (2022); 0.4 (2023); 1.1 (2024); 1.7 (2025); 2.2 (2026).
  - Non-oil primary fiscal balance (percent of non-oil GDP): -5.8 (2019); -7.4 (2020); -7.1 (2021); -4.9 (2022); -3.4 (2023); -2.6 (2024); -2.1 (2025); -1.1 (2026).
  - Public debt (percent of GDP): 59.8 (2019); 77.4 (2020); 74.7 (2021); 72.2 (2022); 70.1 (2023); 66.8 (2024); 62.3 (2025); 56.7 (2026).
- Medium-term objective and program targets:
  - Reduce public debt below 60 percent of GDP (pre-Covid19 level) by 2026.
  - Program targets an adjustment in the NOPB of 3.9 ppts of NOGDP over 2021−23, implying improvement in overall balance of about 2.5 ppts of GDP.
  - 2021 revised budget targets a mildly contractionary fiscal stance of 0.3 ppt of NOGDP (including vaccine cost 0.2 percent of NOGDP).
  - Reduce non-oil primary fiscal deficit below 3 percent of NOGDP by 2024 while increasing investment and social spending.
- Selected 2021 budget aggregates (Billions of CFAF and percent of non-oil GDP):
  - Non-oil revenue: 1,341.6 (Budget); 1,113.4 (Rev. Budget).
  - Tax revenue: 1,268.8 (Budget); 1,038.9 (Rev. Budget).
  - Non-tax revenue: 72.8 (Budget); 74.5 (Rev. Budget).
  - Grants: 38.9 (Budget); 55.0 (Rev. Budget).
  - Total expenditure and net lending: 2,013.9 (Budget); 1,961.2 (Rev. Budget).
  - Primary current expenditure: 1,096.8 (Budget); 1,162.1 (Rev. Budget).
  - Interest payments: 273 (Budget); 294.0 (Rev. Budget).
  - Capital expenditure: 483.4 (Budget); 337.3 (Rev. Budget).
  - Non-oil primary balance: -360.5 (Budget); -498.8 (Rev. Budget).
  - Oil revenue: 475.8 (Budget); 482.6 (Rev. Budget).
  - Overall balance (cash basis): -158.7 (Budget); -335.7 (Rev. Budget).
- Revenue measures and tax administration (Text Table 5 — Percent of non-oil GDP; Cumulative 2021−2023):
  - Streamline exemptions: 0.0 (2021); 1.0 (2021−22); 1.8 (2021−23)
  - VAT exemptions 1/: 0.0 (2021); 0.4 (2021−22); 0.6 (2021−23)
  - Customs exemptions 2/: 0.0 (2021); 0.0 (2021−22); 0.3 (2021−23)
  - CIT revenues exemptions 3/: 0.0 (2021); 0.0 (2021−22); 0.3 (2021−23)
  - Enhancing tax administration: 0.1 (2021); 0.6 (2021−22); 1.0 (2021−23)
  - VAT collection: 0.1 (2021); 0.3 (2021−22); 0.5 (2021−23)
  - Personal income tax: 0.0 (2021); 0.0 (2021−22); 0.1 (2021−23)
  - New taxes on foreigners (2021 budget law): 0.4 (2021); 0.4 (2021−22); 0.4 (2021−23)
  - Total: 0.5 (2021); 2.0 (2021−22); 3.1 (2021−23)
- Administration and governance measures:
  - Operationalize a revamped “Tax exemption committee”; prohibit exemption provisions outside budget law.
  - Roll-out new IT systems; digitalization; full registration of taxpayers; increase joint customs-tax controls; systematic follow-up on taxpayer compliance.
  - Gradual increases of implied customs tariff rate to align with CEMAC CET.
  - Implement single property tax with property titles reform.

### Debt sustainability, arrears clearance, and Eurobond strategy
- Public debt assessment:
  - Public debt remains sustainable but risks are high and have risen with accumulation of arrears.
  - Envisaged fiscal consolidation sufficient to place debt on downward path absent adverse shocks or slippages.
  - Gross financing needs and debt service expected elevated in medium term.
- Eurobond and refinancing:
  - Authorities plan to issue new Eurobonds in 2021 to cover payments due during 2022−24.
  - Issuance expected to alleviate gross financing needs, liquidity pressures, and reduce refinancing risks for 2022–25.
  - Authorities committed to clear bulk of recently accumulated external arrears either before program approval or before first review.
- External arrears (stock at end-May 2021; Text Table 7):
  - Total: Billion CFAF 98.03 / Million US$ 182.10.
  - AfDB: 0.16 billion CFAF / 0.29 Million US$.
  - BDEAC: 11.36 billion CFAF / 21.11 Million US$.
  - IsDB: 12.25 billion CFAF / 22.76 Million US$.
  - Bilateral (China): 34.01 billion CFAF / 63.17 Million US$.
  - Commercial: 40.26 billion CFAF / 74.78 Million US$ (breakdown by creditor listed).
- Arrears clearance commitments:
  - Authorities committed to clear arrears towards AfDB, BDEAC, IsDB and intend to clear insured commercial arrears prior to Board approval.
  - Intention to resolve CFAF 34.01 billion owed to China; China consented to approach.
  - Any remaining bilateral arrears to be cleared prior to first review.
  - Fund may provide financing notwithstanding external arrears to commercial creditors if good faith efforts are evident.

### Financial sector soundness, inclusion, and public financial institutions
- Banking sector indicators and measures:
  - COBAC temporary prudential measures to end end-2021; authorities and COBAC to design smooth exit.
  - Update NPL reduction strategy, strengthen judiciary capacity, complete liquidation of three public banks by mid-2022.
  - Banks’ sovereign exposure increased to nearly 22 percent of banking assets (end-March 2021).
  - Banks buy 95 percent of government debt in CEMAC.
  - Staff encourages strategy to broaden investor base for sovereign bonds, reduce sovereign-banks nexus, and enforce existing regulations on government bond holdings by primary dealers.
- Public financial institutions:
  - Address governance, investment management, and financial integrity weaknesses at CDC, FSRG, and FGIS.
  - Adopt autonomous financing of FGIS; audit participations and sell non-strategic ones.
- Financial inclusion:
  - 34 percent of population have an account at a financial institution.
  - Staff encourages adoption of a national financial inclusion strategy aligned with regional strategy.

### Governance, transparency, anticorruption, and procurement
- Governance measures:
  - Authorities will join EITI to foster transparency in oil and mining sectors; submit EITI membership application by September 2021.
  - Audits of four major SOEs completed to 2019; audits of 2020 financial accounts commissioned (prior action).
  - Strengthen asset declaration regime; enhance capacity of Commission to Combat Illicit Enrichment; amend legal framework for on-line publication of completed declarations.
- COVID-19 procurement and audit commitments:
  - Publish full text of all COVID-19-related procurement contracts concluded as of April 2021 including names and nationalities of beneficial owners of awarded legal persons.
  - As of reporting: some contracts published; beneficial ownership not yet available; authorities set up team to publish all contracts prior to Board approval.
  - Audit of COVID-19 expenditures launched; results expected to be published in September 2021.
- Public procurement and publication:
  - Make comprehensive information on public tenders publicly available per 2018 Public Procurement Code.
  - Develop, with IMF TA, framework for collection and publication of beneficial ownership information in procurement processes.
- Land administration:
  - Complete cadaster and property register; deliver property titles to enhance investor confidence and enable single property tax.

### Social protection, green transition, and structural reforms
- Social safety nets:
  - Work with World Bank to update “Economically Weak Gabonese” database and enhance targeting.
  - Authorities will continue to fund family and social protection spending; maintain minimum retained social spending items at 2021 credit levels.
  - Revamp poverty profile and revise eligibility criteria for GEF by end-December 2021 (structural benchmark).
- Green transition:
  - Program supports transition to green economy via tax measures and public investment choice.
  - IMF TA to analyze environment-friendly taxation (including IMF carbon pricing assessment tool) and evaluate public investments using PIMA-CC framework.
  - Objectives include sustainable forest management, carbon credit mechanism, and forest sector certification/plantations.
- Business environment and governance reforms:
  - Complete cadaster and property register; strengthen anti-corruption framework and property rights.
  - Improve Doing Business ranking (current rank 169/190 in 2020) and trade/logistics indicators.

### Capacity development, TA framework, and risks to implementation
- Capacity development and TA priorities (2021–24):
  - Tax administration and policy; PFM (cash management, budget execution, reporting); debt management; financial sector; macroeconomic statistics.
  - Milestones and outcomes specified in Annex VI (tax unit, e-T@x deployment, full TSA, GFSM transition).
- Risks and mitigation:
  - Key risks: pandemic uncertainty, capacity constraints, institutional weaknesses, tendency for overcommitment, political fragmentation.
  - Mitigants: authorities’ strong ownership of reform agenda, tailored CD strategy, donor engagement, contingency measures in program.
- Staff recommendation:
  - Support for a 36-month EFF arrangement in the amount of 180 percent of quota.
  - Completion of first review conditional on implementation of critical union-level policy assurances.

### Monitoring, reporting, and structural benchmarks (selected)
- Program monitoring instruments: prior actions, semiannual reviews, PCs, ITs, continuous PCs, structural benchmarks.
- Selected quantitative performance criteria (CFAF billions):
  - Floor on primary fiscal balance excluding oil revenue (payment order basis): 2020: -488.7; March 2021: -24.8; July 2021: -201.6; December 2021: -498.9; June 2022: -91.9.
  - Ceiling on net domestic financing of central government (excluding IMF): 2020: -72.7; March 2021: 36.1; July 2021: 150.0; December 2021: 138.0; June 2022: -122.4.
  - Ceiling on central bank net claims on CG (excluding IMF): 2020: 240.1; March 2021: 312.1; July 2021: 297.3; December 2021: 270.8; June 2022: 133.4.
  - Ceiling on external debt disbursing/guaranteeing: 2020: 922.8; March 2021: 12.3; July 2021: 92.7; December 2021: 853.8.
- Selected structural benchmarks (due dates):
  - Submit EITI membership application: End-September 2021.
  - Publish results of audit for all COVID-19 related expenditures: End-September 2021.
  - Development of domestic arrears clearance plan (audited/validated): End-September 2021.
  - Adopt restructuring plans for four major SOEs: End-October 2021.
  - Complete fiscal risks statement and include in FY22 budget: End-October 2021.
  - Require declaration of beneficial owners for bidders and publish for awarded contracts: End-November 2021.
  - Present TOFE according to GFSM 2001/2014 for central government: End-December 2021.
  - Revamp VAT escrow account: End-June 2022.
  - Complete full implementation of TSA: End-January 2023.
  - Full transition to GFSM 2001/2014: End-January 2024.
- Reporting requirements:
  - Monthly data to IMF within six weeks after month-end; detailed list includes monetary survey, CG financial operations, oil revenue breakdown, debt-service schedules, stock of arrears, procurement reports, fiscal risks annex, and status of structural reforms.

*Source: Gabonese authorities; and IMF staff estimates, projections, and program documents (excerpts from 1gabea2021001).*

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Context
- The Gabonese economy was gradually recovering from the 2014 oil price shock when it was hit by the Covid-19 pandemic.
- Decisive confinement measures helped save lives, but the pandemic and the fall in oil prices severely hit the economy, increasing unemployment and poverty.
- Emergency financing from the IMF through the Rapid Financing Instrument (US$299.61 million) helped meet urgent balance of payments needs in 2020.
- The authorities have requested a new three-year Extended Fund Facility (EFF) arrangement of 180 percent of quota or SDR 388.8 million.
- The new IMF-supported home-grown program aims to:
  - Bolster the country’s response to the pandemic.
  - Reduce fiscal and debt vulnerabilities.
  - Foster a high, sustainable, green, and inclusive private sector-led growth.
  - Frontload critical governance measures to lock in higher domestic revenue collection and better public resource management.
  - Strengthen financial sector soundness, promote financial inclusion, and enhance the business environment.
- The program will support the broader CEMAC regional strategy and catalyze donor support.

### Recent economic developments — key findings
- Growth and production:
  - Real GDP declined by 1.8 percent in 2020.
  - Oil production declined by 1.2 percent due to partial compliance with OPEC quotas.
  - Manganese output increased by 24 percent.
  - Real non-oil GDP declined by 1.7 percent; the service sector fell by 11 percent.
  - Available data suggest recovery in Q1 2021: manganese and logging production rose by 4 percent and 19 percent respectively; wood industries and manganese processing grew by 13 percent and 28 percent respectively.
  - Average inflation stood at 1.6 percent in May (y-o-y).
- Labor and poverty:
  - Authorities estimate the crisis led to the loss of 12,000 private sector jobs as of February 2021.
- Fiscal developments:
  - Total revenue declined by 20 percent due to lower oil prices, the recession, and increased tax arrears.
  - Total expenditure increased slightly; additional Covid-related spending amounted to 0.9 percent of GDP.
  - The overall balance moved from a surplus of 1.4 percent of GDP in 2019 to an estimated deficit of 2.1 percent in 2020.
  - Text Table 1 (Fiscal impact of Covid-19, percent of non-oil GDP) highlights changes including:
    - Non-oil revenue: 17.8 → 14.4 (difference -3.4)
    - Current expenditure: 21.4 → 22.5 (difference 1.1)
    - Covid-19 current expenditure: 0.0 → 0.7 (difference 0.7)
    - Capital expenditure: 4.4 → 3.8 (difference -0.6)
    - Covid-19 capital expenditure: 0.0 → 0.4 (difference 0.4)
    - Net lending: 1.1 → -0.1 (difference -1.2)
    - Non-oil primary balance: -5.8 → -7.4 (difference -1.6)
    - Oil revenue (percent of GDP): 7.6 → 6.8 (difference -0.8)
    - Overall balance (percent of GDP): 1.4 → -2.1 (difference -3.5)
- External sector:
  - The current account deficit widened significantly to an estimated 6 percentage points of GDP in 2020, mainly owing to a drop in oil and non-mining exports.
  - Central bank net foreign assets declined by CFAF 154 billion; regional international reserves declined by $0.2 billion to $7,445 billion by end-2020.
  - Gabon’s external position in 2020 was broadly in line with the level implied by medium-term fundamentals and desirable policies (Annex III).
- Public debt and arrears:
  - Public debt reached an estimated 77.4 percent of GDP in 2020.
  - Inclusion of validated past domestic arrears of FCFA 575 billion (6.5 percent of GDP) contributed to the increase.
  - Gabon has outstanding external arrears of CFAF 98 billion (US$182 million) as of end-May 2021.
  - The national issuance of a $1 billion Eurobond occurred in January 2020.
  - Sovereign bond spreads: 350 basis points in January 2020 → 1500 basis points in early April 2020 → around 431 basis points as of June 10, 2021.
- Banking sector:
  - Banks were reportedly solvent and liquid at end-2020: solvency ratio close to 18 percent (minimum 9.5 percent); short-term liquidity ratio above 160 percent (minimum 100 percent).
  - Overdue loans and NPL ratio at 10 percent and 8 percent respectively, at the same level as end-2019—temporary COBAC measures allowing deferral of reclassification of pandemic-impacted loans into NPLs are expected to end at end-2021.
  - Banks’ sovereign exposure increased to almost a fifth of bank assets at end-2020.
  - Judicial capacity was strengthened with a new commercial court in Libreville (15 judges and 8 bailiffs).

### Outlook and risks — projections and scenarios
- Baseline outlook:
  - The economy is expected to gradually recover, though the outlook remains challenging and contingent on the pandemic path, effective vaccine rollout, and implementation of structural reforms.
  - In 2021, non-oil real GDP is projected to recover by 2.7 percent, supported by expansion in manganese and wood production.
  - Inflation is expected to remain below 3 percent.
  - The current account balance is projected to improve by 1.2 percentage points of GDP in 2021 but will remain large at 5 percent of GDP.
  - Medium-term growth depends critically on implementing program commitments: high-quality fiscal consolidation and structural reforms, and diversification efforts under the 2021–23 Economic Recovery Strategy.
- Key risks to the outlook:
  - Uncertainty surrounding the Covid-19 pandemic and the effective rollout of vaccines.
  - Volatility in oil prices.
  - Institutional capacity weaknesses that could slow reform implementation.
  - A fragmented political landscape ahead of the presidential elections in 2023.
- Staff assessment:
  - Staff views that these risks are mitigated by the authorities’ strong ownership of the reform agenda and a tailored capacity development strategy to support implementation of structural reforms.

### New EFF-supported program: objectives, policies, and implementation priorities
- Program objectives:
  - Address protracted external and fiscal needs.
  - Reduce fiscal and debt vulnerabilities.
  - Foster sustainable, green, and inclusive private sector-led growth.
  - Support the broader CEMAC regional strategy.
- Policy priorities and measures:
  - Frontload governance measures to increase domestic revenue collection and improve public resource management.
  - Generate additional revenue and improve expenditure composition and public finance management to create room for large and urgent development needs while preserving debt sustainability.
  - Strengthen financial sector soundness and promote financial inclusion.
  - Enhance the business environment to support private sector-led growth.
- Program design and financing:
  - The Extended Arrangement would support implementation of the 2021–23 Economic Recovery Strategy and is expected to catalyze donor support.
- Implementation risks and mitigation:
  - Risks include pandemic and oil price uncertainty, capacity constraints, and political fragmentation; mitigants include strong ownership by authorities and tailored capacity development.

### Staff recommendation and mission
- Staff supports the authorities’ request for an EFF arrangement.
- The Letter of Intent and Memorandum of Economic and Financial Policies provide for appropriate policies to reach the program goals.
- The mission preparing the report met with senior officials and took place during May 3−June 7, 2021 (video and teleconference).

*Prepared by the Gabon staff team; July 16, 2021.*

### 23.4 percent, reflecting higher oil and mining exports. At the same time, import would

### 1gabea2021001 - 23.4 percent, reflecting higher oil and mining exports. At the same time, import would

### Outlook, growth, and external sector
- Real GDP growth:
  - 2019: 3.9
  - 2020: -1.8
  - 2021 (Est.): 1.5
  - 2022 (Proj.): 3.9
  - 2023 (Proj.): 3.2
  - 2024 (Proj.): 3.4
  - 2025 (Proj.): 3.4
  - 2026 (Proj.): 3.5
- Sectoral growth:
  - Oil growth: 7.0 (2019); -2.4 (2020); -4.3 (2021); 8.8 (2022); -0.2 (2023); -0.2 (2024); -0.2 (2025); -0.2 (2026)
  - Non-oil growth: 3.3 (2019); -1.7 (2020); 2.7 (2021); 3.0 (2022); 3.9 (2023); 4.1 (2024); 4.1 (2025); 4.2 (2026)
- Inflation (eop, y-o-y): 1.0 (2019); 1.6 (2020); 2.0 (2021); 2.0 (2022); 2.0 (2023); 2.0 (2024); 2.0 (2025); 2.0 (2026)
- Current account balance (in percent of GDP): -0.9 (2019); -6.0 (2020); -4.8 (2021); -2.9 (2022); -2.9 (2023); -2.5 (2024); -2.0 (2025); -1.8 (2026)
- External position: current account expected to strengthen in medium term due to planned fiscal consolidation, global economic recovery, booming mining sector, and investments (including Special Economic Zone) to boost non-oil exports in wood and agri-business sectors.
- Exports/imports:
  - Text mentions rebound in import by 5.6 percent (context: import rebound concurrent with exports increase to 23.4 percent reflecting higher oil and mining exports).
- Risks:
  - Risks remain high and tilted to the downside (RAM, Annex IV).
  - Downside: further infection waves, slower vaccine rollout, long-lasting pandemic effects on human capital and investment, weak reform implementation, lower oil prices (would deteriorate fiscal and external positions, increase gross financing needs and public debt).
  - Upside: faster global recovery and higher international oil prices.
- Authorities' commitments regarding windfalls:
  - Save at least 50 percent of revenue windfalls in support of BEAC reserves.
  - Use up to CFAF 15 billion (0.2 percent of nonoil GDP) for critical investment, including health infrastructure.
  - Use remainder to support private sector, including faster clearance of domestic arrears.

