## 1. Growth Performance (IMF staff report — _cr1547)

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### Background and PSGE objectives
- Real GDP growth averaged less than 1 percent in the decade through 2009.
- Real per-capita GDP: US$11,100 in 2013.
- One third of the population remains below the poverty line.
- Formal unemployment: 20 percent.
- President Ali Bongo Ondimba launched in 2010 the Plan Stratégique Gabon Emergent (PSGE), underpinned by a US$12 billion public investment program.
- PSGE objectives:
  - (i) significantly accelerate economic growth and diversify its sources away from oil;
  - (ii) improve social indicators by having more inclusive and job-rich growth;
  - (iii) ensure sustainable management of natural resources for future generations.
- Two main PSGE pillars: improve the level and quality of infrastructure, and raise the quality of human capital.

### Recent growth performance and outlook
- Recent past:
  - Real GDP growth averaged about 6 percent in the last four years (prior to 2015), driven by substantial scaling-up of public investment.
  - By 2013 the overall budget surplus (commitment basis) had virtually disappeared from a high of about 6 percent of GDP in 2009.
  - Average inflation projected in 2014: 4½ percent.
- Outlook and baseline projections:
  - 2015 growth projected to slow to 4½ percent.
  - Growth projected to average about 5.7 percent in the following five years.
  - Projected trend: gradual decline in oil output (driven by maturing wells), potentially mitigated by new extraction technologies and small-scale discoveries.
  - Baseline projections assume:
    - implementation of additional fiscal adjustment beyond what authorities currently envisage;
    - some higher growth toward the end of the projection period driven by increased FDI and projects in SEZs (agro-industry, mining, wood processing).
- Foremost downside risks:
  - insufficient fiscal adjustment to very weak oil prices;
  - weak investment execution capacity;
  - depletion of fiscal buffers, reduced fiscal space, depressed aggregate demand and supply, and derailment of diversification strategy.
- External outlook:
  - With projected decline in oil exports, the external current account surplus is expected to turn negative over the medium term.
  - Current account forecast: surplus of 11 percent of GDP in 2014 to a deficit of about 4 percent in 2015 (text summary).

### Competitiveness and structural constraints
- Gabon ranks lower than comparators in infrastructure, health, and education per Global Competitiveness Index Comparison, 2014–15.
- Financial depth indicators (selected):
  - NPL/loans: Gabon 3.8; Emerging Countries 4.6; Emerging Countries Similar Income per Capita 4.5.
  - Borrowers from commercial banks (per 1,000 adults): Gabon 37.7; Emerging Countries 296.3; Emerging Countries Similar Income per Capita 378.2.
  - Account at a formal financial institution (% age 15+): Gabon 11.2; Emerging Countries 61.2; Emerging Countries Similar Income per Capita 57.5.
  - Domestic credit to private sector by banks (% of GDP): Gabon 11.2; Emerging Countries 61.2; Emerging Countries Similar Income per Capita 57.5.
  - Commercial bank branches (per 100,000 adults): Gabon 6.0; Emerging Countries 5.3; Emerging Countries Similar Income per Capita 5.7.
  - Private credit bureau coverage (% of adults): Gabon 0.0; Emerging Countries 43.7; Emerging Countries Similar Income per Capita 63.3.
  - Strength of legal rights index (0=weak to 12=strong): Gabon 6.6; Emerging Countries 20.1; Emerging Countries Similar Income per Capita 22.7.
- Policy priorities to promote diversification:
  - Reduce infrastructure bottlenecks, improve technical education, and improve business climate to attract FDI in mining, wood processing, agro-industry and SEZs.
  - Recognize generous tax concessions for PSGE projects will limit near-term net fiscal revenue contributions.

### Key statistics (preserved exactly)
- PSGE public investment program size: US$12 billion.
- Projected average inflation in 2014: 4½ percent.
- 2015 growth projection: 4½ percent.
- Projected average growth next five years: 5.7 percent.
- Real per-capita GDP: US$11,100 in 2013.
- Formal unemployment: 20 percent.
- Government expenditures: 38 percent of non-oil GDP in 2009 rising to 46.5 percent in 2013.
- Non-oil primary deficit: 11.7 percent of non-oil GDP in 2009 rising to 19.6 percent in 2013.
- Public debt: 16.5 percent of GDP in 2011 rising to 27.6 percent in 2013.
- 2014 capital spending cut in revised 2014 budget: equivalent to 12 percent of 2014 non-oil GDP.
- 2014 preliminary overall surplus: 4½ percent of non-oil GDP on a commitment basis.
- Arrears paid in 2014: about CFAF 435 billion.
- 2015 budget oil price assumption (authorities’ latest version): Brent at US$45 per barrel.
- Staff baseline oil revenue assumption: US$51 per barrel (January 20, 2015 WEO assumptions).
- Government’s own gross debt ceiling: 35 percent of GDP.
- Eurobond spread: climbed about 200 basis points between end-November 2014 and mid-January 2015.
- Initial 2015 eurobond planned issuance: US$1 billion (staff framework assumes issuance of US$500 million in 2015 and US$250 million in 2016 in other sections).