### Fiscal outlook and consolidation targets
- Overall fiscal balance (cash-basis, in percent of GDP): 0.8 (2019); -2.5 (2020); -3.5 (2021); -0.3 (2022); 0.4 (2023); 1.1 (2024); 1.7 (2025); 2.2 (2026)
- Non-oil primary fiscal balance (in percent of non-oil GDP): -5.8 (2019); -7.4 (2020); -7.1 (2021); -4.9 (2022); -3.4 (2023); -2.6 (2024); -2.1 (2025); -1.1 (2026)
- Public debt (in percent of GDP): 59.8 (2019); 77.4 (2020); 74.7 (2021); 72.2 (2022); 70.1 (2023); 66.8 (2024); 62.3 (2025); 56.7 (2026)
  - External share (in percent of GDP): 39.2 (2019); 46.0 (2020); 44.4 (2021); 44.4 (2022); 45.3 (2023); 45.1 (2024); 43.0 (2025); 39.5 (2026)
  - Domestic share (in percent of GDP): 20.6 (2019); 31.4 (2020); 30.4 (2021); 27.8 (2022); 24.8 (2023); 21.7 (2024); 19.3 (2025); 17.3 (2026)
- Medium-term fiscal objective and anchors:
  - Reduce public debt to below 60 percent of GDP (pre-Covid19 level) in 2026.
  - Program targets an adjustment in the NOPB of 3.9 ppts of NOGDP over 2021−23, implying an improvement in overall balance of about 2.5 ppts of GDP.
  - 2021 revised budget targets mildly contractionary fiscal stance of 0.3 ppt of NOGDP to account for continued measures to protect lives and livelihoods (1 percent of NOGDP), including vaccine cost (0.2 percent of NOGDP).
  - Once pandemic abates, reduce the non-oil primary fiscal deficit below 3 percent of NOGDP by 2024 while increasing investment and social spending.
- Fiscal projections and 2021 budget aggregates (selected figures, Billions of CFAF and percent of non-oil GDP):
  - Non-oil revenue (Billions of CFAF): 1,341.6 (Budget); 1,113.4 (Rev. Budget)
  - Tax revenue: 1,268.8 (Budget); 1,038.9 (Rev. Budget)
  - Non-tax revenue: 72.8 (Budget); 74.5 (Rev. Budget)
  - Grants: 38.9 (Budget); 55.0 (Rev. Budget)
  - Total expenditure and net lending: 2,013.9 (Budget); 1,961.2 (Rev. Budget)
  - Primary current expenditure: 1,096.8 (Budget); 1,162.1 (Rev. Budget)
  - Interest payments: 273 (Budget); 294.0 (Rev. Budget)
  - Capital expenditure: 483.4 (Budget); 337.3 (Rev. Budget)
  - Non-oil primary balance (Billions of CFAF): -360.5 (Budget); -498.8 (Rev. Budget)
  - Oil revenue: 475.8 (Budget); 482.6 (Rev. Budget)
  - Overall balance (cash basis): -158.7 (Budget); -335.7 (Rev. Budget)
- Fiscal trajectory (percent of non-oil GDP; projections):
  - Non-oil revenue: 1.4 (2021); 1.2 (2022); 0.6 (2023); Cumulative 3.2 (2021−2023)
  - Tax revenue: 1.5 (2021); 1.2 (2022); 0.8 (2023); Cumulative 3.5 (2021−2023)
  - Total expenditure and net lending: 1.4 (2021); -2.3 (2022); -0.4 (2023); Cumulative -1.3 (2021−2023)
  - Non-oil primary balance change: 0.3 (2021); 2.1 (2022); 1.5 (2023); Cumulative 3.9 (2021−2023)
  - Overall balance (commitment basis, percent of GDP): -1.1 (2021); 2.8 (2022); 0.8 (2023); Cumulative 2.5 (2021−2023)

### Revenue measures and tax administration
- Tax expenditure rationalization:
  - Tax expenditures estimated at 7 percent of NOGDP in 2017 will be implemented over program period starting in revised 2021 budget (Box 2).
  - Cumulative fiscal impact expected to reach 3.1% of NOGDP in 2023 (Text Table 5).
  - Operationalize a revamped “Tax exemption committee”; prohibit exemption provisions outside budget law (MEFP ¶23).
- Tariffs and property tax:
  - Gradual increases of implied customs tariff rate to align Gabon’s tariffs with the CEMAC common external tariff (CET).
  - Implement single property tax with property titles reform (MEFP ¶30).
- Strengthen revenue administration and arrears collection:
  - Roll-out of new IT systems; promotion of digitalization; full registration of all taxpayers; increase joint customs-tax controls; systematic follow-up on taxpayer compliance (MEFP ¶25, 26 & 27).
- Text Table 5: Tax revenue measures and estimated yield (Percent of non-oil GDP; Cumulative 2021−2023):
  - Streamline exemptions: 0.0 (2021); 1.0 (2021−22); 1.8 (2021−23)
  - VAT exemptions 1/: 0.0 (2021); 0.4 (2021−22); 0.6 (2021−23)
  - Customs exemptions 2/: 0.0 (2021); 0.0 (2021−22); 0.3 (2021−23); 0.8 cumulative
  - CIT revenues exemptions 3/: 0.0 (2021); 0.0 (2021−22); 0.3 (2021−23); 0.4 cumulative
  - Enhancing tax administration: 0.1 (2021); 0.6 (2021−22); 1.0 (2021−23)
  - Taxes on international trade and transactions: 0.0 (2021); 0.0 (2021−22); 0.1 (2021−23)
  - VAT collection: 0.1 (2021); 0.3 (2021−22); 0.5 (2021−23)
  - Personal income tax: 0.0 (2021); 0.0 (2021−22); 0.1 (2021−23); 0.3 cumulative
  - Corporate income tax: 0.0 (2021); 0.0 (2021−22); 0.1 (2021−23)
  - New taxes on foreigners (2021 budget law): 0.4 (2021); 0.4 (2021−22); 0.4 (2021−23)
  - Total: 0.5 (2021); 2.0 (2021−22); 3.1 (2021−23)
- Governance in extractive sector:
  - Submit EITI membership application by September 2021 (MEFP ¶19) and implement obligations for disclosure.
  - Strengthen transparency and governance of Gabon Oil Company and SOGARA; address inefficiencies from independent audits (MEFP ¶20 & 49).
  - Channel all oil revenue through Treasury Single Account (TSA) (MEFP ¶18) and publish natural resources reserves estimates (MEFP ¶20).

### Expenditure, public investment, and governance
- Rationalize nonpriority expenditure:
  - Use biometric census of civil servants to streamline payroll; strengthen recruitment (MEFP ¶31).
  - Task force to deliver by end-September 2021 a first list of public entities to close and recommend measures for retained entities (MEFP ¶32).
  - Objective to keep wage bill broadly constant in nominal terms; authorities plan to keep wage bill below FCFA 700 billion over medium term (wage bill stood at CFAF 683.5 billion in 2020).
- Public investment efficiency:
  - Continue modernization and strengthening of public investment management per 2019 PIMA recommendations (MEFP ¶36).
- Public finance management reforms:
  - Finalize a full-fledged TSA.
  - Reform VAT escrow account.
  - Implement treasury and cash management plans integrated with IT systems (MEFP ¶38).
  - Enhanced automated interfacing of budget, Treasury, and revenue IT systems (MEFP ¶38).
  - Continue expenditure regulation mechanism from previous program.
- Fiscal transparency and reporting:
  - Continue quarterly budget execution reports; extend public information and documents; reduce direct tenders; disclose all COVID-19 related expenditure and measures (MEFP ¶39).
  - Full transition to GFSM 2001/2014 by end of program (MEFP ¶40).
- Monitoring fiscal risks:
  - Include a full-fledged fiscal risks statement in FY2022 budget law documentation (MEFP ¶50).
  - Complete coverage of budgetary and financial reports to include assets and liabilities, guarantees, PPPs, SOEs (MEFP ¶51).
- SOE governance:
  - Update legal framework for State/SOEs relationships (MEFP ¶50).
  - Request SOEs to publish annual reports in line with best corporate practices.
  - Include full-fledged annex on public sector in FY22 budget law documentation (MEFP ¶51).
  - Expand coverage of fiscal reports to include all public entities per CEMAC directives.

### Debt sustainability, financing, and arrears
- Public debt assessment:
  - Public debt remains sustainable but risks are high and have risen recently with accumulation of arrears (Annex V).
  - Envisaged fiscal consolidation sufficient to put debt on a downward path absent adverse shocks or slippages; gross financing needs and debt service expected to remain elevated in medium term.
- External debt and Eurobonds:
  - Authorities plan to issue new Eurobonds in 2021 to cover payments due during 2022−24 (and related issuance fees).
  - Issuance of new Eurobonds in 2021 expected to alleviate gross financing needs, liquidity pressures, and reduce refinancing risks related to large Eurobond repayments over 2022–25.
  - Authorities committed to clear bulk of recently accumulated external arrears either before program approval or before first review (¶31 and MEFP ¶45).
  - Prospects of maintaining market access would weaken if Gabon maintained substantial stock of external arrears; country can lose access to project finance as significant part of foreign-financed capital expenditures are financed by commercial banks.
- Domestic arrears and clearance plan:
  - Authorities updated debt stock and prepared tentative clearance plan for implementation starting in 2021 (MEFP ¶46 & 47).
  - Identify and audit remaining domestic arrears (e.g., social sectors, public enterprises, public wages) and design clearance strategy.
  - To avoid future arrears accumulation: set a budgetary float ceiling and mechanism to closely monitor incurred expenditure and pending payments (MEFP ¶48).
  - Cash management reforms (¶14) will contribute to avoiding new arrears accumulation.

### Financial sector soundness and inclusion
- Banking sector measures and oversight:
  - COBAC took temporary prudential measures until end-2021 to ease crisis impact on asset quality and bank solvency; COBAC analyzing conditions and developing smooth exit strategy.
  - Authorities to monitor bank solvency and liquidity, support COBAC’s efforts to strengthen soundness and regulatory compliance.
  - Update strategy to reduce overdue loans in 2021, strengthen judiciary capacity, complete liquidation of three public banks by mid-2022.
- Sovereign exposure and investor base:
  - Gabonese banks have accumulated over one fifth of their assets in sovereign exposure.
  - Banks buy 95 percent of government debt in CEMAC.
  - Staff encourages authorities to work with BEAC to develop a strategy to broaden investor base for sovereign bonds and reduce sovereign-banks nexus, including enforcing existing regulations on government bond holdings by primary dealers.
- Public financial institutions governance:
  - Address weaknesses in governance, investment management, and financial integrity of CDC, FSRG, and FGIS.
  - Develop prudent strategies consistent with accelerated growth strategy.
  - Strengthen financial transparency, adopt autonomous financing of FGIS that does not undermine FSRG profitability, and audit participations to sell non-strategic ones.
- Financial inclusion:
  - Only 34 percent of population have an account at a financial institution.
  - Staff encourages adoption of a national financial inclusion strategy in line with regional strategy to improve access to finance and payment services.

### Structural reforms and social protection
- Business environment and governance:
  - Business and investment climate remains poor due to endemic corruption and weak property rights.
  - Focus on completing cadaster and property register and strengthening anti-corruption framework.
- Social safety nets:
  - Authorities working with World Bank to update database of the poor “Economically Weak Gabonese” and enhance social safety nets (MEFP ¶59).
  - Authorities will continue to adequately fund family and social protection spending (MEFP ¶58).
- Green transition:
  - Program supports transition to green economy focusing on tax measures and public investment choice.
  - With IMF TA, authorities will analyze environment-friendly taxation impacts, including use of IMF carbon pricing assessment tool, and evaluate public investments using PIMA-CC framework to identify climate and environment related risks (MEFP ¶66).

*Source: Gabonese authorities; and IMF staff estimates and projections (excerpts from provided IMF chapter).*

### 25. Improving governance and strengthening the anticorruption framework.

### 25. Improving governance and strengthening the anticorruption framework.

### Governance, transparency, and anticorruption measures
- The authorities will join the EITI to foster transparency in the oil and mining sectors.
- Completed audits of four major SOEs and are improving fiscal governance and transparency.
- Key reforms related to COVID-19 expenditure, public procurement, and the anti-corruption framework.

### COVID-19 expenditure transparency and audits
- Commitments in the Letters of Intent (LOIs) appended to Gabon’s 2020 RFI Purchase requests:
  - (i) Publication on-line of the full text of all COVID-19-related procurement contracts concluded as of April 2021 along with the names and nationalities of the beneficial owners of the awarded legal persons.
  - (ii) Publication on the government website of the results of the audit for all COVID-19 related expenditures.
- Implementation status:
  - Some COVID-19 procurement contracts have been published on the government website.
  - Beneficiary ownership information is not available.
  - Authorities have set up a team to accelerate publication of all relevant COVID-19 related contracts and expect to publish all contracts prior to the Board approval of the proposed Extended Arrangement.
  - Authorities will develop, with IMF TA, a framework for the collection and publication of beneficial ownership information in procurement processes.
- Audit of COVID-19 expenditures:
  - The authorities have launched the audit for all COVID-19 related expenditures.
  - The results of the audit are expected to be published in September 2021.

### Public procurement and asset declaration reforms
- Public procurement:
  - Make publicly available comprehensive information on public tenders in line with the 2018 Public Procurement Code.
- Asset declaration:
  - Strengthen the asset declaration regime for public officials by:
    - (i) increasing the capacity of the Commission to Combat Illicit Enrichment; and
    - (ii) amending the legal framework to bring it into alignment with the applicable international good practices, including by ensuring the on-line publication of completed declarations.

### Land administration reforms
- Completing the cadaster and property register and delivering property titles:
  - Expected effects: enhance investor confidence, promote private investment including in construction and housing, and facilitate implementation of a fair and effective property tax system.

### Program design, access, and use of funds
- Access under the Extended Arrangement:
  - Proposed at 180 percent of quota, or SDR 388.8 million.
  - Proposed three-year Extended Arrangement.
  - Significant frontloading: first two purchases totaling 75 percent of quota.
  - EFF financing to be used for budget support; on-lent to the government via the Central Bank.
- Rationale for three-year design:
  - (i) Acute impact of the pandemic on fiscal and external accounts with a significant decline in oil and non-mining exports and revenues.
  - (ii) Protracted need for a broad adjustment and reform agenda to reduce structural domestic and external imbalances, rekindle non-oil growth and increase living standards on a sustainable footing.

### External financing requirements and sources (Text Table 6: Gabon: External Financing Requirements, 2021−24) — figures in Billions of CFAF
- Financing Needs by year:
  - 2021: 860
  - 2022: 382
  - 2023: 309
  - 2024: 185
  - Total prog. period: 1,736
- Current account balance (excl. official transfers):
  - 2021: 461
  - 2022: 294
  - 2023: 298
  - 2024: 271
  - Total prog. period: 1,324
- Private capital and financial flows:
  - 2021: -236
  - 2022: -127
  - 2023: -206
  - 2024: -326
  - Total prog. period: -896
- Amortization of public loans (excl. IMF) 1/:
  - 2021: 635
  - 2022: 215
  - 2023: 218
  - 2024: 240
  - Total prog. period: 1,307
- Financing Sources by category (selected):
  - Official loans:
    - 2021: 212
    - 2022: 281
    - 2023: 251
    - 2024: 191
    - Total prog. period: 935
  - Project loans:
    - 2021: 172
    - 2022: 191
    - 2023: 165
    - 2024: 191
    - Total prog. period: 719
  - Budgetary loans:
    - 2021: 409
    - 2022: 0
    - 2023: 86
    - 2024: 0
    - Total prog. period: 495
  - AFDB:
    - 2021: 40
    - 2022: 65
    - 2023: 660
    - 2024: 171
  - France:
    - 2021: 0
    - 2022: 25
    - 2023: 200
    - 2024: 45
  - Portfolio investment public:
    - 2021: 495
    - 2022: 0
    - 2023: 0
    - 2024: 0
    - Total prog. period: 495
  - NFA central bank (excl. IMF):
    - 2021: 326
    - 2022: 57
    - 2023: 259
    - 2024: 228
  - IMF transactions:
    - 2021: -5
    - 2022: -18
    - 2023: -68
    - 2024: -133
    - Total prog. period: -224
- Residual Gap by year:
  - 2021: 126
  - 2022: 545
  - 2023: 467
  - 2024: 302
  - Proposed Extended Arrangement:
    - 2021: 126
    - 2022: 545
    - 2023: 467
    - 2024: 302

### Financing assurances and donor support
- Projected financing gaps for 2021−24 amount to 5.1 percent of GDP.
- IMF expected to provide financing of 3 percent of GDP, contributing about 58 percent of exceptional financing.
- Remaining gap to be covered by budgetary support from the African Development Bank and France.
- Indications that BADEA could also provide budget support; World Bank may provide budget support if a strong reform program is agreed.
- If additional financing becomes available this year, authorities would build deposits or change composition of financing rather than raise the deficit.
- Program is fully financed with firm commitments for financing for the next 12 months and good prospects for the remainder of the program.

### Program conditionality and monitoring
- Program monitored in semiannual reviews through:
  - Quantitative performance criteria (PCs)
  - Indicative targets (ITs)
  - Structural benchmarks (SBs)
- PCs set on:
  - Primary fiscal balance (excluding oil revenue; payment order basis)
  - Net domestic financing of the central government
  - Central bank net claims on central government (excluding use of IMF credit)
  - Contracting or guaranteeing of external debt
  - Non-accumulation of new external arrears
- ITs set on:
  - Net reduction in the stock of domestic arrears
  - Tax revenues (excluding oil revenue)
  - Critical social spending programs
- PCs and ITs defined in the TMU. Program includes adjustors to PCs for fluctuations in oil revenues and budget support, and to save oil revenue windfalls.

### Contingency measures (adverse scenario)
- If lower oil prices, economic growth, government revenue, and financing materialize, measures include:
  - Ensure full adherence to the existing automatic spending adjustment mechanism.
  - Reprioritize low-priority expenditure.
  - Slow down pace of domestic arrears clearance.
  - Accelerate phasing-out of tax expenditure.
  - Monetize some government assets guided by ongoing audits of major public companies.
  - Reduce lower-priority investments (which would likely affect pace of recovery) while preserving social spending.
  - Consider potential higher access to regional and international markets.
- Gabon expected to receive a new SDR allocation of about SDR 216 million (CFAF 168.1 billion or 1.75 percent of GDP) in 2021 which has not been included in the macroeconomic framework.
- Staff and the authorities agreed to discuss use of the proposed new SDR allocation at the time of the first review.
- Program includes adjustors to deal with oil price volatility and the new SDR allocation in 2021.

### External arrears (Text Table 7: Gabon: External Arrears in 2021) — Stock at end-May 2021
- Total: Billion CFAF 98.03 / Million US$ 182.10
- Afican Development Bank (AfDB): 0.16 billion CFAF / 0.29 Million US$
- Central African States Development Bank (BDEAC): 11.36 billion CFAF / 21.11 Million US$
- Islamic Development Bank (IsDB): 12.25 billion CFAF / 22.76 Million US$
- Bilateral: 34.01 billion CFAF / 63.17 Million US$
  - China: 34.01 billion CFAF / 63.17 Million US$
- Commercial: 40.26 billion CFAF / 74.78 Million US$
  - Austria: 15.54 billion CFAF / 28.87 Million US$
  - Spain: 0.09 billion CFAF / 0.17 Million US$
  - France: 12.57 billion CFAF / 23.34 Million US$
  - Israel: 2.23 billion CFAF / 4.13 Million US$
  - China: 1.30 billion CFAF / 2.42 Million US$
  - Morocco: 1.01 billion CFAF / 1.87 Million US$
  - AFREXIMBANK: 7.52 billion CFAF / 13.97 Million US$

- Authorities committed to clear arrears towards the AfDB, BDEAC, IsDB and intend to clear insured commercial arrears prior to Board approval of the proposed Extended Arrangement.
- Intention to resolve about CFAF 34.01 billion owed to China; China has been contacted and provided consent to this approach.
- Any remaining bilateral arrears should be cleared as soon as possible and prior to the first review of the Extended Arrangement.
- Gabon has external arrears to commercial creditors (CFAF 40.26 billion).
- Staff has ascertained that Gabon is making a good faith effort to reach collaborative agreements with commercial creditors; Fund may provide financing notwithstanding external arrears to commercial creditors.

### Capacity to repay and debt-related indicators
- Total amount of outstanding credit from the Fund, including disbursement related to envisaged Extended Arrangement:
  - 345.9 percent of quota in 2021
  - Peak at 367.4 percent of quota in 2022
- Outstanding obligations to the Fund based on existing and prospective drawings would peak at:
  - 6.0 percent of GDP in 2021
  - 15.5 percent of exports of goods and services in 2021
- Obligations relative to imputed international reserves to Gabon will peak at 408.4 percent in 2021.
- Risks: reliance on regional pool of the CEMAC region and susceptibility to commodity price shocks; increased risks to debt sustainability, elevated gross financing needs, debt profile risks.

### Safeguards assessment
- BEAC has implemented the priority recommendations from the 2017 safeguards assessment.
  - Alignment of BEAC’s secondary legal instruments with its Charter was concluded.
  - BEAC issued its FY 2019 audited financial statements in full compliance with IFRS.
- Under IMF safeguards policy, an update safeguards assessment of the BEAC is expected to be conducted in line with the four-year cycle for regional central banks.

### Policy assurances by BEAC
- BEAC provided updated policy assurances on end-June 2021 and end-December 2021 NFAs.
- Follow-up letter of policy support reiterated commitment to:
  - Appropriate monetary policy stance.
  - Member states implementing fiscal adjustment agreed in IMF-supported programs to underpin external reserves build-up.
  - Increase policy rate if reserves were to fall markedly again.
- Corrective actions to support reserve position:
  - (i) Adapt liquidity management and re-introduce liquidity absorptions to reduce excess liquidity, stimulate the interbank market, and improve monetary policy transmission.
  - (ii) Discontinue public securities purchase program in September 2021.
- BEAC will continue to finalize adaptations for the extractive sector foreign exchange regulation by end-2021.
- Regional assurances on regional NFAs are deemed critical for Gabon’s program success and regional external sustainability.

### Capacity development and technical assistance
- Staff and authorities agreed on a capacity development strategy for the next three years (milestones and outcomes in Annex VI).
- Fund TA focus areas:
  - Tax administration and policy
  - PFM: cash management, budget execution, budget credibility and reporting, financial information system
  - Debt management
  - Financial sector
  - Macroeconomic statistics
- TA to support engagement in transition to green economy, impacting tax policy and public investment.

### Risks to program success
- Notable risks: high uncertainty from the pandemic, capacity challenges, weaknesses in institutional capacity, tendency for overcommitment (evidenced in 2017 Extended Arrangement), fragmented political landscape ahead of presidential elections in 2023.
- Mitigating factors: authorities’ commitment to decisive policy responses, close engagement with donors, tailored CD strategy, contingency planning.

### Staff appraisal and priorities
- COVID-19 pandemic amplified pre-crisis macro-structural and social challenges; contraction in activity increased unemployment and poverty.
- Incipient signs of recovery; economic outlook contingent on pandemic path, vaccine rollout, and structural reforms.
  - Authorities action: accelerate vaccination program and inoculate 27.1 percent of the population by end-2021.
- Fund-supported program objectives: bolster pandemic response; foster sustainable, green, and inclusive private sector-led growth; priority to saving lives and livelihoods.
- Fiscal policy:
  - 2021 revised budget maintains COVID-19 support, implying a modestly contractionary fiscal stance of 0.3 ppt of NOGDP.
  - Once recovery solid, more ambitious fiscal consolidation needed to reduce public debt and rebuild space for investment and social spending.
- Governance and fiscal reforms emphasized:
  - Improve transparency in extractive sectors.
  - Enhance non-oil revenue mobilization and spending efficiency.
  - Rationalize current spending including wage bill.
  - Redirect resources toward social and public investment outlays.
  - Improve public investment management.
  - Expand Fiscal Risk Statement and accelerate SOE governance reform.
- Social spending and social safety net:
  - Continue working with the World Bank to update the “Economically Weak Gabonese” database and design better targeted social safety nets.
  - Reducing SOE transfers and generalized transfers (tax exemptions) to create space for expanding social safety nets.
- Structural reforms to support recovery:
  - Enhance banking sector and financial inclusion.
  - Complete cadaster and property register.
  - Strengthen anti-corruption framework to address bottlenecks and promote private investment and inclusive growth.
- Staff recommendation:
  - Support for a 36-month Extended Arrangement under the EFF in the amount of 180 percent of quota.
  - Propose that completion of the first review be conditional on implementation of critical policy assurances at the union level, as established in the June 2021 union-wide background paper.

*Source: 1gabea2021001 - 25. Improving governance and strengthening the anticorruption framework.*

### 2023. Gabon’s capacity to repay the Fund  is expected to be adequate but subject to high risks.

### 2023. Gabon’s capacity to repay the Fund is expected to be adequate but subject to high risks.

### Capacity to repay and risk assessment
- The authorities’ strong ownership of the reform agenda and policy measures in the 2021 revised budget mitigate risks.
- A tailored CD strategy is intended to support implementation of structural reforms.
- Better coordination within the public administration and across public agencies at the policy and technical level is critical to ensure effective and timely implementation of the reform agenda.
- Overall assessment headline: capacity to repay the Fund is expected to be adequate but subject to high risks.

### Key economic and sector projections (selected indicators, 2018–26)
- GDP at constant prices (annual percent change): 0.8; 3.9; 3.8; -2.7; -1.8; 1.5; 3.9; 3.2; 3.4; 3.4; 3.5
- Oil (annual percent change): -2.4; 7.0; 2.5; -14.9; -2.4; -4.3; 8.8; -0.2; -0.2; -0.2; -0.2
- Consumer prices, yearly average: 4.8; 2.0; 3.0; 3.0; 1.3; 2.0; 2.0; 2.0; 2.0; 2.0; 2.0
- Overall fiscal balance (commitment basis, percent of GDP): -1.3; 1.4; 1.4; -5.4; -2.1; -3.2; -0.4; 0.4; 1.1; 1.6; 2.2
- Primary fiscal balance (commitment basis, percent of GDP): 1.1; 3.6; 3.7; -2.3; 1.2; -0.2; 2.2; 3.4; 4.1; 4.6; 5.1
- Total public debt (percent of GDP): 60.6; 59.8; 55.6; 74.7; 77.4; 74.7; 72.2; 70.1; 66.8; 62.3; 56.7
- External public debt (percent of GDP): 40.0; 39.2; 42.3; 50.6; 46.0; 44.4; 44.4; 45.3; 45.1; 43.0; 39.5
- Domestic public debt (percent of GDP): 20.6; 20.6; 13.3; 24.1; 31.4; 30.4; 27.8; 24.8; 21.7; 19.3; 17.3
- Gross government deposits in BEAC (percent of GDP): 3.4; 2.3; 7.1; 2.6; 2.4; 2.4; 2.5; 2.9; 3.0; 3.1; 3.2
- Current account balance (percent of GDP): -2.1; -0.9; -2.0; -9.5; -6.0; -4.8; -2.9; -2.9; -2.5; -2.0; -1.8

### Balance of Payments (selected lines, 2018–26)
- Current account (billions of CFAF): -196; -89; -209; -839; -531; -461; -294; -298; -271; -221; -217
- Export of goods (fob, billions of CFAF): 3,446; 3,706; 3,986; 2,777; 2,762; 3,409; 3,605; 3,642; 3,685; 3,766; 3,849
  - Hydrocarbons (billions of CFAF): 2,449; 2,648; 2,389; 1,370; 1,670; 2,117; 2,216; 2,104; 2,035; 1,994; 1,968
  - Timber (billions of CFAF): 315; 380; 419; 272; 377; 411; 429; 471; 516; 567; 596
  - Manganese (billions of CFAF): 636; 628; 846; 861; 634; 774; 827; 914; 964; 1,017; 1,073
- Import of goods (fob, billions of CFAF): -1,761; -1,832; -1,875; -1,702; -1,732; -1,829; -1,867; -1,910; -1,967; -2,030; -2,114
- Services (net, billions of CFAF): -964; -1,085; -1,107; -842; -874; -944; -1,011; -923; -917; -903; -886
- Income (net, billions of CFAF): -861; -820; -1,043; -922; -652; -1,084; -953; -1,042; -1,009; -992; -1,008
- Financial account, direct investment (net, billions of CFAF): 477; 735; 988; 847; 742; 751; 563; 575; 553; 572; 592
- Overall balance (billions of CFAF): -217; -336; 326; -459; -393; -129; -610; 125; 152; 122

### Central government accounts (2018–26, selected lines)
- Total revenue and grants (billions of CFA francs): 1,581; 1,931; 1,946; 1,369; 1,553; 1,651; 1,844; 1,982; 2,147; 2,329; 2,503
  - Oil revenue (billions of CFA francs): 583; (2020 onwards lines include) 747; 684; 395; 596; 483; 587; 619; 655; 700; 705
  - Non-oil revenue (billions of CFA francs): 997; 1,184; 1,245; 949; 953; 1,113; 1,257; 1,363; 1,492; 1,628; 1,798
- Total expenditure and net lending (billions of CFA francs): 1,702; 1,796; 1,806; 1,848; 1,742; 1,961; 1,883; 1,940; 2,027; 2,144; 2,242
  - Current expenditure (billions of CFA francs): 1,270; 1,320; 1,278; 1,368; 1,431; 1,456; 1,362; 1,420; 1,459; 1,525; 1,584
  - Wages and salaries (billions of CFA francs): 701; 689; 661; 675; 683; 685; 695; 707; 741; 788; 831
  - Interest payments (billions of CFA francs): 225; 225; 241; 278; 297; 294; 262; 311; 320; 330; 345
  - Capital expenditure (billions of CFA francs): 248; 281; 513; 380; 241; 337; 363; 359; 403; 451; 487
- Overall balance (cash basis, billions of CFA francs): -147; 84; 152; -481; -217; -336; -304; 41; 219; 226; 4
- Stock of arrears (billions of CFA francs): 452.5; 239.5; 28.2; 81.9; 156.8; 74.2; 7.5; -2.0; -2.0; -2.0; -1.0
- Non-oil primary balance excluding capital transfers (billions of CFA francs): -479; -387; -303; -596; -489; -499; -364; -267; -214; -185; -99
  - As percent of non-oil GDP: -7.6; -5.8; -4.2; -8.9; -7.4; -7.1; -4.9; -3.4; -2.6; -2.1; -1.1

### Financing of the fiscal deficit (2018–24, highlights)
- Overall fiscal deficit (cash basis, billions of CFA francs): 146.5; -83.6; -152.4; 245.2; 217.4; 335.7; 29.5; -44.4; -122.4
- Amortization (including arrears, billions of CFA francs): 478.9; 544.8; 1,000.1; 983.3; 938.7; 924.5; 579.6; 629.7; 741.6
  - External amortization (billions of CFA francs): 170.4; 259.8; 695.4; 686.4; 632.9; 635.3; 214.8; 244.5; 280.2
  - Domestic amortization (billions of CFA francs): 308.5; 285.0; 304.7; 297.0; 305.8; 289.3; 364.7; 385.2; 461.3
- Total financing needs (C = A + B, billions of CFA francs): 696.7; 549.3; 1,270.7; 1,531.3; 1,190.9; 1,344.0; 745.8; 685.7; 697.9
- Identified sources of financing (D, billions of CFA francs): 375.5; 243.8; 1,083.7; 1,025.5; 952.2; 1,178.3; 601.4; 545.3; 630.7
- Financing gap (E = C − D, billions of CFA francs): 321.2; 305.5; 187.0; 505.8; 238.7; 165.7; 144.4; 140.4; 67.2
- Exceptional external financing (F, billions of CFA francs): 202.2; 230.2; 115.0; 180.6; 65.8; 39.6; 90.0; 85.0; 90.0
- Residual financing needs after exceptional financing (E − F, billions of CFA francs): 119.0; 75.3; 72.0; 325.2; 172.9; 126.1; 54.4; 54.4; 67.2
- Indicative IMF financing in residual: IMF-EFF (billions of CFA francs): 113.9; 72.8; 72.0; 72.4; 0.0
  - IMF-RFI-1 and IMF-RFI-2 lines shown in the financing table (e.g., IMF-RFI-1 = 88.0; IMF-RFI-2 = 84.9 in earlier columns)

### Monetary and financial sector (selected indicators)
- Broad money (M2) annual percent change (selected years): -2.9; 17.5; 23.0; 15.7; 1.2; 7.1; 11.7; 14.2; 1.2; 3.0; 8.7; 5.0; 7.1; 7.1; 11.7; 12.4
- Credit to the private sector (annual percent change, selected): -11.4; -4.0; 4.7; 6.2; 9.3; 3.1; 4.0; 9.5; 2.2; 5.4; ... ; -6.5; 5.4; 6.2; 7.0
- Financial soundness indicators (2015–20, percent):
  - Total bank regulatory capital to risk-weighted assets: 8.3; 9.1; 9.7; 10.8; 16.4; 17.5
  - Non-performing loans to total loans: 5.3; 10.7; 10.8; 12.4; 7.7; 8.3
  - Net income to average capital (ROE): 13.5; 20.6; 27.9; 22.4; 23.6; ...
  - Liquid assets to total assets: 24.4; 23.2; 24.2; 26.4; 25.9; 27.2

### Indicators of capacity to repay the Fund (Table 7, 2021–31, selected series)
- Fund obligations based on existing credit (in millions of SDRs, principal): 6.0; 23.8; 88.1; 170.5; 130.0; 62.5; 56.6; 38.7; 14.9; 0.0; 0.0
- Fund obligations based on existing and prospective credit (in millions of SDRs, total obligations): 15.1; 39.0; 105.0; 187.8; 150.6; 102.1; 104.1; 100.0; 82.4; 66.7; 59.2
- Total obligations in millions of US$ (projection): 21.7; 56.0; 150.7; 269.5; 216.1; 146.5; 149.3; 143.5; 118.2; 95.7; 85.0
- Total obligations as percent of exports of goods and services: 0.3; 0.7; 2.0; 3.4; 2.7; 1.7; 1.7; 1.6; 1.2; 0.9; 0.8
- Total obligations as percent of debt service: 4.4; 8.2; 17.5; 26.6; 19.3; 12.9; 12.2; 13.1; 8.9; 7.1; 0.0
- Total obligations as percent of GDP: 0.1; 0.3; 0.8; 1.3; 1.0; 0.7; 0.6; 0.6; 0.4; 0.3; 0.3
- Total obligations as percent of Gross International Reserves: 8.2; 17.4; 31.2; 37.4; 21.5; 11.8; 8.7; 6.5; 4.4; 3.1; 2.5
- Outstanding Fund credit (in millions of SDRs): 747.1; 793.5; 775.6; 691.5; 554.7; 462.3; 364.1; 267.8; 188.1; 123.3; 65.3
- Outstanding Fund credit (in millions of US$): 1,072.1; 1,138.6; 1,112.9; 992.2; 796.0; 663.3; 522.4; 384.3; 269.9; 176.9; 93.6
- Net use of Fund credit (in millions of SDRs): -6.0; -23.8; -88.1; -170.5; -136.8; -92.4; -98.2; -96.3; -79.7; -64.8; -58.1
- Memorandum: Exports of goods and services (in millions of US$): 6,937; 7,490; 7,647; 7,836; 8,100; 8,378; 8,730; 9,158; 9,642; 10,192; 10,817
- Memorandum: Gross Official Reserves imputed to Gabon (in millions of US$): 263; 321; 483; 720; 1,006; 1,237; 1,722; 2,205; 2,663; 3,098; 3,353
- Quota (millions of SDRs): 216; 216; 216; 216; 216; 216; 216; 216; 216; 216; 216

### Proposed schedule of disbursement and timing of reviews under the Extended Arrangement (2021–24)
- July 28, 2021 — Approval of the extended arrangement under the EFF: Amount 81.000 (millions of SDRs); Percentage of Quota 37.500
- December 1, 2021 — Observance of the PCs for end-July 2021, continuous PCs and completion of the first review: Amount 81.000; Percentage of Quota 37.500
- June 1, 2022 — Observance of the PCs for end-December 2021, continuous PCs and completion of the second review: Amount 35.100; Percentage of Quota 16.250
- December 1, 2022 — Observance of the PCs for end-June 2022, continuous PCs and completion of the third review: Amount 35.100; Percentage of Quota 16.250
- June 1, 2023 — Observance of the PCs for end-December 2022, continuous PCs and completion of the fourth review: Amount 35.100; Percentage of Quota 16.250
- December 1, 2023 — Observance of the PCs for end-June 2023, continuous PCs and completion of the fifth review: Amount 35.100; Percentage of Quota 16.250
- April 1, 2024 — Observance of the PCs for end-December 2023, continuous PCs and completion of sixth review: Amount 86.400; Percentage of Quota 40.000
- Total: Amount 388.800 (millions of SDRs); Percentage of Quota 180.000

_Source: IMF staff estimates, projections, and Gabonese authorities (from 1gabea2021001 - 2023)._

### Box 1. Covid-19 Development and Vaccination

### Box 1. Covid-19 Development and Vaccination

### Epidemiological situation
- As of June 11, 2021, there were 24,736 confirmed cases of Covid-19 in Gabon, above 11,000 cases per million people.
- Total deaths: 156.
- Mortality is topping 70 deceases per million inhabitants.
- Gabon is among the highest in sub-Saharan Africa (SSA) for both cases per million and deceases per million.

### Testing
- Total tests performed: 839,236 tests (or the equivalent to almost 40 percent of its population).
- Gabon is the largest per capita tester of Covid-19 in SSA.

### Vaccination rollout and coverage
- Vaccination started on March 24 using the Chinese Synopharm vaccine.
- Number inoculated with the first dose: 23,260 people (about one percent of its population).
- Number inoculated with the second dose: 10,931 people (around 0.5 per cent of its population).
- Authorities plan to vaccinate at least 27.5 percent of the population by end-2021.
- Priority groups targeted for immunization under the plan:
  - (i) people at high risk of infection (health workers);
  - (ii) people at high risk due to comorbidity or precarious health situation and those aged 60 and above;
  - (iii) those at high risks of infection and transmission (non-health essential workers, e.g., security forces, teachers, prisoners).

### Procurement, financing, and capacity
- Gabon has enrolled in the UN COVAX arrangement with the aim to acquire, with World Bank financing, AstraZeneca vaccines to cover up to 20 percent of its population.
- Preliminary cost of the COVAX/AstraZeneca plan: around $20 million or 0.1 percent of GDP.
- As of the reporting date, no vaccine has been received under the COVAX agreement.
- Vaccines received/acquired outside COVAX:
  - 400,000 doses received as grants of the Synopharm vaccine.
  - 10,000 doses purchased of the Russian Sputnik V vaccine.
- Combined vaccine capacity from grants and purchases gives capacity to cover 205,000 people (or around 9.5 percent of their population).

### Comparative notes
- Gabon ranks among the highest in SSA for confirmed cases per million and deceases per million.
- Testing per capita in Gabon is the highest in SSA.

*Source: Gabon's Prime Minister Office — Prevention Committee against Covid-19; and World Health Organization (WHO). Note: Information as of June 11, 2021.*

### Annex II.  Estimating the Impact of Covid-19 Using  Input–Output

### Annex II. Estimating the Impact of Covid-19 Using Input–Output Tables

### Methodological approach and assumptions
- Key assumption: the COVID-19 shock largely leaves the underlying input–output structure of the world’s economies unchanged in the short run as firms would not have been able to significantly alter their production patterns apart from scaling them down.
- Use of network approach following Acemoglu et al. (2016) to calculate the impact of COVID-19 on Gabon’s total output, with focus on the service sector and propagation through sectoral linkages.
- Data sources and limitations:
  - Multi-Regional Input-Output (MRIO) database compiled by Eora used for broad MRIO context.
  - Gabon’s total requirement coefficients obtained from its 2014 Input-Output (IO) table (latest available), assuming no material technological changes during 2014–20.
  - IO table for Gabon consists of 26 sectors (including agriculture, mining and quarrying, manufacture, construction, wholesale and retail, transport, financial intermediation, and hotel and restaurant).
- IO framework (as presented):
  - Sector i gross output: X_i sold as intermediate outputs z_ij or to final users Y_i:
    - X_i = z_i1 + z_i2 + z_i3 + ⋯ + z_ii + Y_i
  - Direct requirement coefficients:
    - a_ij = z_ij / X_i
  - Matrix form and Leontief inverse:
    - X = A X + Y
    - X = (I − A)^{-1} Y where (I − A)^{-1} is the Leontief inverse and I is a diagonal matrix.
  - Predictive form for final demand shocks:
    - ∆X = (I − A)^{-1} ∆Y

### Pandemic scenarios used to calibrate demand shocks
- Scenario 1 (“trending”): current lockdown measures and travel ban will continue through the first half of 2021, and become 50% better in the latter half of 2021.
- Scenario 2 (“optimistic”): current lockdown measures and travel ban will continue through the first half of 2021, and return to normal in the latter half of 2021.
- Scenario 3 (“pessimistic”): current lockdown measures and travel ban will continue throughout 2021.

### Initial sectoral shock calibration and amplification
- IMF (2020) estimate: lockdown measures and travel ban hit the hotels and restaurants industry with a 75% disruption in activity (initial severe impact cited).
- Total requirement coefficient for the hotel and restaurant industry (Gabon, transformed from direct to total requirements): 1.07.
  - Interpretation: one-unit increase/decrease in final demand of the hotel and restaurant industry leads to a sum of 1.07 units of change in economy-wide output through upstream and downstream linkages.
- Size of initial sectoral shock is generated by comparing current demand to the counterfactual value without the pandemic; sum effect expressed as the difference between projected growth and pre-COVID trend growth.

### Quantified results (Table 1 reproduced values)
- Table 1. Estimation of Economic Impact Using Input-Output Table (hotel & restaurant sector focus)
  - Shared sector statistic and computed effects by scenario:
    - Hotels & Restaurants: Share of GDP = 2.6%
    - Scenario 1:
      - Size of Initial Sectoral Shock = 56%
      - Total Requirement Coefficients = 1.07
      - Amplification Effect = 60%
      - Sum Effect on GDP = 3.1%
    - Scenario 2:
      - Size of Initial Sectoral Shock = 38%
      - Total Requirement Coefficients = 1.07
      - Amplification Effect = 40%
      - Sum Effect on GDP = 2.0%
    - Scenario 3:
      - Size of Initial Sectoral Shock = 75%
      - Total Requirement Coefficients = 1.07
      - Amplification Effect = 80%
      - Sum Effect on GDP = 4.1%

### Aggregate conclusions and implications
- Depending on scenario and recovery speed, COVID-19 is projected to trim 2-4 percent from Gabon’s level of GDP in 2021 through shocks to its service sector and subsequent supply-chain repercussions.
- The formal service sector:
  - Represents a small share of GDP (Hotels & Restaurants share = 2.6%) but is labor intensive (low-skills workers, women).
  - A shock could increase unemployment and poverty and produce long-term scars (cited: Chen, 2020; Shibata, 2020).
- Next analytical steps stated: use a survey to analyze the link on unemployment and poverty through the impact on the service sector.

*Sources: Gabonese authorities; and IMF staff estimates and calculations.*

### 9.      The bottom-line assessment is that the external position is broadly in line with the

### 9.      The bottom-line assessment is that the external position is broadly in line with the

### External position assessment
- The external position is broadly in line with the level implied by fundamentals and desirable policies.
- Assessment is drawn from regression-based CA and REER approaches, which exhibit relatively low residuals and account for desirable policies supporting external stability and regional commitments that support the CFA currency peg.
- The consumption-based approach illustrates how Gabon’s declining resource base calls for continued efforts to strengthen the external position, which may be offset by productive investment in the non-oil sector to diversify the export base.
- The overall assessment estimates a REER gap of 0.9 to 2.5 percent based on the range of CA and REER results, respectively, compared with an overall assessment of a 9 to 16 percent overvaluation in 2018.
- This assessment is based on the CA gap estimate being 1.4 percent of GDP.
- Preliminary data suggest that this assessment could further improve in 2021 given the anticipated strengthening of the current account.
- Stronger returns from recent FDI, including through higher than anticipated oil production, represent an important medium-term upside risk which could also improve the external position.

### Policy recommendations to sustain external position strengthening
- Continue policy adjustment and measures to strengthen structural competitiveness, including:
  - Measures under the new IMF-supported program including fiscal consolidation and efforts to improve the efficiency of public investment.
  - Measures to improve governance and the business environment.
- Address low rankings on structural indicators:
  - Doing Business Ranking: 169 out of 190 countries in 2020.
  - Continue improving trade-related structural indicators (World Economic Forum’s Enabling Trade Index and World Bank’s Logistics Performance Index).

### Structural competitiveness indicators (WEF Enabling Trade Index and Subcomponents, 2016)
- Overall rank (out of 136): 129
- Domestic market access: 125
- Tariff rate (%): 13.4
- Complexity of tariffs: 31
- Share of duty free imports (%): 22.1
- Foreign market access: 128
- Tariff rate faced (%): 4.7
- Margin of preference in destination markets: 132
- Border administration ranking: 119
- Customs service index: 105
- Efficiency of clearance process: 120
- Time to import (documentary, hours): 120
- Time to import (border compliance, hours): 84
- Cost to import (documentary) US$170
- Cost to import (border compliance) US$1320
- Time to export (documentary, hours): 60
- Time to export (border compliance, hours): 96
- Cost to export (documentary) US$200
- Cost to export (border compliance) US$163
- Irregular payments and bribes: 90
- Time predictability of import procedures: 103
- Customs transparency index: 86
- Infrastructure rankings:
  - Transport infrastructure: 119
  - Transport services: 130
  - Availability and use of ICTs: 107
- Operational environment ranking: 110
- Protection of property: 93
- Efficiency and accountability of govt: 118
- Access to finance: 124
- Openness to foreign participation: 109
- Physical security: 82

### Risk Assessment Matrix — selected risks, likelihood, impact, and recommended policy response
- Disruption in domestic oil production caused by aging fields and lower than expected production from new projects.
  - Relative Likelihood: Medium
  - Impact if Realized: Medium
  - Recommended Policy Response: Reprioritize fiscal spending and enhance the efficiency of spending, while supporting non-oil activity during shutdowns. Enhance facility maintenance and plan adequate investment for refurbishment, and encourage exploration and discovery of new oil.
- Deterioration of domestic political conditions.
  - Relative Likelihood: Medium
  - Impact if Realized: Medium
  - Recommended Policy Response: Communicate benefits of the government’s macroeconomic program and enhance inclusiveness of the approach to economic management. Step up efforts to improve governance.
- Widespread social discontent due to intensified domestic transmission of the COVID-19 pandemic, delays in vaccination or unequal access to the vaccine.
  - Relative Likelihood: Medium
  - Impact if Realized: Medium
  - Recommended Policy Response: Continue to enforce social distancing regulations. Ramp up crisis preparedness in the health system. Expand emergency assistance. Intensify efforts to secure sufficient resources, ensure efficient use of COVID-19-related emergency resources, closely monitor their expenditure, and ensure full transparency and accountability per commitments in the LOIs appended to Gabon’s 2020 RFI Purchase requests.
- Unexpected (prolonged pandemic) shift in the COVID-19 pandemic.
  - Relative Likelihood: High
  - Impact if Realized: High
  - Recommended Policy Response: Reprioritize fiscal spending and enhance efficiency. Accelerate reforms to address structural weaknesses aimed at supporting private sector growth. Energize external support through better compliance to donors’ conditionality and emphasize merits and needs of Gabon’s development strategy.
- Sharp rise in global risk premia exposing financial and fiscal vulnerabilities.
  - Relative Likelihood: Medium
  - Impact if Realized: Medium
  - Recommended Policy Response: Pursue a credible medium-term fiscal consolidation path to rebuild fiscal and external buffers and sustain confidence. Strengthen debt management.
- Oversupply or volatility in the oil market.
  - Relative Likelihood: High
  - Impact if Realized: High
  - Recommended Policy Response: Increase non-oil revenue to help build fiscal buffers. Reprioritize fiscal spending and enhance efficiency. Accelerate reforms to support private sector growth.
- Accelerating de-globalization.
  - Relative Likelihood: Medium
  - Impact if Realized: Medium
  - Recommended Policy Response: Continue improving the business environment to attract investments and diversify the economy. Reprioritize fiscal spending and enhance efficiency while supporting non-oil activity. Diversify the structure of the economy and export products and markets.
- Intensified geopolitical tensions and security risks.
  - Relative Likelihood: Medium
  - Impact if Realized: Medium
  - Recommended Policy Response: Enhance an already well-established policy framework for dealing with emigration.

### Annex V — Debt Sustainability Analysis: key findings
- Public debt-to-GDP remains sustainable in the medium term, but risks are high and have risen lately as evidenced by recent accumulation of arrears.
- Under the baseline scenario, public debt is forecast to decline to about 56.7 percent of GDP by 2026, supported by ongoing fiscal adjustment and a prudent borrowing strategy.
- Stress tests indicate public debt levels remain sustainable against standard shock scenarios, but liquidity pressures are considerable with debt-service representing a significant share of revenues.
- External arrears remain.
- Significant debt-profile risks include large share of debt held by non-residents and foreign currency debt.
- Essential policy actions: build a track record of remaining current on debt service payments, proactive measures to mitigate Eurobond refinancing risks, and a credible medium-term debt management strategy.

### Public debt level and composition (end-2020 and related details)
- Debt definitions and coverage: coverage limited to central government and direct government guarantees; local and SOE debt not captured. External debt defined on a currency basis.
- At FCFA 6,824 billion (about US$11.9 billion) as at end-2020, public debt stood at 77.4 percent of GDP (from 59.8 percent in 2019).
- The 2020 stock included FCFA 38.6 billion in external arrears to commercial creditors.
- Gabon’s public debt is mostly medium to long term and external (60 percent of the overall stock).
- Financial market debt related to Gabon’s Eurobonds represented the largest share of overall debt at 19 percent of the total stock.
- Exposure to interest rate risk: 32 percent of external debt carries variable interest rates, mostly related to the Eurobond.

### Baseline projections and assumptions
- Economic growth projections: growth reaching 1.5 percent in 2021 and averaging 3.2 percent over 2021–26 driven by a steady increase in non-oil growth as key FDI projects reach maturity and investment in the oil sector helps production stabilize.
- Fiscal adjustment: non-oil primary balance improves throughout 2021–26 due to continued fiscal consolidation; spending anticipated to stabilize at about 16 percent of GDP over 2021-26.
- Borrowing strategy: authorities expected to pursue a prudent borrowing strategy, remain committed to reducing debt below the regional target of 45 percent of GDP. Baseline assumes a Eurobond issuance in 2021 and use of at least 82 percent of this issuance to rollover Eurobonds, reducing payments in 2022–24.

### Debt trajectory and financing needs
- Gross debt levels projected to decline from a peak of 77.4 percent of GDP in 2020 to about 56.7 percent of GDP by 2026.
- Debt service: projected at 77 percent of total fiscal revenues in 2021 and projected to average 56 percent of revenues over 2021–26.
- Gross financing needs: projected at 13 percent of GDP in 2021 and will average 11 percent of GDP over 2021–26.

### Arrears and remedial actions
- As of May 2021, external arrears remain at 0.4 percent of GDP.
- Authorities have taken steps: addressing coordination between Treasury and Debt Units, improvements in cash management and systems to monitor debt payments, implementation of the Treasury Single Account.
- Domestic arrears: authorities have begun to clear VAT refund arrears at a faster rate and designed a growth-friendly clearance plan validated by a task force.

### Eurobond refinancing risk
- Gabon currently has US$1.3 billion in Eurobonds (approximately 15 percent of GDP) coming due during 2021–24.
- Authorities budgeted for a US$0.9 billion Eurobond issuance in 2021 to lock in current market conditions on terms in line with the most recent rollover in 2017 (assumed in the DSA baseline).
  - Terms include approximately a 7 percent interest rate and a 10-year maturity.
- Baseline assumes partial pre-payment using 82 percent of the 2021 Eurobond for repayment debt service due in 2021–24; remaining Eurobond-related debt interest service due would still average 1 percent of GDP per year or 4.2 percent of fiscal revenues.
- Using all potential proceeds for a Eurobond rollover would help address large refinancing need; ensure use of such proceeds remains consistent with planned fiscal adjustment.

### Stress test scenarios and outcomes
- Primary balance shock: deterioration of 1.6 percentage points of GDP in the primary balance in 2022 increases public debt to 60 percent of GDP by end-2026; gross financing needs also increase slightly.
- Growth shock: real output growth rates lowered by one standard deviation for 2 consecutive years starting in 2022. Decline in growth deteriorates nominal primary balance to 1.7 percent of GDP by 2022; debt-to-GDP ratio increases to about 75 percent during the shock and to 64 percent by 2026. Gross financing needs increase to 9 percent of GDP by 2026.
- Interest rate shock: real interest rates increase by 1,252 basis points starting in 2022. Implicit average interest rate reaches almost 10 percent by 2026 (almost 5 percentage points higher than baseline). Debt-to-GDP and gross financing needs increase, reaching 65 and 12 percent of GDP, respectively, by 2026.
- Real exchange rate shock: a permanent real exchange rate depreciation of 17 percent increases debt by about 6 percentage points of GDP by 2026. Gross financing needs increase by about 1 percentage points of GDP over 2022-26 compared with the baseline.
- Combined shock: incorporates largest effect of individual shocks on all relevant variables; debt would increase to around 90 percent of GDP and gross financing needs increase to about 18 percent of GDP in 2026.
- Additional liabilities shock: adding a 7 percent shock to capture potential additional liabilities from audit of domestic arrears and SOE debt raises the debt stock from 75 percent to 84 percent in 2021; gross financing needs reach 11 percent of GDP in 2026.

### Debt stock by components (Billions of CFAF), 2018−20 (table values)
- External debt: 2018: 3,743.7; 2019: 3,875.9; 2020: 4,052.4
- Bilateral: 2018: 804.6; 2019: 872.8; 2020: 841.4
- Multilateral: 2018: 1,056.8; 2019: 1,399.9; 2020: 1,627.8
- Commercial: 2018: 629.5; 2019: 324.8; 2020: 269.1
- Financial markets: 2018: 1,252.8; 2019: 1,278.4; 2020: 1,314.1
- Domestic debt: 2018: 1,932.4; 2019: 2,034.3; 2020: 2,771.6
- Banking sector: 2018: 772.3; 2019: 677.0; 2020: 887.6
- Non-banking sector: 2018: 1,160.1; 2019: 1,357.3; 2020: 1,884.0
- Total public debt: 2018: 5,676.1; 2019: 5,910.2; 2020: 6,823.9

### Vulnerabilities highlighted
- Heat map indicates external financing requirement and levels of debt held by non-residents breach upper risk-assessment benchmarks.
- Market perception, short-term debt, and public debt in foreign currency fall between the upper and lower risk assessment benchmarks.
- Debt levels are elevated, breaching the benchmark in the baseline.

*International Monetary Fund — Country Report excerpts as provided*

### 9.      Building a track record of remaining current on debt service and a credible medium-

### 9.      Building a track record of remaining current on debt service and a credible medium-

### Key policy recommendations and operational measures
- Avoid accumulation of external and domestic arrears; building a track record of remaining current on debt service is essential.
- Implement measures to improve coordination and cash management agreed with staff, including:
  - developing weekly cash flow forecast;
  - organizing monthly transfer of data related to debt service from the Debt Department to the Treasury.
- Use the majority of the proceeds from any near-term Eurobond issuance for rollover of maturing Eurobonds.
- Strengthen the Medium-Term Debt Management Strategy (MTDS) in line with recent IMF TA recommendations, including:
  - mitigating interest rate and refinancing risks;
  - strengthening the institutional framework for managing debt;
  - strengthening presence on domestic financing markets;
  - putting in place a communication strategy with Eurobond investors to prepare for refinancing.
- Broaden debt coverage to capture potential risks from contingent liabilities; first step: establish a list of all SOEs to gather information on their financial status.

### Risk-assessment benchmarks and stress-test parameters (as reported)
- Gross financing needs benchmark: 15%.
- Bond spread scenarios: 200 and 600 basis points.
- External financing requirement scenarios: 5 and 15 percent of GDP.
- Change in the share of short-term debt scenarios: 0.5 and 1 percent.
- Public debt held by non-residents scenarios: 15 and 45 percent.
- Share of foreign-currency denominated debt scenarios: 20 and 60 percent.

### Selected baseline fiscal and debt profile indicators and projections (as reported)
- Real GDP growth (annual sequence shown): 4.0, 3.9, -1.8, 1.5, 3.9, 3.2, 3.4, 3.4, 3.5 (percent).
- Inflation (GDP deflator, annual sequence shown): 1.9, 1.6, -9.2, 7.6, 0.4, -0.4, 0.2, 1.3, 2.5 (percent).
- Change in gross public sector debt (percent of GDP, annual/cumulative sequence shown): 3.9, -1.1, 17.6, -2.7, -2.5, -2.1, -3.3, -4.5, -5.6, -20.7.
- Identified debt-creating flows (percent of GDP, annual/cumulative sequence shown): -1.3, -4.3, 5.9, -3.1, -2.2, -2.0, -3.3, -4.5, -5.6, -20.7.
- Primary deficit (percent of GDP, annual/cumulative sequence shown): -2.2, -4.4, -0.8, 0.3, -2.2, -3.4, -4.1, -4.6, -5.1, -19.2.
- Primary (noninterest) revenue and grants (percent of GDP, sequence shown): 23.6, 19.5, 17.6, 17.1, 18.4, 19.2, 20.1, 20.8, 21.0, 116.6.
- Primary (noninterest) expenditure (percent of GDP, sequence shown): 21.4, 15.1, 16.8, 17.4, 16.1, 15.8, 15.9, 16.2, 15.9, 97.4.
- Effective interest rate (defined as interest payments divided by debt stock at end of previous year): 4.6, 4.0, 4.5, 4.2, 4.0, 4.2, 4.4, 4.6, 4.9 (percent).
- Residual, including asset changes (percent of GDP, sequence shown): 5.2, 3.2, 11.7, 0.5, -0.3, -0.1, 0.0, 0.0, 0.0.

### Stress-test and scenario insights (summary of scenario types and underlying assumptions)
- Stress-test scenarios reported include: Primary Balance Shock; Real GDP Growth Shock; Real Interest Rate Shock; Real Exchange Rate Shock; Combined Macro-Fiscal Shock; Contingent Liabilities.
- Example underlying assumptions reported across scenarios (percent or level, as shown):
  - Baseline Real GDP growth sequence: 1.5, 3.9, 3.2, 3.4, 3.4, 3.5.
  - Baseline Inflation sequence: 7.6, 0.4, -0.4, 0.2, 1.3, 2.5.
  - Effective interest rate under some shocks: 4.2, 4.0, 4.2, 4.4, 4.6, 4.9 (percent) and higher under stress (examples reported up to 10.9).
  - Primary balance paths under shocks vary; example sequences: -0.3, 0.6, 1.8, 4.1, 4.6, 5.1 (percent of GDP).
- Public gross financing needs and gross nominal public debt respond to shocks in the stress-test outputs (charts reported for 2021–2026).

*Source: IMF staff, as presented in the chapter "9.      Building a track record of remaining current on debt service and a credible medium-" in the provided PDF.*

### Annex VI.  Capacity  Building  and  Technical  Assistance  Framework

### Annex VI. Capacity Building and Technical Assistance Framework

### A. Policy Priorities
- Overarching priorities:
  - Increasing domestic revenue mobilization.
  - Reducing transfers to SOEs and curbing fiscal risks.
  - Enhancing budget credibility and transparency, and limit domestic arrears accumulation.
- Transition to a green economy noted as likely to impact tax policy and public investment.
- Substantial TA will be provided to support these priorities.

### B. Past Technical Assistance and Capacity Building
- Gabon has been a high recipient of Fund TA under the previous program.
- Past TA areas (supported by Fund HQ, AFRITAC, or other donors, e.g., World Bank):
  - Tax administration and policy.
  - Public financial management, including cash management and public investment and procurement.
  - Fiscal accounting and reporting.
  - Management of natural resources.
  - Macroeconomic statistics.
  - Debt management.
  - Financial markets.
  - Public procurement.
- Implementation status:
  - Recommendations are being implemented with mixed results.
  - Many advances remain uncompleted; budget credibility and transparency remain weak.
  - Delays in implementing reforms derived from the CEMAC directives.

### C. TA Priorities Going Forward
- TA focus: continue developing capacities in revenue (tax and customs) administration and PFM, and liaise with other donors for coordination and complementarity.

Revenue Administration and Tax Policy (2021–24)
- Objective:
  - Increasing domestic revenue mobilization through modernized tools and processes, broader tax base and green-friendly tax policy.
  - Specific elements include implementing tax policy reforms, broadening the tax base (streamlining tax expenditures and enhancing analysis tools), strengthening tax and customs capacities, and full deployment of revenue administration IT tools and digitalization.
- Outcomes:
  - Monitoring of tax exemption is strengthened and their scope is progressively reduced in light of economic, social and environmental impacts.
  - Tax-to -GDP ratio increases in line with CEMAC convergence criteria’s objectives.
  - Transition to green economy is encouraged through appropriate tax measures.
  - Revenue collection is timely and more transparent; coverage, frequency and effectiveness of controls is improved.
  - All revenues can be declared and payed electronically and cash payment for both customs and tax revenues are no longer accepted above a certain threshold.
- Milestones:
  - Review of existing tax exemptions and strategy to reduce their scope (2021).
  - Progressive reduction of tax exemptions at an average rate of 0,4% GDP per year over the program duration (2021–24).
  - Establishment of a tax policy unit (2022).
  - Progressive deployment of e-T@x for both declarations and payments (2022-2024).
  - Compliance of all tax and customs rates with both national and regional provisions in the IT systems (2022).
  - Reform of property titles and introduction of a single property tax (SPT).
  - Revamping of the VAT escrow account (2022).
  - Reduction of the tax rate paid in cash (2023).
- Input:
  - HQ-led missions (e.g., tax exemptions, compliance of tax and customs rates, green taxation, tax policy unit) complemented by AFRITAC Centre TA missions (e.g., implementation of previous TA recommendation; strengthening capacities of tax and customs administrations; deployment of IT systems).
- Assumptions:
  - Improved customer services to facilitate taxpayer procedures.
  - Elimination of inefficient and unjustified exemptions and gradual improvement of efficiency of other special exemptions and regimes.
  - Willingness to implement tax and customs recommendations from previous TA (e.g., reform of property taxation).
  - Acceleration and extension of computerization and digitization of revenue administration operations.

Public Finance Management (2021–24)
- Objective:
  - Reducing fiscal risks and strengthening monitoring of contingent liabilities; strengthening budget credibility and transparency; supporting transition to green economy.
  - Components: monitoring and disclosure of fiscal risks and oversight of public entities; enhanced transparency per CEMAC directives; strengthen budget credibility, execution and cash management to avoid domestic arrears; enhance public investment efficiency and transparency (including environment); strengthen coordination between Budget and Treasury via better IT articulation.
- Outcomes:
  - Main fiscal risks, especially related to SOEs, guarantees and PPPs, are periodically disclosed and efficiently monitored.
  - Implementation of a fully functional Treasury Single Account (TSA) is completed.
  - Budget credibility and execution are strengthened to guarantee absence of domestic arrears accumulation.
  - Public investment management is strengthened and aligned with government climate objectives.
  - Fiscal and financial data, especially regarding COVID19, is periodically and comprehensively disclosed.
  - Full transition to GFSM 2001/2014 is completed (2024).
- Milestones:
  - Elaboration of a fully-fledged fiscal risk statement attached to the budget law (2021).
  - Reform of the VAT escrow account (2022).
  - Conduction of a follow-up PIMA and a PIMA-CC evaluations (2021–22).
  - Strengthen articulation between budget classification and Chart of Accounts (CoA) (2022).
  - Elaboration of a public sector entities annex to the budget law (2022).
  - Production of a public sector balance sheet (2023).
  - Elaboration of the special annex for off-balance sheet transactions.
  - Full implementation of the TSA (2023).
  - Production of a TOFE and national accounts compliant with GFSM 2001/2014 standards 2001/2014.
- Input:
  - HQ-led missions (e.g., PIMA and PIMA-CC, PSBS) complemented by AFRITAC Centre TA missions (e.g., fiscal risk statement, VAT escrow account, budget classification, annex for off-balance sheet transactions, TSA).
- Assumptions:
  - Continued political support to PFM reforms.
  - Willingness to implement TA recommendations.
  - Timely provision of adequate resources to enhance efficiency of PFM departments.
  - Further enhancement of governance practices.

Financial Sector (2021–24)
- Objective:
  - Improve financial sector soundness by completing liquidation of public banks and an updated strategy to reduce NPLs including strengthening judiciary capacity.
  - Rationalize and make more effective and transparent public instruments to finance the economy by implementing a time-bound plan once audits of FGIS and CDC are completed.
  - Adopt a national financial inclusion strategy aligned with the regional strategy to facilitate access to finance and payment services.
  - Develop and implement a plan to broaden the investor base for sovereign bonds and actively reduce the sovereign-banks nexus, including enforcing existing regulations on government bond holdings by primary dealers in cooperation with regional authorities.
- Outcomes:
  - NPLs for the overall banking system are gradually reduced to single digits by end-2024, while judicial capacity (trained judges, functioning commercial courts, collateral registries) is upgraded.
  - Public financing entities are well governed, operating transparently and have a new strategy exclusively focused on indirect financing (end-2022).
  - Liquidation of the three failed banks is completed (2021: BHG, Postbank, 2022: BGD) at no significant cost to the state.
  - A national financial inclusion strategy is developed and its implementation started (2022).
  - Institutional investors and private individuals hold a third of domestic sovereign bonds by end-2024.
- Milestones:
  - Adopt a strategy to broaden the investor base for government bonds by end-2021.
  - Adopt an updated NPL reduction strategy including domestic arrears clearance plan and upgraded judicial capacity by end-April 2022.
  - Adopt a time-bound plan by end-June 2022 to reform CDC and FGIS.
- Input:
  - HQ-led TA missions if necessary to review and comment on: (i) plan to broaden investor base for government bonds (December 2021); (ii) updated NPL reduction strategy (March 2022); (iii) reform plan of CDC and FGIS (June 2022).
- Assumptions:
  - Strong commitment to strengthen existing banks and foster financial stability including reducing banks–sovereign nexus.
  - Avoid long-lasting and costly liquidations, minimize fiscal cost and treat all borrowers and depositors fairly.
  - Strengthen institutional capacity and impose the rule of law.
  - Develop access to finance for all.

Macroeconomic and Fiscal Statistics (2021–24)
- Objective:
  - Coverage of all public sector operations.
- Outcomes:
  - Fiscal statistics and reports consistent with GFSM 2001/2014 standards and regional directives and deadlines, covering all public sector operations, stocks, and flows.
- Milestones:
  - Present the TOFE according to GFSM 2001/2014 for central government (2021).
  - Full transition to the GFSM 2001/2014 standards (2023).
- Input:
  - AFRITAC Centre to continue providing TA on the transition to GFSM standards.
- Assumptions:
  - Human and financial resources are available.
  - Good collaboration between stakeholders.
  - Fiscal data are available, comprehensive and comply with required standards.

### D. Risks and Mitigation Measures
- The TA program faces various risks; authorities committed to supply necessary human and budgetary resources to absorb TA and follow up on TA recommendations.
- Summarized risks, probabilities, impacts, and mitigation:
  - Risk: Weakening political commitment to reforms
    - Probability: Medium
    - Impact: High
    - Mitigation Measures: Authorities aware of need to increase public spending efficiency and raise additional revenue; embarked on initiatives to improve tax policy and administration with continued Fund and development partner support. Fund to provide TA toward improving PFM and public investment.
  - Risk: Implementation capacity constraints
    - Probability: Medium
    - Impact: High
    - Mitigation Measures: Limited number of technical staff in core ministries may hinder progress; hand-on training and support from short/long term experts would help improve implementation capacity.
  - Risk: Financing risk
    - Probability: Medium
    - Impact: High
    - Mitigation Measures: Authorities improving capacity to assess TA-related costs and committed to include such costs in annual budgets; spending efficiency gains could create fiscal space to facilitate implementation of TA recommendations.

### E. Authorities’ Commitments
- Authorities committed to:
  - Continue building capacity for successful implementation of the Extended arrangement.
  - Implement the Fund Capacity Building Framework (CBF) and complementary TA from other donors by securing political support, staffing, and resources.
  - Provide adequate financial and human resources to priority sectors in the capacity building program, and budget resources to implement TA recommendations with financial implications.
  - Strengthen units tasked with monitoring reform implementation by providing resources to manage the overall capacity building program.
  - Ensure sectoral capacity building plans are discussed with individuals and units responsible for implementation.

*Annex VI. Capacity Building and Technical Assistance Framework (Gabon), as provided in the source content.*

### 1.    Memorandum of Economic and Financial  Policies (MEFP)

### Memorandum of Economic and Financial Policies (MEFP)

### I. Introduction — context and recent shocks
- Objective: meet economic and social needs from the COVID-19 shock and fall in oil prices; strengthen social safety nets; anchor fiscal viability and public debt sustainability; strengthen institutions for resilient growth.
- Pandemic metrics and timing:
  - "about 11.14 confirmed cases but just 0.07 deceases per 1,000 inhabitants as of June 18, 2021"
- Commodity price shocks and sector impacts:
  - Crude oil: -34.0 percent (price fall)
  - Manganese: -18.7 percent (price fall)
- Macroeconomic outcome:
  - GDP contraction: "1.8 percent in 2020 (against a positive growth of 3.9 percent in 2019)"
  - Contraction driven by drops in both oil and non-oil real GDP.
- Public health and response:
  - Border closures, curfew, internal travel restrictions, lockdowns; investments in health equipment, drugs, training.
- Sectoral recovery signals (late 2020 into Q1 2021):
  - Improved production in manganese, forestry, agriculture, fuel industry, wood, oil refining, carbonated and alcoholic drinks, manganese processing, telecommunications, rail and maritime transport.
  - Sectors still struggling: construction, air transport, general trade, trade in petroleum products.

### II. Financial sector, prices, and external sector developments
- Banking sector resilience and supervisory context:
  - Banks’ return on capital: remained above "20 percent"
  - Capital adequacy ratio: improved to "18 percent" from "16 percent" at end-2019
  - Short-term liquidity ratio: improved to "167 percent" from "148 percent" at end-2019
  - Lending resumed growth in last quarter of 2020; asset quality deterioration anticipated as COBAC withdraws temporary prudential measures by end-2021.
- Inflation:
  - Average inflation in 2020: "1.3 percent" (vs "2.0 percent" in 2019)
  - Projected to rise to "2.0 percent" and remain below "3 percent" over the medium term (subject to union constraints and supply shocks).
- Monetary developments (end-December 2020):
  - Net foreign assets of banking system: "-39.0 percent"
  - Money supply: "5.7 percent"
  - Net domestic credit: "17.1 percent"
    - Driven by net claims on central government: "+ 39.1 percent"
    - Credit to the economy: "+ 0.8 percent"
- Balance of payments and trade:
  - Balance of payments deficit: "CFAF 531 billion (i.e. 6 percent of GDP)"
  - Current account deficit: widened from "1 percent of GDP in 2019 to 6.0 percent of GDP" in 2020
  - Trade: decline of "50 percent in value terms"
    - Exports: "-26 percent"
    - Crude oil sales: "-37 percent" (mainly due to price fall)

### III. Fiscal outcomes in 2020 and near-term fiscal effects
- Fiscal balances:
  - Primary balance (2020): surplus "1.2 percent of GDP" (vs "3.6 percent of GDP in 2019")
  - Non-oil primary balance (2020): deficit "7.4 percent of nonoil GDP" (vs "5.8 percent of non-oil GDP in 2019")
  - Overall budget balance (2020): deficit "2.1 percent of GDP" (vs surplus "1.4 percent of GDP in 2019")
- Revenue and expenditure dynamics:
  - Government revenues fell by "17 percent"
    - Oil revenues: "-20.2 percent"
    - Non-oil revenues: "-19.5 percent"
  - Public expenditure contraction: "3 percent"
    - Investment expenditure: "-14.1 percent"
    - Payroll control: lower by "0.8 percent"
  - Increased social expenditure linked to COVID-19 response: "72.5 billion CFAF"
- Development and reform delays:
  - Investment budget execution rate in 2020: "about 63.5 percent"
  - Postponement of infrastructure projects, delays to structural reforms (e.g., EITI membership processes).

### IV. IMF support and accountability
- IMF financing in 2020:
  - Rapid Financing Instruments (RFI) April and July 2020: "100 percent of quota, USD 299.1 million"
  - RFI resources used for hospitals refurbishment (ICUs), respirators, PPE, testing infrastructure; Gabon described as "the highest tester per capita of Sub-Saharan Africa."
- Audit and transparency:
  - Comprehensive external audit of all COVID-19 related spending underway; results to be published "by end-September 2021 (structural benchmark)."

### V. Economic outlook and risks
- Baseline projections:
  - Real GDP growth: "1.5 percent in 2021"
    - Non-oil activity: "2.7 percent" in 2021
    - Oil production: decline "5.5 percent" in 2021 (OPEC compliance)
  - Medium-term average GDP growth: "2.9 percent over the period 2021–23"
    - Non-oil activity: increase of "3 percent on average"
    - Crude oil production: "2.2 percent for crude oil production on average per annum"
  - Inflation: projected "2.0 percent" and remain below "3 percent" over the medium term
  - Overall fiscal balance (cash basis): strengthen from deficit of "3.5 percent of GDP in 2021 to broad balance in the medium term"
  - Current account balance: improve from deficit of "6 percent of GDP in 2020 to 4.8 percent of GDP in 2021", then stabilize around "2.5 percent of GDP over the medium-term"
- Risks:
  - Downside: renewed COVID-19 outbreaks domestically or among trading partners; commodity prices falling below baseline; deterioration in global sentiment towards emerging markets; delays in fiscal consolidation and structural reforms.
  - Upside: sharper rise in commodity prices; faster rebound in economic activity and non-oil revenues; faster pace of structural reforms.

### VI. Main program objectives and policy priorities
- Program aims: immediate COVID-19 response, protect population and SMEs, lay foundations for sustainable recovery, and pursue structural reforms per the Gabon Transformation Acceleration Plan 2021–23 (PAT 2021−23).
- Principal policy priorities:
  - COVID-19 response: support vulnerable populations and SMEs.
  - Fiscal policy: growth-friendly fiscal consolidation to preserve debt sustainability by strengthening revenues (broadening tax base, reducing tax expenditure) and streamlining spending while prioritizing high-impact social and efficient investment spending.
  - Public finance management: increase efficiency, effectiveness, and transparency of public spending.
  - Structural reforms: improve business environment, stimulate investment, job creation, and growth.
  - Governance and anti-corruption: improve institutional control, prevention framework, and support anti-corruption institutions.
  - Capacity building and technical assistance: improve data and information for policymaking.

### VII. Fiscal policy under the program — 2021 specifics
- 2021 revised budget targets:
  - Non-oil primary deficit: "7.2 percent of non-oil GDP" (from "7.4 percent in 2020")
  - Total revenue and grants: "CFAF 1,651 billion"
  - Total expenditure and net lending: "CFAF 1,961 billion"
  - Overall budget deficit would widen by "CFAF 310 billion (2.1 percent of GDP)" relative to the initial 2021 budget.
- Revenue administration and tax measures (2021):
  - Broaden tax base by reducing the informal sector: "PIT withholding tax on foreigners' residence permits, PIT withholding at the customs cordon, and opening of tax centers in proximity to taxpayers"
  - Secure tax revenue and combat tax fraud: better VAT administration (targeted controls), risk-based programming, strengthen recovery action, consolidate project and e-T@x (electronic declarations and electronic payments)
  - Rationalization of existing tax exemption arrangements
  - Customs revenue mobilization: recover unpaid debts; regularize export duties and taxes related to manganese sales; deploy the hydrocarbon warehouse
- Public expenditure control and management:
  - Wage bill management measures: improve recruitment controls; implement three-year recruitment plans for civil servants; strengthen budgetary management of civil servants; establish forward-looking staff, jobs and skills management; prepare job descriptions for administrative officers
  - Special accounts management: integrate earmarked revenue into budget process; improve transparency instruments for earmarked revenue
  - Autonomous Public Agencies (SPPs): improve financial statement presentation; control SPP expenditures (including payroll); update legal framework for public entities and establish financial supervision over SPPs
  - Public Investment Management (PIM): continue PIM modernization per 2019 PIMA recommendations; establish a Public Investment Program (PIP) of projects with studies; ensure coordination between PIP and PAT 2021−23
- Financing plan for 2021:
  - Budget support expected from the African Development Bank
  - Bond issuance on the regional financial market
  - New IMF program support
- Contingency for shocks and performance protection:
  - Mechanism to offset shortfalls: any revenue or funding shortfall will be compensated by curtailing non-critical spending, in consultation with IMF staff
  - Reserve mechanism: "estimated in 2021 at CFAF 65.7 billion (3.7% of total expenditures)"

*Attachment I. Memorandum of Economic and Financial Policies, July 15, 2021.*

### 18.      For the following years of the program period, we will continue our efforts to

### For the following years of the program period, we will continue our efforts to mobilize domestic revenue and contain public expenditure

### Fiscal targets and overall strategy
- Reduce the non-oil primary deficit to 3.4 percent of non-oil GDP by 2024.
- Achieve a broadly balanced budget and bring down public debt below 70 percent of GDP.
- Increase domestic revenue above the pre-crisis level, including by a gradual phasing out of tax expenditure and strengthening tax and customs administration.
- Contain current spending (wage bill, goods and services, transfers) while making room for social spending.
- Gradually increase capital spending to about 4 percent of GDP by 2024.

### Structural Fiscal Reforms — audits and SOE transparency
- Commit to conduct an audit of the 2020 financial accounts of the Gabon Oil Company (GOC) and the SOGARA refinery.
- Existing audits (available until 2019) for four large SOEs (Gabon Oil Company (GOC), SOGARA, Caisse des Depots et Consignations (CDC), Fonds Gabonais d’Investissment Strategique (FGIS)) have been shared with IMF staff (prior action for the program).
- Action plans to address audit weaknesses will be completed by end-October 2021 (structural benchmark).
- From 2021 onwards, annual financial reports of the four public companies will be certified by internationally renowned auditors and published each year on their respective websites and on a government site.
- Based on the audit of SOGARA's production facilities, adopt an investment plan to strengthen SOGARA’s financial autonomy and launch a call for expressions of public interest to attract private investors to recapitalize SOGARA, reduce the State's shareholding, and eliminate any form of public subsidy for its operations.

### Transparency and petroleum revenue management
- Continue centralization of oil revenues in the treasury single account (TSA) and specifically identify these revenues in the TSA to facilitate monitoring.
- Publish on a government website all documents, information and reports as required by the EITI.
- Develop mechanisms for estimating natural resource reserves and periodically publish this information on a government website.

### Policies to mobilize non-oil revenues — exemptions and tax policy
- Work towards greater rationalization of tax and customs exemptions; prepare a table listing benefits and exemptions to be removed or modified (see Annex II), specifying implementation schedule and legislative vehicle.
- Changes to be reflected in the supplementary 2021 budget and future budget laws (structural benchmark).
- Assess compliance of existing tax and customs rates to national and regional legal provisions in IT systems and conduct necessary modifications by January 2022 (structural benchmark).
- Commit to not renew exemption arrangements that have expired (example: cement).
- Initiate a study on companies in an economic zone with a special regime (ZERP) to better supervise, harmonize and limit impacts of their exemptions (paragraph 29).

### Oversight of new exemptions and legal framework
- Prior to entry into force, any new discretionary or general tax exemption will be examined by a dedicated special Commission, coordinated by the Ministry of Economy; an order from the Minister of Economy will specify the Commission’s operating methods.
- Strictly apply the principle of fiscal monopoly of the budget law per the CEMAC regional directive on the transparency code; proscribe fiscal provisions in texts outside the budget law.

### Tax policy capacity and administration
- Establish a Tax Policy Unit (UPF) within the Ministry of Economy; a decree will be issued before the end of the 2021 fiscal year.
- UPF to consolidate analyses from the Taxes General Directorate (DGI), Customs and Indirect Rights General Directorate (DGDDI), and line ministries; monitor memorandum commitments, especially reduction of tax expenditures.

### Revenue mobilization operations and targets
- DGI intends to mobilize 100 percent of recoverable overdue tax debts over the next three years, at a rate of 33 percent per fiscal year.
- DGI auditing teams targeting taxpayers owing taxes and duties will be deployed in 2021.
- DGDDI to continue negotiations with main debtors to consolidate amounts due and conclude moratoriums.
- A consolidated plan from the DGI/DGDDI specifying stock of tax and customs arrears, main debtors, recoverable portion, and recovery path will be communicated to IMF staff by December 2021 (structural benchmark).
- DGI committed to continue registering new taxpayers semiannually at a rate comparable to the average of the last three years (structural benchmark - semiannual).
- Reinforce the Location and Investigation Services Unit within the DGI to increase field trips for identifying non-registered or relocated taxpayers.

### Tax and customs information systems modernization
- Continue migration of SYDONIA World in 2021 to cover all customs regions before the end of 2021; objective to interconnect all offices during 2022.
- Computerize warehouses, customs clearance areas and customs depot for optimal system use.
- DGI to replace current tax system (LIIR) over the next 3 years with a new system to manage administrative/technical tasks and taxpayer relations.
- Commit to fully deploy e-T@x access to taxpayers for both declarations and payments for all taxes by January 2024 (structural benchmark).
- DGI and DGDDI to communicate an action plan for continued deployment of their information systems to achieve complete coverage and allow paperless declaration and payment transactions by November 2021 (structural benchmark).

### Staffing, controls, and payment methods
- Increase resources of tax and customs administrations to facilitate and systematize controls, particularly on exemptions.
- DGI to redeploy and train staff to strengthen and systematize controls for tax fraud on exempt products and other mandatory contributions.
- DGDDI to develop and implement a program for monitoring and controlling destination and use of goods benefiting from total or partial exemption from duties and taxes.
- Carry out more frequent joint DGI/DGDDI controls, particularly regarding reporting obligations or realization of commitments by taxpayers benefiting from exemptions.
- Introduce a limit for the cash payment of taxes and customs duties as part of the 2022 budget law; beyond the limit taxpayers must pay by bank transfers, checks, or electronic transfers.

### Medium-term tax and customs reform studies
- Conduct studies with technical and financial partners on:
  - (i) increase in the VAT rate and customs duties for certain products and harmonization/alignment of product lists (2022 budget proposal);
  - (ii) increase in rates and reform of exemptions under the program to fight the high cost of living (“vie chere”) (2022 budget proposal);
  - (iii) introduction of a special environmental protection tax to replace the rehabilitation funds (RES);
  - (iv) introduction of a specific tax for the banking sector;
  - (v) reform of the rate and scope of the social solidarity contribution (CSS) to finance social programs;
  - (vi) reform of the taxation system applied to the tourism sector;
  - (vii) reform of tax and customs arrangements applied to an economic zone with a special regime (ZERP).

### Property taxation reform
- Reform the system for granting and managing land titles and include a Unified Property Tax (CFU) in the draft of the 2023 Budget Law by September 2022 (structural benchmark).
- Work on the CFU was launched in November 2020; the related report is being finalized and to be presented to government during summer 2021.
- CFU will be enshrined in the 2023 budget law proposal and will enter into force on 1 January 2023; implementation will be progressive.

### Policies to improve expenditure efficiency — wages and arrears
- Continue actions to control the wage bill, including cleaning the payroll following the biometric census; fully implement audit results and remove employees who did not meet audit criteria.
- Produce a medium-term strategy for the evolution of the wage bill specifying reforms required for recruitment and wage policies before the end of the 1st quarter of 2022.
- Assess existing salary arrears and produce a clearance plan validating amounts and specifying pace of repayment before the end of 2021; implement the plan in the budget starting from 2022.
- Strengthen management of public wage payments to avoid accumulation of salary arrears during the program period.

### Rationalization of public agencies (SPPs) and independent administrative authorities (AAI)
- Implement Task Force action plan to:
  - (i) carry out a financial analysis of all SPPs and AAIs;
  - (ii) identify entities to be restructured to generate savings;
  - (iii) assess cost of social plans for irreparably compromised entities and speed up restructuring;
  - (iv) have a legal framework to strengthen supervision, governance and reporting of financial, asset and human resources;
  - (v) reform governance and rationalize the budget of social protection systems to guarantee sustainability.
- Commit to propose a first list of SPPs and AAIs to be restructured or eliminated before the first review of the program and to start implementing restructuring from 2022.
- Seek development partner support to manage social costs of restructuring and elimination; provide periodic reports to financial partners.
- Revamp legal framework related to strategic management, governance, and financial supervision of SPPs and have it adopted before end of 2021.

### Management and oversight of SPPs
- Develop before the end of the program a dedicated module in VECTIS to consolidate SPP information.
- Stricter supervision of SPP payroll and transmission of budgetary and financial data to supervisors as required by current legal framework.
- Include provisions in budget laws forcing public entities to transmit financial statements.
- Improve the quality of the budget annex relating to operators to present comprehensive financial information, including all resources.

### Clearing arrears and social security funds
- Take necessary measures to clear existing arrears with certain public entities and prevent future arrears.
- For social security funds, actions from 2022 onwards to improve financial situation:
  - (i) assessment of the State's debt to these organizations;
  - (ii) a debt clearance plan, depending on existing fiscal space;
  - (iii) examination of difficulties in systematic repayment of public employees and payment of government’s share of social security contributions;
  - (iv) proposal of a mechanism for systematic repayment of collected contributions.
- Depending on budgetary margins, gradually increase employer contribution paid to CNAMGS to reach the amount required by law by 2025, at the latest.
- Ensure prompt payment for services received by public companies (example: SEEG) and propose a repayment strategy for State debt to public enterprises over the program period.

### Earmarked revenues and special accounts
- Continue working on an exhaustive inventory of earmarked revenues and control of special accounts, with IMF technical assistance.
- Actions taken: production of specific codification for revenue allocations (ADP) and special earmarked account (CAS) in VECTIS; development of CAS and ADP execution procedure manual; drafting of specifications to identify management rules to be implemented in budget information systems.
- Integrate information on earmarked revenues and their distribution (State/public entities) in the budget and vote in budget laws.
- Deploy information systems (VECTIS and e-BOP) adapted to trace and control execution; continue efforts to comprehensively track gross revenue and expenditure flows in the budget.
- Commit to ensuring revenues match expenditures in execution so special accounts are no longer a cause of deterioration of the budget deficit.
- Continue efforts to reflect comprehensively earmarked revenue flows in the budget while distinguishing State revenues from those allocated to other public sector components (SPP, local communities).
- For social security funds (pensions, family and social services, CNAMGS), ensure the State’s share is effectively paid per commitments in paragraph 34.

*IMF staff and government commitments as detailed in the source document.*

### 35.      Efforts to modernize and strengthen public investment management (PIM) will

### 1gabea2021001 - 35.      Efforts to modernize and strengthen public investment management (PIM) will

### Public investment management (PIM)
- Finalize an exhaustive public investment program (PIP) to be annexed to the annual budget law proposal.
- Update the legal framework for project selection and management to oversee the entire cycle of public investment management, including:
  - specifying responsibilities;
  - giving binding legal force to ex-ante evaluation of major investment projects; and
  - systematizing ex-post evaluation.
- Renovate the Sectoral Study Committee.
- Operationalize projects with assistance of technical and financial partners.
- Increase transparency by publishing data related to investments made by other public entities (e.g., public enterprises, local communities) or through PPPs.
- Strengthen monitoring of public-private partnerships (PPP) and fully reflect PPPs in budget documents (e.g., PIP) and in documents relating to public debt (contingent liabilities).

### Budget execution and State treasury management
- Complete implementation of the treasury single account by January 2023 (structural benchmark), including repatriation of funds and closing of accounts in commercial banks and at the CDC.
- Continue working with the Central Bank on acquisition of an IT solution called AMS/X for automated management of funds and consolidated real-time cash position of the State.
- Reform the VAT escrow account by June 2022 (structural benchmark) to avoid accumulation of arrears; pending AMS/X, the Treasury commits to systematically transfer VAT receipts into the escrow account. IMF technical assistance may be requested.
- Pursue implementation of commitment plans articulated with the monthly cash flow plan attached to the budget law, and integrate these commitment plans into VECTIS envisaged no later than the first half of 2022, per AFRITAC Centre recommendations.

### Financial information systems and IFMIS planning
- Reform budgetary and accounting nomenclature (particularly in the economic segment).
- Automatic interfacing between VECTIS and SIGFIP-ASTER by June 2023 (structural benchmark).
- Extend VECTIS to all public agencies.
- Develop a ministry-wide IT master plan and launch discussions for medium-term implementation of an integrated public finance management system (IFMIS).

### Transparency in public management
- Resume regular publication of the quarterly budget execution report (RTEB) no later than 55 days following the end of each quarter; complete the document with COVID-19 expenditure, social expenditure, environmental expenditure, and presentation of expenditure according to functional classification.
- Increase budgetary and financial information made available to the public (e.g., online) and improve website user experience.
- Significantly reduce proportion of public contracts awarded without a call for tenders and systematize publication of offers and awards in the public procurement journal (online), including indicating beneficiaries.
  - Commit to publish any contract award, regardless of procedure, in an electronic public procurement journal no later than one month after validation of results by July 2022 (structural benchmark).
  - Develop, with IMF TA, a framework for collection and publication of beneficial ownership information in procurement processes (structural benchmark).
- Publish all expenditures and measures with a financial impact carried out in the context of the fight against COVID-19 online.
  - Prior action: publish online the entire text of all public contracts related to COVID-19.
  - Publish on a government website the results of the audit carried out for all expenditure related to COVID-19 by September 2021 (structural benchmark).

### Public finance statistics and consolidated reporting
- Gradually include all public entities in addition to central government to establish and periodically update a public sector balance sheet covering all assets and liabilities by June 2023 (structural benchmark).
- Implement provisions of the public finance statistics manual (GFSM 2014) and CEMAC directives over the program period.
- Phased approach:
  - Prepare a presentation based on current scope of the Government Financial Operations Table and the financial statement using the new classification by December 2021 (structural benchmark).
  - Produce a Government Financial Operations Table for the entire public sector using the new classification by January 2024 (structural benchmark).
  - Prepare a consolidated balance sheet of public sector financial assets and liabilities and perform a complete assessment of the entire public sector.
- Seek IMF technical assistance for these actions.

### Legislative, regulatory, and accounting reforms
- Develop and adopt regulations derived from the organic law on budget (LOLFEB), including:
  - draft decree relating to in-year appropriation modifications;
  - draft decree to improve reporting of public expenditure;
  - modification of the decree setting up the budgetary calendar and the process for preparing budget laws;
  - modification of the decree organizing functions of Responsable de programme (RPROG), Responsable de budget opérationnel de programme (RBOP), and Responsable d’unite opérationnelle (RUO).
- Transpose into national law the directive on stock accounting.
- Operational implementation actions (with development partner support):
  - establish the monitoring committee for the reform of public finance management (PFM);
  - develop a comprehensive PFM reform plan;
  - establish internal control system with draft decrees on general principles of internal fiscal and management controls;
  - implement a functional classification;
  - establish a performance monitoring framework;
  - implement a cost analysis accounting (CAC);
  - strengthen reform steering and communication strategy with stakeholders.

### State accounting reform implementation
- Two bodies established:
  - the budgetary and accounting risk monitoring committee as part of internal budgetary and accounting control; and
  - the State Accounting Reform Monitoring Committee.
- A plan for reform of government accounts designed with IMF technical assistance.
- Authorities will implement the action plan in accordance with CEMAC regional directives deadlines (January 1, 2024).

### Public debt management — Institutional strengthening and arrears clearance
- Strengthen institutional framework for debt management, including sovereign guarantees, to reinforce coordination between the General Debt Directorate and other stakeholders.
  - Establish a national coordination mechanism to determine general conditions of access to debt financing and decide on national debt strategy.
  - Establish a framework for operational and strategic issuance of Bonds between the Treasury and DG Debt.
  - Implement cash management methods for rapid clearance of arrears (orders, debt maturities, reimbursement of VAT, etc.).
  - Adopt a modern and comprehensive framework for management of State’s explicit guarantees.

- Potential new SDR allocation:
  - Gabon may receive a new SDR allocation of around SDR 216 million (1.75 percent of GDP) in 2021, to help consolidate CEMAC international reserves, cover COVID-related expenses or partially finance investment expenses. Use to be discussed with IMF staff at first review.

- Commit to clear existing external arrears and avoid new ones.
  - At end-May 2021, stock of Gabon’s external arrears: CFAF 98.03 billion (US$182.1 million), including:
    - CFAF 23.8 billion (US$44.2 million) vis-à-vis multilaterals;
    - CFAF 21.05 billion (US$39.1 million) vis-à-vis government agencies and private creditors insured with companies from Paris Club member countries and from China;
    - CFAF 1.3 billion (US$2.42 million).
  - Government strategy: focus on multilateral debt, bilateral debt, insured commercial commitments and seek agreements with other creditors prior to IMF Board meeting.
  - Commit to clear arrears vis-à-vis multilaterals and clear bilateral and commercial-insured arrears as follows:
    - Austria CFAF 6.83 billion (US$12.69 million);
    - France CFAF 11.9 billion (US$22.11 million);
    - Israel CFAF 2.23 billion (US$4.13 million);
    - Spain CFAF 0.09 billion (US$0.17 million).
  - Other commercial arrears and bilateral payment arrears:
    - AFREXIMBANK commercial-insured: CFAF 7.52 billion (US$13.97 million);
    - commercial non-insured vis-à-vis France: CFAF 0.7 billion (US$1.24 million);
    - commercial non-insured vis-à-vis Austria: CFAF 8.71 billion (US$16.18 million);
    - commercial non-insured vis-à-vis Morocco: CFAF 1.01 billion (US$1.87 million);
    - bilateral payment arrears to China: CFAF 34.01 billion (US$63.17 million).
  - Commit to clear existing external arrears towards AfDB, BDEAC and IsDB, commercial-insured arrears and resolve bilateral arrears before Board approval of proposed Extended Arrangement.
  - Clear all bilateral arrears prior to the first program review.

### Domestic debt stock and repayment plans
- Total stock of domestic debt represents 25 percent of GDP at end-March 2021, including:
  - moratorium debt 5.6 percent of GDP;
  - bank debt 4.4 percent of GDP;
  - debt vis-à-vis BEAC 4.6 percent of GDP;
  - debt issued on regional markets 8.8 percent of GDP;
  - debt from annual budget management such as VAT arrears and budgetary float 1.6 percent of GDP.
- Repayment schedules announced:
  - VAT arrears reimbursed over 4 years, from 2021 to 2025 (CFAF 24 billion per year).
  - Moratorium debt repaid over seven years, from 2021 to 2027, subject to IMF-agreed macroeconomic framework:
    - 2021 repayment projected at CFAF 61 billion;
    - 2022−2026 repayments CFAF 80 billion per year;
    - 2027 repayment CFAF 110 billion.
  - Stock of budgetary float reimbursed over 4 years - 2021 and 2024 (CFAF 10 billion per year).

- Develop a comprehensive debt repayment strategy based on PWC report and Task Force on domestic debt.
  - Clearance strategy to be communicated to IMF staff by September 2021 (structural benchmark) and implementation to begin in 2021.
  - Plan to specify clearance schedule, type of debt, instruments, and budgetary implications (e.g., interest).
  - Commit to assess additional existing arrears related to social security funds (e.g., CNAMS, CNSS), certain public enterprises (e.g., SEEG), or State employees, establish complementary stock of domestic debt and propose terms and schedule for clearance by the second review of the program at latest.

### Measures to prevent new domestic arrears
- Annual level of budgetary float limited and must not exceed 15 percent.
- Prepare a summary table of the stock of expenditure incurred at different stages jointly by the DGBFIP and DGCPT and communicate quarterly to IMF staff (see TMU).
- Implement accrual basis for calculation of domestic arrears in information and monitoring systems per regional directives.
- Continue and strengthen fiscal regulation mechanism set up under previous IMF program.

### Governance of public enterprises and fiscal risk monitoring
- Strengthen governance and transparency of public enterprises; require regular communication of financial and strategic information to Minister of Economy and Minister of Budget.
  - Systematize transmission of financial statements and asset situations and regular publication of activity reports.
  - Adopt a regulatory text, before end of 2021 financial year, organizing relations between State and public enterprises and private companies in which State has holdings.
  - Reform legal and institutional framework to establish sustainable practices and effective risk management on guarantees, environmental risks and local communities.

- Strengthen strategic management and monitoring of State holdings:
  - Establish clear provisions on responsibility and nature of monitoring and reporting obligations of companies.
  - Enhance transparency through regular publications and transmission of information to control institutions (Parliament, Court of Auditors).
  - Establish operational framework to monitor holdings managed by SPIN, GOC, SEM and FGIS; these entities to send periodic reporting to Ministry of Economy summarizing financial and strategic information.
  - Regulatory text to specify modalities for transmitting information to supervising ministries.
  - Task Forces on public agencies (SPP) and public enterprises to study rationalization or possible merger of vehicles into single structure managing all public participations.
  - Prepare a public portfolio management strategy by end of the first quarter of 2022.
  - Speed up establishment of public enterprise control unit within Ministry of the Budget, providing it with tools—including one developed by IMF technical services—to manage risks on public sector portfolio.

### IMF technical assistance and implementation commitments
- Implement recommendations of IMF technical assistance mission of January 2021 to strengthen fiscal risk management.
- Continue to seek and use IMF technical assistance across PIM, accounting reform, public finance statistics, procurement transparency, and portfolio management.

*Source: 1gabea2021001 - 35. Efforts to modernize and strengthen public investment management (PIM) will*

### annex on fiscal risks by including  data and analyzes of budgetary implications, especially on public

### 1gabea2021001 - annex on fiscal risks by including  data and analyzes of budgetary implications, especially on public

### Fiscal risks annex and public sector reporting
- Finalize and attach an annex relative to fiscal risks to the budget law for 2022 by October 2021 (structural benchmark).
- Complete and expand coverage of budgetary and financial reports to:
  - include all information available for each category of risk;
  - present all the public entities in addition to the central government;
  - establish the balance sheet of the public sector covering all assets and liabilities in accordance with the provisions of the CEMAC directives (see Paragraph 42).
- Strengthen monitoring and supervision capacities of the public sector at the Ministries of Economy and of Budget by strengthening the resources of units in charge of monitoring the public sector and the SPP.

### Transition to a Green Economy (Paragraphs 52–57)
- Program support focus:
  - analyze impact of an environmentally friendly tax system and identify revenues and legal aspects requiring change (with IMF TA and in the context of the UN Integrated National Financial Framework (INFF));
  - assess public investments according to the PIMA-CC framework to identify risks and problems related to climate and the environment.
- Government actions:
  - accelerate implementation of environmental and climate change policies to increase sustainable development contribution of the forest sector;
  - develop a national carbon credit trading mechanism in line with the Paris agreement to help finance forest conservation policies and actions, support a national carbon registry, and improve national technical knowledge for certification;
  - submit to parliament a law on climate change to promote development of a carbon market equipped with a quota trading system to encourage emissions reductions.
- International cooperation:
  - Agreement signed with the Kingdom of Norway on September 23, 2019 to reward sustainable forest management efforts.
- Forest-wood sector objectives:
  - fight against illegal exploitation and improve transparency;
  - create forest plantations;
  - strengthen certification of all forest concessions;
  - conduct a national forest inventory;
  - augment the value chain by more than 30 percent through acceleration of second and third wood transformation;
  - design a new forestry law aligned with Gabon's economic, social, environmental and climatic challenges.
- Conservation and land use:
  - continue conservation and preservation of national parks;
  - implement national strategy to resolve human-elephant conflict (installation of electric fences and support mechanisms for affected populations);
  - implement the national land use plan to better delimit village land and optimize land use.

### Social Sector Policies (Paragraphs 58–59)
- Commitment to protect social sector spending and redirect fiscal resources if necessary.
- List of retained expenditure items to be maintained at 2021 credit levels:
  - social services relating to social safety nets to free deliveries, the emergency unit (Service d'aide médicale urgente (SAMU) Social), and seniors;
  - legal assistance;
  - costs of the electrification program and hydraulic installations intended for rural areas without access to public water and electricity network;
  - special solidarity contribution (CSS) allocated to economically weak Gabonese (GEF).
- Guarantee minimum level of expenditure even in the event of a budgetary adjustment during the program period; monitoring modalities specified in the technical memorandum of understanding (TMU).
- Employer contribution to CNAMGS:
  - commit, depending on available budgetary margins, to gradually increase employer contribution (included in the budget and paid to the CNAMGS) to reach the amount provided for by legal texts by 2025 at the latest.
- Targeting and monitoring improvements:
  - complete overhaul of the poverty profile to improve effectiveness of social protection programs;
  - review eligibility criteria and adjust the GEF file by December 2021 (structural benchmark);
  - if additional costs arise from revised eligibility, take necessary measures to ensure balance, sustainability and effectiveness of social protection programs;
  - implement functional classification according to the Classification of the Functions of Government (COFOG) model to improve monitoring of social spending.

### Strengthening the Financial Sector and Access to Finance (Paragraphs 60–66)
- Financial sector standing and temporary measures:
  - quality of bank portfolio expected to deteriorate when temporary measures are lifted;
  - COBAC measures in mid-2020 to last until end-2021 allowed: (i) banks to delay recognition and provisioning of nonperforming loans and to reclassify restructured loans as performing; (ii) limit distribution of dividends; (iii) zero-rate weighting of certain recent issuances of government securities secured by an escrow account at the BEAC.
  - At end-March 2021, banks’ exposure to the sovereign increased by 6 percentage points to nearly 22 percent of banking assets, compared with about 16 percent at end-2019.
- Liquidation of public banks:
  - liquidation of BHG and Postebank expected to be completed by end-2021 instead of end-2020; liquidation of BGD expected by mid-2022 instead of early 2022;
  - estimated fiscal cost of liquidations broadly comparable to previous estimates, at around 1.5 percent of GDP.
- Financial inclusion and microfinance:
  - development of a national financial inclusion strategy included in the 2021–23 program; coordinated approach lacking.
  - microfinance institutions doubled from 10 in 2010 to 20 in 2020;
  - deposits increased from CFA 8 billion to CFA 67 billion from 2010 to 2020;
  - outstanding gross loans rose from CFA 4 billion to CFA 66 billion over same period;
  - weakness: absence of a control brigade to repress illegal microfinance practice.
- Mobile money:
  - volume of mobile money deposits reached CFAF 871 billion in 2020, or 40 percent of total deposits;
  - volume of mobile money payments increased from CFAF 55 billion in 2019 to CFAF 353 billion in 2020 (sixfold increase).
- FGIS and CDC governance strengthening:
  - both renewed boards of directors and conducted extensive audits in 2020;
  - FGIS audit highlighted weaknesses in governance, investment organization and management, lack of transparency and financial strategy at the Gabonese sovereign wealth Fund (FSRG);
  - FGIS commissioned an audit of FSRG holdings (results pending) and developed a proposal for a new funding model for FGIS and FSRG;
  - CDC audit found significant weaknesses in governance, internal control, and investment management; CDC redefining strategic direction.
- Government commitments (actionable items and deadlines):
  - ensure close monitoring of solvency and liquidity of the banking sector while supporting regulatory compliance with COBAC;
  - update the non-performing loans reduction strategy, including domestic arrears inventory and repayment plan, and upgrade judicial capacity, by end-September 2021;
  - establish a strategy for developing non-bank investment in public securities in cooperation with the BEAC by end-2021 to strengthen government financing capacity and stimulate savings and social security;
  - complete liquidations of BHG and Postebank by end-2021 and BGD by mid-2022, at no significant cost to the State (structural benchmark — end-June 2022); hold quarterly meetings of the Liquidation Support Committee; actively support liquidators in recovery of unpaid debtors; design a plan for management of post-liquidation procedures;
  - adopt a national financial inclusion strategy by mid-2022, in line with the regional strategy;
  - address weaknesses identified at FGIS and CDC and confirm progress through a mid-2022 follow-up audit; by mid-2022, develop and adopt a prudent strategy for FSRG and CDC in line with the government's growth acceleration plan;
  - enhance financial transparency for public financial institutions, including publication of annual reports starting in 2021;
  - adopt an autonomous financing method for the FGIS that covers operating costs but does not undermine profitability of the FSRG;
  - audit the State's direct and indirect shareholdings and transfer non-strategic assets.

### Business Environment and Governance (Paragraphs 67–70)
- Regulatory reforms for investment zones and investment code:
  - draft bill to harmonize laws on Special Investment Zones (Z.I.S) to: bring flexibility and clarity in creation, organization and operation of Z.I.S; improve governance and competitiveness; reduce benefits and remove certain tax and customs exemptions granted to Z.I.S., with nature and duration determined by the Finance Law.
  - draft Investment Code (orientation law of the National Investment Policy) aims to strengthen regulatory framework via an investor license and a committee for investment monitoring.
- High Council for Investment (HCI):
  - created by Decree No. 072/PR/MPIIHAT of February 25, 2014; reorganized by Decree 281/PR/MPIPCTI of December 28, 2018;
  - platform for public-private dialogue with objectives: (i) strengthen public-private dialogue; (ii) promote and improve business environment; (iii) decide and steer investment policy; (iv) monitor implementation of reforms;
  - platform became fully operational in 2017; meetings resumed since April 2021 focusing on: validation of Doing Business reform roadmap 2021–23; drafting orientation Law of the National Investment Policy; improving investment framework and investor support; rationalizing parafiscal system; improving employment and vocational training framework; improving competitiveness of PAT's priority sectors.
- Land administration modernization (PAT program “Modernizations of Land Administration and direct access to land”):
  - two major projects: (i) centralization of cadastral information, optimization of procedures and mass regularization to allow simplified issuance of title deeds for applicants with known status; (ii) facilitate gradual implementation of property taxation in general and of the Single Land Contribution;
  - process of transmitting land information to the Directorate General of Taxes will continue during the program period.
- Governance and anti-corruption measures:
  - institutionalization of the oath for all members of government, credit authorizing officers and other administrators;
  - creation of a Court of Justice of the Republic to judge members of the Government;
  - adoption of a Penal Code punishing financial and transnational offenses and creating new criminal jurisdictions;
  - creation of the National Audit and Verification Authority (ANAVEA);
  - priority to strengthen asset declaration regime for public officials by increasing capacity of the Commission to combat Illicit Enrichment and amending legal framework to align with international good practices, including online publication of completed declarations;
  - commit to publish an annual report by the CNLCEI, including monitoring (25 percent) of asset declarations by category of public official (structural benchmark — December 2022).

### Improving Macroeconomic Statistics (Paragraph 71)
- Ongoing efforts since 2017 with World Bank and IMF support; activities over 2017–21 include: poverty survey, launch of agricultural census, completion of demographic and health survey, transmission of all public finance data from Gabonese central government to IMF public finance database (GFS), and membership in the General Data Dissemination System.
- Remaining challenges: (i) reform institutional set-up; (ii) produce and publish real sector statistics; (iii) improve forecasting and impact simulation tools.
- Institutional reform actions:
  - adopt and promulgate law on the national statistical system and implementing decrees and statutes of bodies (National Statistical Commission, Institute of Statistics, Statistical Development Fund, etc.) no later than the first half of 2022.
- Production of productive sector statistics:
  - carry out the General Business Census (RGE) with results to be published in the fourth quarter of 2021 to create a unique reference file of companies for administrations (DGS, DGI, CNSS, CNAMGS, Customs, etc.);
  - develop a multisectoral databases managing platform at the DGS accessible to all users;
  - rebase national accounts, switch to the 2008 SNA and produce the 2011–20 accounts no later than the 4th quarter of 2022.
- Capacity building and modelling tools:
  - improve economic monitoring (data collection and processing) and quality of the business conditions note by integrating trend approach and leading business indicators;
  - develop new forecasting and modelling tools available from the first quarter of 2022: a new forecasting model for macro aggregates (GDP) with better consistency (linkage with national accounts, budget, monetary sector, external sector) and an impact evaluation model to assess effects of fiscal policies on different sectors.
- Data dissemination:
  - Gabon benefited from a joint IMF-AfDB mission in the fourth quarter of 2019 to implement the improved GDDS-a; a GDDS management team was set up;
  - commit to regularly publish all available information and organize statistical harmonization workshops in line with GDDS framework;
  - Gabon's PNRD (National Data Summary Page) to be fully informed with updated data, particularly GDP, at the end of 2022.

### Technical assistance and capacity building
- Multiple references throughout the program to IMF technical assistance (TA) and collaboration with other partners (UN INFF, World Bank, AfDB) for:
  - environmentally friendly tax analysis and PIMA-CC public investment assessments;
  - statistical system reform, rebasing national accounts, and development of forecasting and impact models;
  - broader capacity building across Ministries and public institutions (monitoring units, FGIS/CDC governance, liquidation support, COFOG implementation).

*IMF staff report excerpts as presented in the source document.*

### 72.      Technical assistance (TA) and national capacity building remain essential to further

### Technical assistance (TA) and national capacity building

### Key points on TA needs and commitments
- Technical assistance (TA) and national capacity building remain essential to further strengthen our technical and institutional capacities.
- Gabon has received substantial technical assistance from the IMF in recent years, and the overall assessment of the implementation of this TA is positive.
- TA contributed significantly to capacity building and facilitated implementation of economic programs.
- IMF TA is requested to help over the 2021-23 period to:
  - (i) pursue prudent macroeconomic policies and maintain fiscal discipline to preserve debt sustainability and avoid the accumulation of arrears;
  - (ii) increase domestic revenue by broadening the tax base to meet the growing demand for public goods and services, and to meet rising social needs;
  - (iii) improve the efficiency of public spending; and
  - (iv) address banking sector weaknesses and enhance financial inclusion.
- Gabon also needs to strengthen its statistics to better inform policy decisions and the private sector.
- Donors do not provide TA in the specific areas that would be covered by IMF TA to avoid duplication.
- A memorandum of understanding with IMF staff has been agreed.
- Gabon commits to:
  - continue to improve technical and institutional capacities;
  - make best use of TA provided by the IMF and other development partners;
  - ensure availability of sufficient human and financial resources; and
  - ensure good collaboration among national institutions involved in different areas of technical assistance.

### Program monitoring

### Review schedule and instruments
- Program implementation will be monitored through prior actions, semi-annual reviews, quantitative performance criteria and indicative targets, continuous performance criteria, and structural benchmarks.
- The first review is scheduled for December 2021 based on end-July 2021 quantitative targets, the continuous performance criteria, and relevant structural benchmarks.
- The second review is scheduled for June 2022, based on end-December 2021 quantitative performance criteria, the continuous performance criteria, and relevant structural benchmarks.
- For all reviews, the quantitative performance criteria will include:
  - a floor on the primary fiscal balance, excluding oil revenues (on a payment order basis);
  - a ceiling on net domestic financing of the central government (excluding the use of IMF financing);
  - a ceiling on the net claims of the central bank on the central government, excluding the use of IMF credit;
  - a ceiling on external debt borrowing or guarantee (including program and project);
  - a ceiling on the accumulation of new external arrears by the central government.
- Prior actions and structural benchmarks are presented in Table 2. Quantitative targets through June 2022, and the continuous quantitative performance criterion, are presented in Table 1.

### Proposed Quantitative Program Targets, 2021−2022 (selected figures)
- Units: Billions of CFA francs, unless otherwise indicated.
- I. Quantitative Performance Criteria (floor/ceiling values by date)
  - Floor on primary fiscal balance, excluding oil revenue (on a payment order basis):
    - 2020: -488.7
    - March (2021): -24.8
    - July (2021): -201.6
    - September (2021): -310.6
    - December (2021): -498.9
    - March (2022): -18.1
    - June (2022): -91.9
  - Ceiling on the net domestic financing of the central government (excluding IMF financing):
    - 2020: -72.7
    - March (2021): 36.1
    - July (2021): 150.0
    - September (2021): 135.8
    - December (2021): 138.0
    - March (2022): -23.6
    - June (2022): -122.4
  - Ceiling on central bank net claims on central government, excluding use of IMF credit:
    - 2020: 240.1
    - March (2021): 312.1
    - July (2021): 297.3
    - September (2021): 278.1
    - December (2021): 270.8
    - March (2022): 171.7
    - June (2022): 133.4
  - Ceiling on disbursing and guaranteeing of external debt (program and project):
    - 2020: 922.8
    - March (2021): 12.3
    - July (2021): 92.7
    - September (2021): 195.9
    - December (2021): 853.8
    - March (2022): 4.9
    - June (2022): 28.8
- II. Continuous Performance Criterion
  - Ceiling on accumulation of new external arrears by the central government:
    - 2020 and all listed review points: 0
- III. Indicative Targets (selected)
  - Floor on government tax revenue, excluding oil revenue:
    - 2020: 874.1
    - March (2021): 233.5
    - July (2021): 597.2
    - September (2021): 772.3
    - December (2021): 1038.9
    - March (2022): 264.9
    - June (2022): 602.0
  - Ceiling on the stock of domestic arrears:
    - 2020: 220.1
    - March (2021): 165.1
    - July (2021): 161.4
    - September (2021): 159.8
    - December (2021): 159.5
    - March (2022): 139.5
    - June (2022): 99.5
  - Floor on family and social protection:
    - 2020: 45.2
    - March (2021): 10.9
    - July (2021): 34.3
    - September (2021): 40.2
    - December (2021): 57.7
    - March (2022): 11.4
    - June (2022): 33.3
- Notes attached to the targets (selection):
  - Targets as defined in the attached Technical Memorandum of Understanding (TMU).
  - Cumulative amount from January 1, 2021. Targets are set for the end of the respective month, unless otherwise stated.
  - The ceiling on net domestic financing of the central government will be adjusted upward (downward) for any lower (higher) external program disbursements and/or oil revenue due to changes in oil prices as set in the TMU. The ceiling on net domestic financing of the central government is also expected to be adjusted downward by the same amount of the proposed SDR allocation in 2021.
  - The ceiling in central bank net claims on the central government will be adjusted upward (downward) for any lower (higher) external program disbursements and/or oil revenue due to changes in oil prices as set in the TMU. The ceiling on net claims of the central bank on the central government is also expected to be adjusted downward by the same amount of the proposed SDR allocation in 2021.
  - The performance criterion on external debt disbursements/guarantees will be adjusted upward (downward) in case of early (late) disbursements of specifically agreed and identified financing flows as set in the TMU.
  - The ceiling on domestic arrears will be adjusted upward if Brent oil price projections as reported by IMF-WEO rise relative to the baseline program projection.

### Prior actions and structural benchmarks (2021–24)

### Prior actions for 2021 (selected)
- Adoption of a 2021 supplementary budget consistent with program targets: Adopted budget and related documents sent to IMF staff.
- Sharing with the IMF of the 2019 audits and hiring by competitive procurement of internationally reputable companies to perform audits of the 2020 financial accounts of four major SOEs (GOC, SOGARA, CDC, FGIS): 2019 Audit reports shared with IMF staff and reputable companies to certify the 2020 financial accounts hired.
- Publication on-line of the full text of all COVID-19-related procurement contracts concluded as of April 2021: Procurement contracts with required details accessible on the website of the Ministry of Economy.

### Structural benchmarks (selected, with due dates and indicators)
- Register new taxpayers at a rate comparable to the one observed during the average of the last three years: Semiannual summary table from tax department of new registered taxpayers.
- Review of existing tax exemptions and identification of those to remove and review of existing tax rates (e.g., excise, VAT, custom) and implement the appropriate measures in the 2022 budget law:
  - Due date: End-September 2021.
  - Indicator: Report from the Ministry of Economy reviewing the exemptions (including the matrix annexed to the current MEFP) and 2022 budget law.
- Publication on the government’s website of a quarterly note on the oil sector, including reconciliation of oil output and revenues:
  - Due date: Quarterly, starting end-September 2021.
  - Indicator: A copy of the note published on the website of the Ministry of Economy shared with IMF staff.
- Submission of a membership application to the Extractive Industries Transparency Initiative (EITI):
  - Due date: End-September 2021.
  - Indicator: A copy of the letter of transmission to the EITI shared with IMF staff.
- Publication on the government website of the results of the audit for all COVID-19 related expenditures:
  - Due date: End-September 2021.
  - Indicator: Audit report accessible on the website of the Ministry of Economy.
- Development of a plan for the clearance of domestic arrears audited and validated in early 2021:
  - Due date: End-September 2021.
  - Indicator: Report shared with IMF staff.
- Adoption by the government of restructuring-plans to address issues identified by the audit of the four major companies (GOC, SOGARA, CDC, FGIS):
  - Due date: End-October 2021.
  - Indicator: Adopted plan shared with IMF staff.
- Completion of the fiscal risks statement and include it in the FY22 budget law budget documentation:
  - Due date: End-October 2021.
  - Indicator: Fiscal risks statement shared with IMF staff.
- Require legal persons bidding on public procurement contracts to declare names and nationalities of beneficial owners and publish them on-line for awarded contracts:
  - Due date: End-November 2021.
  - Indicator: Procurement contracts with required information published on the website of the Ministry of Economy.
- Communication of an action plan for continued deployment of information systems to achieve complete coverage of taxpayers and allow paperless declaration and payment transactions:
  - Due date: End-November 2021.
  - Indicator: Action plan shared with IMF staff.
- Prepare a comprehensive list of all tax arrears, including those of public companies, and identify the recoverable part:
  - Due date: End-December 2021.
  - Indicator: Final list shared with IMF staff.
- Present the TOFE according to GFSM 2001/2014 for central government:
  - Due date: End-December 2021.
  - Indicator: TOFE according to GFSM 2001/2014 for central government sent to IMF staff.
- Complete the revamping of poverty profile to better target poor and vulnerable population (Gabonais Economiquement Faibles ― GEF) through social protection programs:
  - Due date: End-December 2021.
  - Indicator: Legal/regulatory document implementing the revised eligibility criteria for GEF.

### Selected structural benchmarks for 2022–2024 (due dates and indicators)
- End-January 2022: Assess compliance of existing tax and customs rates to national and regional legal provisions in IT systems and conduct necessary modifications — Report extracted from the IT systems showing the applied rates.
- End-June 2022: Reform the VAT escrow account — Legal/regulatory document revamping the escrow account.
- End-June 2022: Complete the liquidations of BHG and Postebank by end-2021 and that of BGD by mid-2022, at no significant cost to the State — Letter from the Minister of Finance announcing completion of the liquidation.
- End-July 2022: Publish any contract award in an electronic version of the public procurement journal on the Ministry of Budget and Public Accounts website and publish full texts of awarded contracts — Procurement contracts with required information accessible on the website of the Ministry of Economy.
- End-September 2022: Reform system for granting and managing property/land titles and introduce a single property tax (SPT) in the budget law for FY2023 — Draft budget and annexes sent to IMF staff.
- End-December 2022: Annual publication of a report by the CNLEI, including percentage of declaration of assets by category of public officials as requested by Law No. 003/2003 — Report shared with IMF staff.
- End-January 2023: Completion of the full implementation of the TSA — Letters from Minister of Finance and the Central Bank National Director certifying the TSA is fully operational.
- End-June 2023: Introduce automated interfaces between (i) VECTIS and SIGFIP and (ii) revenue IT systems and VECTIS-SIGFIP — Copies of the specifications and reports at end-May 2023.
- End-June 2023: Produce and publish a public sector balance sheet (PSBS) — PSBS accessible on the website of the Ministry of Economy.
- End-January 2024: Completion of the full transition to GFSM 2001/2014 — TOFE compliant with GFSM 2001/2014 standards.
- End-January 2024: Deployment of e-T@x access to taxpayers for both declarations and payments for all taxes — Copies of e-T@x webpages and specifications.

### Annex I — Transformation Acceleration Plan (PAT 2021–23)

### Main objectives
- Reduce the contribution of the oil sector to less than 25% of GDP.
- Revitalize economic growth, including in the difficult context of COVID-19, around 3% of GDP over the period 2021-2023.
- Increase to more than 50% of national consumption the share of locally produced agricultural products in Gabon.
- Stimulate job creation in the formal private sector; the share of the formal private sector in total formal employment is expected to rise above 55%, compared to less than 50% currently.
- Increase private investment to more than CFAF 2,000 billion per year, compared to about CFAF 1,600 billion per year currently.
- Reduce the proportion of the population living below the poverty line to below 25%, compared to 33% currently.

### Strategy and pillars
- The PAT is organized around three transformation pillars with twelve key goals.

- Economic pillar: Preparing the productive sectors of the future
  1. Slow down the fall in oil production and diversify the oil sector; aim to maintain production above 100,000 barrels/day through investment and better regulation, and stimulate upstream and downstream investment in gas conditioning and processing.
  2. Accelerate expansion of manganese and pave the way for iron and gold mining. Manganese production is expected to grow from 9 to 12 million tons annually in three years covered by the PAT, largely due to efforts to upgrade the railway. Increased support to investors with operating permits for the Eteke gold mine and the Baniaka, Milingui and Belinga iron mines should facilitate coming on stream within a timeframe of 2 to 5 years, with a major impact on Gabon's GDP.
  3. Improve productivity and diversify the logging sector. Upstream forestry rationalization aiming at allocating larger areas to increase productivity and reduce illegal logging, and start plantation forests, should enable annual production to increase from 2 to 6 million m3 of lumber by 2025. Investments in logistics support for industrial platforms (new industrial timber zones in Lambaréné and Moanda) should increase local secondary and tertiary wood processing.
  4. Strengthen Gabon's food independence and develop export sectors. Through better management of AfDB financing (CFAF 76 billion), develop high agricultural productivity areas, particularly banana and cassava, to substitute national production for imports.
  5. Pave the way for development of other sectors. Special incentives (free access to land, easy access to bank financing or private capital) to promote national and foreign investment in production of building materials and real estate for job creation and access to decent housing.

- Social pillar: Creating the conditions for a new social pact
  6. Boost employment in the private sector through better matching between educational curricula and labor market requirements. Significant investment in vocational training infrastructure is coming to an end and must be complemented by curriculum revision and training of trainers to supervise 12,000 additional students who might be admitted to vocational training programs. The new labor code favors professional integration through dual apprenticeship and internship contracts.
  7. Improve the health situation by refocusing on prevention and primary health care: shift investment from hospitals to community health facilities, upgrade infrastructure and equipment, provide qualified and motivated personnel, and ensure conditions for some financial autonomy for community health facilities; concentrate more resources on disease prevention than on heavy curative care.
  8. Ensure sustainability of a targeted and equitable social protection system: governance and management reforms and strengthening of financial resources of social protection institutions to universalize health and old age coverage and enhance financial sustainability and quality of services for the most vulnerable.

- Cross-pillar: Upgrading the drivers of development
  9. Improve the business environment to attract investors and ensure conditions for growth in non-productive sectors: measures related to improving the Doing Business ranking, make land available, and facilitate/reduce cost of administrative procedures.
  10. Strengthen infrastructure (electricity, water, transportation) to improve quality of life and competitiveness: investments mainly structured as Public-Private Partnerships in energy (3 hydroelectric dams and a gas-fired thermal power plant), water (a water treatment plant to increase Libreville supply by 130,000 m3/day), and roads (Transgabonaise project, resumption of stopped road projects, Libreville North and South bypass roads). Plan new investments in digital infrastructure, particularly terrestrial optical fiber, within PPPs rather than state loans.
  11. Accelerate digitalization of businesses and public services: digitize administrative processes for revenue collection and issuance of administrative acts to simplify use and improve control of financial resources collected through digitalized services.

*Source: Gabon — IMF country document (excerpt).*

### 12. Improve public finances to create buffers. This program encompasses actions to contain

### 1gabea2021001 - 12. Improve public finances to create buffers. This program encompasses actions to contain

### Instruments for implementation
- The Government has set up 20 Task Forces responsible for implementation of action programs linked to the twelve goals.  
  - Each Task Force is headed by a task force leader and is composed of senior executives from the public administration and the private sector.  
  - Task Forces provide a platform for collaboration and regular reporting to facilitate dialogue and consistency in action.
- Above the Task Forces, the Government created a National Council for the Transformation Acceleration Plan (CNPAT).  
  - The CNPAT Steering Committee is chaired by the Prime Minister, Head of Government, and the General Coordinator for Presidential Affairs.  
  - The Steering Committee decides on issues submitted by the Task Forces.
- An Executive Secretariat of CNPAT provides technical support in solving operational problems encountered by Task Forces, monitors progress of roadmaps, and reports regularly to the CNPAT Strategic Orientation Committee.

### Main reforms being considered (summary)
- Increase in SOGARA's capital to support investment in production facilities, improve operational and financial results, lower the State's share in the company’s capital, and remove direct and indirect subsidies granted to it.
- Consolidation of the upstream forestry sector:
  - Withdrawing forestry permits from operators not complying with regulatory and fiscal obligations and reallocating them to better capitalized operators with sustainable logging certification to support supply of wood to industrial timber zones (existing Nkok zone, Ikolo zone in Lambaréné, and an industrial zone in Moanda scheduled to open in 2021).
- Launch of forest plantations in sparsely wooded savannah areas to improve yields per hectare, boost future wood availability, and reduce pressure on natural forests.
- Reform of the labor code (bill submitted to Parliament) to make contractual labor framework more flexible, lower certain barriers to entry into employment, and guarantee better gender equality.
- Acceleration of universal health coverage:
  - Registration of nearly one million newly insured persons (half of the population).
  - Establishment of a health insurance scheme for workers in the informal sector.
- Major investment plan structured through Public Private Partnerships to include:
  - Building three hydroelectric dams, a gas-fired power plant, and a water treatment plant producing 130,000 m3 of additional water per day to guarantee Libreville's water supply.
  - Upgrading the Transgabonais railway.
  - Renovation and widening of 780 km of national roads 1 and 3 connecting Libreville to Franceville.

### Tax and customs exemptions reform timetable (selected measures and implementation agenda)
- Corporate income tax (CIT)
  - Alignment of the CIT rate for all sectors (excluding the oil sector) on the common law regime (30%) (including tourism sector, public establishments, real estate development companies, etc.) — Revised 2021 Budget: X
  - Rate increase for real estate development companies (from 20% to 30%) — Revised 2021 Budget: X
  - Reduction of the allowance from 50% on the second profit year to 25% (in compliance with the CEMAC regulation on new businesses) — Revised 2021 Budget: X
  - End of permanent exemptions and alignment of exemption measures over a single period (e.g., 3 years) — Revised 2021 Budget: X
  - Reform of exemptions in the tourism sector — Revised 2021 Budget: X
  - Reduction from 5 to 3 years of the exemption from profits for small and medium-sized businesses that do not hold an authorization — 2022 Budget: X
  - Suspension of exemptions for companies or holders of operating or research permits that have not fulfilled reporting obligations (including in special economic zones) — Revised 2021 Budget: X
  - Limitation of tax advantages for new companies in the Nkok area: exemption from CIT (ex. 5 years instead of 10 years), reduced corporate tax rate (common rate of 30% instead of the reduced rate 10% for 5 years), end of the exemption from withholding taxes — 2022 Budget: X
  - Non-renewal of tax advantages granted to companies arriving at the end of their 10-year period — 2023 Budget: X
  - Limitation of the exemption period to 5 years for new businesses setting up in all special economic zones — 2021 Budget: X
  - Alignment of CGI provisions with specific legal provisions for special economic zones — 2021 Budget: X
  - Systematic evaluation of counterparties and questioning advantages granted to investors in case of non-realization of counterparties — 2021 Budget: X
  - Use of the actual tax base of headquarters and application of the standard rate of 30% — 2021 Budget: X
  - Use of the actual tax base for oil subcontractors / elimination or limitation of the provision of the CGI — 2021 Budget: X

- Personal income tax (PIT)
  - Implementation of the provisions of the CEMAC directive relating to PIT (directive n° 01/04-UEAC-177 of July 30, 2004) — 2021 Budget: X

- Value-added Tax (VAT)
  - Alignment of VAT exemptions with the CEMAC Directives (n ° 1/99 / CEMAC-0286-CM-03 of December 17, 1999 and n ° 07/11-UEAC of December 19, 2011) — Revised 2021 Budget: X
  - Cancellation of VAT exemptions outside the legal framework and application of legal rates (list of products and services benefiting from an exemption not authorized by Community directives such as peanuts, cane sugar, capital goods for activities agricultural and livestock farming, mortgage loans, etc.) — 2022 Budget: X
  - Reform of the reduced rate of VAT on cement: increase to 5% to 10% (target 18% in 2023 = to be taken into account in PLF 2023) — Revised 2021 Budget: X
  - Increase in the VAT rate according to the list of products: exemption = reduced rate of 5%; rate 5% = rate of 10%; 10% rate = 18% common law rate — 2022 Budget: X
  - Reform of exemptions in the tourism sector — 2021 Budget: X
  - Gradual application of a reduced rate (10%) instead of the total VAT exemption applicable to certain products and services (outside the scope of the exemptions provided for by the CEMAC directive) — 2022 Budget: X
  - Gradual increase in the single reduced customs rate by product group 2021–23 to the standard rate (18%) — 2022 Budget: X; 2023 Budget: X
  - Harmonization of rates applied at the customs cordon and on the internal market (ensure that the import rate is not lower than the rate applied to local production) — 2022 Budget: X
  - Reform of the VAT in the banking sector (e.g., end of exemptions or creation of a specific tax) — 2023 Budget: X

- Customs
  - Cancellation of tax-free advantages for State contracts (subject to special provisions concerning contracts on external financing) — Revised 2021 Budget: X
  - Application of a reduced rate of 5% for a maximum period of 3 years instead of a total exemption from the deductibles granted in the finance law (excluding wheat) according to the CEMAC TEC during the operating phase (then application of the normal rate) — Revised 2021 Budget: X
  - End of the exemption from customs duties on cement inputs and application of a 5% rate — Revised 2021 Budget: X
  - Revision of the lists of products giving the right to tax-free advantages in budget law (e.g. agricultural sector, wood industry, cement industry, large industrial complexes, tourism, social housing) — Revised 2021 Budget: X / 2022 Budget: X
  - Gradual application of an overall reduced rate of (5%) instead of a total exemption for products on the "high cost of living" list according to the tariff lines provided for by CEMAC — 2022 Budget: X

- Miscellaneous
  - Abolition of exemptions from licenses and property contributions for tourism companies (excluding current regimes) — Revised 2021 Budget: X
  - Elimination of property contributions exemptions for special economic zones — Revised 2021 Budget: X
  - Reinstatement of exempt products in the list of products subject to social contribution (CSS) — Revised 2021 Budget: X
  - Abolition of exemptions from licenses, registration fees and property contributions for companies in the mining sector and application of withholding tax — 2022 Budget: X

### Technical Memorandum of Understanding (TMU) — program monitoring, definitions, and reporting
- TMU effective date in attachment: July 15, 2021.
- QPCs and ITs:
  - The TMU sets out understandings regarding definition of quantitative performance criteria (QPC) and indicative targets (IT), QPC and IT adjusters, and data reporting requirements for the extended arrangement under the Extended Financing Facility as described in the Letter of Intent dated July 15, 2021.
  - QPCs and ITs are shown in Table 1 of the MEFP; prior actions and structural benchmarks are in Table 2 of the MEFP.
  - Quantitative performance criteria and indicative targets are set for July 31, 2021 and December 31, 2021; the same variables are indicative targets for September 30, 2021; March 31, 2022; and June 30, 2022.
- Program accounting exchange rates (used for foreign-currency related assets, liabilities, and flows unless otherwise indicated):
  - CFAF to U.S. dollar: 551.809 as of June 30, 2021.
  - Euro: 1.1884 U.S. dollars.
  - Pound Sterling: 1.3863 U.S. dollars.
  - Chinese Yuan: 6.4589 U.S. dollars.
  - Special Drawing Right (SDR): 1.42642 U.S. dollars.
  - Official gold holdings valued at 1770.11 U.S. dollars per fine ounce.
- Definitions and reporting:
  - The central government (CG) consists of all institutions, government units, and special funds (including the Road Fund) currently covered under the state budget; excludes local government authorities, the BEAC, and government-owned entities with separate legal status. Authorities will inform Fund staff of any new funds or extra-budgetary programs and ensure incorporation into the CG definition.
  - Fiscal year is the calendar year, starting on January 1 and ending on December 31.
  - Reporting: Data will be provided to the Fund with a lag of no more than six weeks after the end of the month.

### Quantitative targets and program figures (selected)
- Cumulative flows from the beginning of the fiscal year — Non-oil primary fiscal balance on a payment order basis (CFAF billions):
  - End March 2021: 113.6
  - End July 2021: 277.6
  - End September 2021: 359.6
  - End December 2021: 482.6
- External Program Disbursements (Baseline Projection) — Cumulative flows from the beginning of the year (In US$ Millions):
  - External loans for budget support:
    - End March 2021: 0.0
    - End June 2021: 0.0
    - End July 2021: 0.0
    - End September 2021: 117.1
    - End December 2021: 307.8
  - External loans for project financing:
    - End March 2021: 22.9
    - End June 2021: 128.8
    - End July 2021: 164.2
    - End September 2021: 234.8
    - End December 2021: 340.8
  - External loans from commercial sources and international capital markets:
    - End March 2021: 0.0
    - End June 2021: 6.0
    - End July 2021: 8.0
    - End September 2021: 12.0
    - End December 2021: 937.5

### Definitions of key fiscal variables (selected)
- Non-oil primary fiscal balance of the CG on a payment order basis:
  - Measured as the difference between (i) total central government revenue on a cash basis (excluding oil revenue) and grants; and (ii) total central government expenditure on a payment order basis excluding interest payments.
  - Total CG revenue (excluding oil revenue) is measured on a cash basis and includes offsetting revenue and expenditure operations and earmarked revenues (Road Fund and special funds).
  - Oil revenue includes payments received in cash and in crude. Revenue received by the treasury is registered after encashment, which will be at most 7 days after the date of receipt; oil revenue received in kind will be recorded at transaction value on the day of sale.
- Total CG expenditure:
  - Includes spending on a payment order basis (ordonnancements), treasury advances (avances à régulariser), and outlays on special funds and from earmarked revenues.
  - TOFE will recognize additional expenditure categories including certain capital transfers and end-of-year current transfers used for financing deficits on Treasury accounts and accounts of Treasury correspondents and local governments.
- Net domestic financing of the central government (ceiling):
  - Sum of (i) net bank credit to the government; and (ii) net nonbank financing.
  - Net bank credit equals the change in the balance between government’s liabilities and assets with the national banking system and is calculated based on BEAC data subject to monthly reconciliations between the treasury and the BEAC.
  - Net nonbank financing includes changes in outstanding government securities issued in CFA francs not held by the local banking system, privatization receipts, changes in correspondent bank and consignment accounts, and changes in outstanding claims on the government abandoned by the private sector.
- Ceiling on net claims of the BEAC to the central government, excluding the use of IMF credit:
  - Calculated as the gross change of BEAC claims on the CG (including BEAC statutory advances and other BEAC claims on the CG, excluding BEAC claims created by on-lending of IMF credit) less the change in gross BEAC liabilities to the CG (including treasury vault cash, deposits of the Future Generation Fund, deposits of the Sovereign Wealth Fund, and other central government deposits held at the central bank). The ceiling applied from end-July 2021.
- Ceiling on disbursing or guaranteeing external debt by the central government:
  - Definition of debt follows paragraph 8(a) of the Guidelines on Public Debt Conditionality in Fund Arrangements (IMF Executive Board Decision No. 15688-(14/107), adopted December 5, 2014, as amended). Debt includes loans, suppliers’ credits, and leases as defined in the Guidelines; arrears, penalties, and judicially awarded damages arising from failure to make payment under a contractual obligation that constitutes debt are debt.

*Source: Technical Memorandum of Understanding and MEFP material contained in the provided PDF content.*

### 89.      Definition: For the purposes of the ceiling on disbursing or guaranteeing external debt by

### Definition: For the purposes of the ceiling on disbursing or guaranteeing external debt by

### Ceiling on Disbursing or Guaranteeing External Debt by the Central Government (CG)
- Definition: External debt is debt contracted or serviced in a currency other than the franc of the Financial Community of Africa (CFAF).
- Scope: The ceiling applies to all external debt whether or not concessional.
- Guaranteeing external debt triggers nonobservance of the performance criterion regardless of whether or not a disbursement has been made.
- Assessment: The performance criterion will be assessed on a cumulative basis during the fiscal year.
- Exclusions: The performance criterion does not apply to:
  - i. Normal import-related commercial debt having a maturity of less than one year;
  - ii. Rescheduling agreements.
- Eurobond issuance: The amount deemed disbursed is the amount subscribed/purchased at the end of the subscription/purchase period as specified in the final documentation.
- Reporting: Authorities will inform IMF staff within 2 weeks of any planned contracting or guaranteeing of external debt and the related conditions before the debt is contracted or guaranteed by the CG. Once contracted or guaranteed, their disbursement becomes part of the monitored disbursements of existing debts.

### Ceiling on the Accumulation of New External Arrears by the CG
- Definition: External payments arrears by the CG are a continuous performance criterion with a zero limit throughout the program period.
- External payment arrears defined as contractual external debt service obligations (interest and/or principal, including moratorium and later/penalty interest, where applicable) of the CG that have not been made after falling due.
- Exclusion: Arrears resulting from nonpayment for which a rescheduling agreement is sought are excluded.
- Reporting:
  - The Ministry of Economy will provide final data on the stock of external arrears of the CG to the IMF with a lag of not more than six weeks from the end of the month.
  - The Ministry of Economy will provide data concerning any external arrears of the CG immediately after such arrears are incurred.

### Quantitative Indicative Targets: Definitions
- A. Cumulative Floor on the Net Reduction of the Stock of Domestic Arrears of the CG
  - Definition: Stock of domestic payment arrears = sum of all contractual obligations unpaid 90 days after accrual, consistent with regional directives (see article 14 of directive on TOFE).
  - Included obligations: procurement contracts for goods and services and other contracts in domestic currency; statutory obligations (e.g., civil service wages, VAT reimbursements, and other entitlements).
  - Measurement: Cumulative floor measured as stock of outstanding domestic arrears on the test date minus stock as of January 1, 2021.
  - Reporting: Data on repayment and new accumulation of domestic payment arrears and remaining previous-year stock provided to the IMF with a lag of no more than six weeks from the end of the month.
- B. Cumulative Floor on Central Government Tax Revenue, Excluding Oil Revenue
  - Definition: CG non-oil tax revenue = sum of direct domestic taxes, indirect domestic taxes, and international trade taxes as defined by the Government of Gabon’s revenue classification.
  - Reporting: Data provided with a lag of no more than six weeks from the end of the month.
- C. Cumulative Floor on Central Government Social Spending
  - Definition: Floor on non-wage social spending as defined in the CG budget for a fiscal year; funded by government resources.
  - Included programs:
    - (i) social services relating to social safety nets, free childbirth coverage, SAMU Social and seniors;
    - (ii) legal assistance;
    - (iii) costs of electrification program and hydraulic installations for rural areas without access to public water and electricity network;
    - (iv) special solidarity contribution (CSS) allocated to economically weak Gabonese (GEF).
  - Reporting: Data provided with a lag of no more than four weeks from the end of the month.

### Adjustors to Performance Criteria and Indicative Targets
- Net Domestic Financing of the Central Government: Oil prices
  - If Brent oil price projections as reported by IMF-WEO decline by up to 25 percent relative to the program baseline (US$60 per barrel), the ceiling will be adjusted upward to accommodate the shortfall in oil revenue in a given quarter.
  - If Brent oil price projections as reported by IMF-WEO decline by more than 25 percent relative to the baseline program projection, then a consultation between the government and the IMF is required.
  - If Brent oil price projections as reported by IMF-WEO rise relative to the baseline program projection for 2021, one-half should be allocated to increase central government deposits at the BEAC, with a requisite downward adjustment of the cumulative ceiling on net claims of the banking sector on the CG.
    - A share (up to FCFA 15 billion; representing 0.2 percent of non-oil GDP) could be used to increase central government expenditure on high-priority public investment projects, and the remainder of higher-than-programmed oil revenue should be used to reduce the stock of domestic payment arrears.
- Budget support:
  - The program will be adjusted downward (upward) by the amount by which budget support exceeds (falls short of) the projected amounts.
  - Any upward adjustment will be capped to 10 percent of the amount set out in table 2.
- New SDR allocation:
  - Authorities decided to save the new SDR allocation in 2021. The program ceiling is expected to adjust downward in 2021 by the same amount of the proposed SDR allocation.
- Non-oil Fiscal Balance:
  - The floor on the cumulative primary non-oil fiscal balance of the CG on a payment order basis will be adjusted downward (upward) to the extent that external financing is more (less) than external program disbursements given in Text Table 2.
  - Any downward adjustment will be capped to a maximum of CFAF 15 billion.
- Social Spending:
  - If primary expenditure compression is needed, social spending would nevertheless be maintained to the execution level estimated for 2021 regarding the various budget items included in the cumulative floor for CG social spending (0.8 percent of NOGDP).
- Debt:
  - Program ceiling on disbursing or guaranteeing external debt by the central government will be adjusted as follows:
    - upward up to a maximum of 5 percent of the ceiling on new external debt in cases where differences vis-à-vis the PC on new debt are caused by variation in financing conditions (interest, maturity, grace period, payment schedule, front-end fees, management fees) of the debt or debts. The adjustor may not be applied when differences result from an increase in the face value of the total debt contracted or guaranteed.
    - upward (downward) in cases where early (late) disbursements of specifically agreed and identified financing flows take place.

### Program Monitoring — Reporting Requirements
- Monthly reports and data to IMF by e-mail within six weeks following the end of the preceding month, including (but not limited to):
  - comprehensive monetary survey, central bank balance sheet, consolidated balance sheet of commercial banks (electronic file);
  - central government financial operations (opérations financières de l’Etat) on a payment order basis (ordonnancements), identifying discrepancies between fiscal deficit and changes in domestic and external arrears and treasury float, and total net domestic bank/nonbank and net external financing (electronic file);
  - detailed breakdown of oil revenue by type (royalties, profit tax, dividends, boni and other) and by company/type of contract; detailed breakdown of non-oil tax revenue (by type of tax) and nontax revenue (electronic file);
  - detailed breakdown of total central government expenditure on adjusted commitment, adjusted payment order, and cash basis as presented in the Tableau Intégré (electronic file);
  - details for domestic and external debt-service obligations, contractual and actual payments, breakdown into interest and principal and by creditor, and any accumulation of domestic or external arrears (electronic file);
  - details on the stock of external and domestic debt at the end of each quarter prepared by the General Directorate of Debt; external debt stock evaluated at end-of-quarter exchange rates (electronic file);
  - details for outstanding stock of the treasury float (month to month) and cumulative flows from January 1, 2021; net accumulation of new float during 2021 (difference between payment orders and payments made) and repayment of pre-2021 float, both broken down by wages and salaries, goods and services, transfers and subsidies, interest, capital expenditure, and net lending; any stock-flow adjustment not consistent with flows should be explained (electronic file);
  - information on the balance of accounts relating to treasury correspondents, local governments, and other treasury financial operations specified in the TOFE;
  - amount of new external debt contracted or guaranteed by the central government, with detailed information on original terms and conditions (currency of denomination, interest rate, grace period, and maturity) and envisaged disbursement path;
  - actual disbursements on external debt, including newly contracted loans, by creditors and projects/programs and amounts of debt relief, if any (Excel file);
  - monthly information on the oil sector: export prices, effective exchange rate, production per oil field, volume of exports and volumes provided to SOGARA based on data from the Direction Générale des Hydrocarbures (electronic file);
  - quarterly report on numbers and value of procurement contracts treated by the Direction Générale des Marchés Publics (DMP) by type of contracting;
  - quarterly reports (table) presenting stock of expenditure pending at various execution stages, prepared jointly by DGBFIP and DGCPT;
  - indicators and other statistical data on recent economic developments, such as household consumer price index (Excel file), merchandise imports and exports (value and volume) by major categories based on customs data, timber production and exports by categories (value and volume), quarterly reports on economic activity by the General Directorate of the Economy (DGE), and six-monthly balance of payments report by the BEAC;
  - a status report on implementation of structural reforms specified in Table 2 attached to the letter of Intent of July 15, 2021.
- The Technical Committee monitoring the Fund-supported program will provide the African Department of the IMF any other information the IMF staff may deem necessary.

### Supplementary Information: External Arrears Clearance and Procurement Publication
- Update on arrears clearance through July 23, 2021:
  - Authorities cleared external arrears to multilateral creditors (African Development Bank, the Central African States Development Bank, and the Islamic Development Bank), and cleared official bilateral arrears arising from commercial claims where the sovereign guarantee was triggered.
  - Authorities reached out to remaining external commercial creditors to share information and solicit inputs on the strategy to clear arrears.
- Update to Text Table 7 — Gabon: External Arrears in 2021 (Stock at end-May 2021; Cleared; Stock on July 23, 2021)
  - All: 98.03 billion CFAF 182.10 Million US$ | 61.24 billion CFAF 113.76 Million US$ | 36.79 billion CFAF 68.34 Million US$
  - Multilateral: 23.77 billion CFAF 44.15 Million US$ | 23.77 billion CFAF 44.15 Million US$ | 0.00 billion CFAF 0.00 Million US$
    - AfDB: 0.16 billion CFAF 0.29 Million US$ | 0.16 billion CFAF 0.29 Million US$ | 0.00 billion CFAF 0.00 Million US$
    - BDEAC: 11.36 billion CFAF 21.11 Million US$ | 11.36 billion CFAF 21.11 Million US$ | 0.00 billion CFAF 0.00 Million US$
    - IsDB: 12.25 billion CFAF 22.76 Million US$ | 12.25 billion CFAF 22.76 Million US$ | 0.00 billion CFAF 0.00 Million US$
  - Bilateral: 56.36 billion CFAF 104.69 Million US$ | 37.47 billion CFAF 69.61 Million US$ | 18.89 billion CFAF 35.08 Million US$
    - China: 35.31 billion CFAF 65.59 Million US$ | 16.42 billion CFAF 30.51 Million US$ | 18.89 billion CFAF 35.08 Million US$
    - Austria: 6.83 billion CFAF 12.69 Million US$ | 6.83 billion CFAF 12.69 Million US$ | 0.00 billion CFAF 0.00 Million US$
    - Spain: 0.09 billion CFAF 0.17 Million US$ | 0.09 billion CFAF 0.17 Million US$ | 0.00 billion CFAF 0.00 Million US$
    - France: 11.90 billion CFAF 22.11 Million US$ | 11.90 billion CFAF 22.11 Million US$ | 0.00 billion CFAF 0.00 Million US$
    - Israel: 2.23 billion CFAF 4.13 Million US$ | 2.23 billion CFAF 4.13 Million US$ | 0.00 billion CFAF 0.00 Million US$
  - Commercial non-guaranteed: 17.91 billion CFAF 33.26 Million US$ | 0.00 billion CFAF 0.00 Million US$ | 17.91 billion CFAF 33.26 Million US$
    - France: 0.67 billion CFAF 1.24 Million US$ | 0.00 billion CFAF 0.00 Million US$ | 0.67 billion CFAF 1.24 Million US$
    - Austria: 8.71 billion CFAF 16.18 Million US$ | 0.00 billion CFAF 0.00 Million US$ | 8.71 billion CFAF 16.18 Million US$
    - Morocco: 1.01 billion CFAF 1.87 Million US$ | 0.00 billion CFAF 0.00 Million US$ | 1.01 billion CFAF 1.87 Million US$
    - AFREXIMBANK: 7.52 billion CFAF 13.97 Million US$ | 0.00 billion CFAF 0.00 Million US$ | 7.52 billion CFAF 13.97 Million US$
- Prior action on publication of COVID-19-related procurement contracts:
  - Authorities published 500 procurement contracts, invoices, or payment orders on the Ministry of Economy website, amounting to CFAF 57 billion.
  - These published items represent:
    - 86.9 percent of the total purchase of goods and services and capital expenditures related to the COVID-19 response in 2020 (CFAF 51.8 billion).
    - 80.0 percent of the same type of COVID-19-related expenditure in 2021 up to end-April (CFAF 15 billion).
  - Note: In line with expedited processes (Court of Accounts opinion No. 0006/19-20/CC/CC/GC of June 3, 2020), many COVID-19-related procurements were completed via issuance and payment of invoices rather than conclusion of contracts.
- Table 1. Gabon: COVID-19 Spending — RFI Commitments as of July 26, 2021 (Billions of CFAF)
  - 2020: Total 70.4; Goods and services and capital expenditures 51.8; Transfers and subsidies 18.6; Publication 45.0; COVID-19 Spending with contracts 45.0; Share of Covid-19-related spending published (in percent of goods and services and capital expenditure) 86.9
  - end-April 2021: Total 15.0; Goods and services and capital expenditures 15.0; Transfers and subsidies 0.0; Publication 12.0; COVID-19 Spending with contracts 12.0; Share of Covid-19-related spending published (in percent of goods and services and capital expenditure) 80.0

*Italic: Content summarized from the provided IMF document excerpt.*

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_Source: https://www.imf.org/-/media/files/publications/cr/2021/english/1gabea2021001.pdf_