---

### Fiscal Policy, Debt Outlook, and Public Finance Management

### Fiscal developments and policy response (2011–2015)
- Fiscal deterioration driven by massive scaling-up of public investment:
  - Government expenditures rose from 38 percent of non-oil GDP in 2009 to 46.5 percent in 2013.
  - Non-oil primary deficit increased from 11.7 to 19.6 percent of non-oil GDP between 2009 and 2013.
- Financing pressures and arrears:
  - Public debt rose from 16.5 percent of GDP in 2011 to 27.6 percent in 2013.
  - Statutory advances at maximum permissible level, rapid draw-down of central bank deposits in 2014, significant accumulation of domestic payments and VAT arrears, and some external arrears.
- Authorities’ actions (2014–2015):
  - Eliminated most industrial diesel subsidies in January 2014.
  - Reduced capital spending sharply in mid-2014.
  - Revised 2014 budget cut capital spending by an amount equivalent to 12 percent of 2014 non-oil GDP.
  - Preliminary estimates: 2014 adjustment resulted in an overall surplus of 4½ percent of non-oil GDP on a commitment basis, enabling payment of about CFAF 435 billion in arrears.
  - 2015 budget assumes Brent at US$45 per barrel, cuts spending on goods and services relative to 2014, substantially reduces oil subsidies, reschedules repayment of domestic arrears, and freezes public investment.
  - Authorities plan to issue a eurobond in 2015; staff baseline reduces initial planned issuance by half.

### Staff anchors and recommended fiscal measures (medium term)
- Staff macro framework assumptions:
  - Full implementation of upfront revenue and spending measures.
  - Issuance of a US$500 million eurobond in 2015 and a US$250 million eurobond in 2016.
- Staff recommends anchoring medium-term fiscal policy on:
  - a nonoil primary deficit of less than 10 percent of GDP, and
  - an overall surplus of at least 2 percent of GDP, to progressively rebuild fiscal buffers.
- Recommended revenue measures:
  - Expand non-oil revenue tax base by reducing overly generous tax exemptions.
  - Eliminate discretionary tax exemptions.
  - Strengthen tax collection: risk-based audits and enhanced customs controls (including use of scanners).
  - Ensure authorities are current on VAT refunds.
- Recommended spending measures:
  - Strictly contain growth in current expenditures, especially the wage bill.
  - Phase out substantial and poorly targeted fuel subsidies while protecting well-targeted social spending.
  - Avoid any increase in spending beyond current projections in the run-up to the 2016 elections.
  - Gradually increase capital spending to finance PSGE while accumulating government deposits and without permanently violating the government’s debt ceiling.
- Public-private partnerships (PPPs):
  - Strengthen legal environment to promote PPPs and ensure safeguards to avoid excessive government risk.

### Debt outlook, shock risks, and scenarios
- Public debt projections:
  - Public debt is expected to continue upward in 2015 and 2016, slightly exceeding the 35 percent of GDP ceiling in 2016, and gradually decline afterwards as spending is controlled.
  - Staff DSA baseline nominal gross public debt series (selected): 2013: 31.3; 2014: 26.9; 2015: 27.7; 2016: 34.4; 2017: 35.7; 2018: 33.7; 2019: 33.2; 2020: 31.9.
- No Fiscal Adjustment scenario (2014–2020) — assumptions and outcomes:
  - Assumptions: lower increase in non-oil revenues (tax exemptions not eliminated); fuel subsidy scheme not reformed; current spending grows with non-oil GDP; public investment grows with non-oil GDP from 2015.
  - Outcomes: Gross Public Debt path considerably higher than baseline; Fiscal Overall Balance and Non Oil Fiscal Balance substantially worse through 2020; debt levels without adjustment would considerably surpass government’s 35 percent of GDP ceiling.
- Public DSA alternative shocks and outcomes:
  - Constant primary fiscal deficit scenario (primary balance at -1.3 percent of GDP) leads to substantial accumulation of public debt, surpassing 60 percent of GDP.
  - Growth (supply) shock: real GDP growth 1 percentage point lower leads to public debt up to almost 60 percent of GDP.
  - Combined shock: reduction in government revenues by 2 percentage points of GDP and reduction in GDP growth by 1 percentage point produces debt dynamics similar to the 1 percentage point growth shock.
  - Non-interest current account and real exchange rate shocks can raise external debt to 41–42 percent of GDP by 2020 in stress tests.

### Public financial management (PFM) issues and reform priorities
- PEFA assessment — key deficiencies:
  - Low budget credibility due to frequent upward revisions and inadequate arrears monitoring.
  - Weak accounting and financial reporting; insufficient monitoring and external audit; lack of parliamentary review.
  - Weak internal controls and low transparency of budgetary transactions and transfers to local authorities.
  - Gaps between budget transactions and accounting; delays in expenditure chain; inadequate financial information systems; payroll/personnel file mismatches.
- Action plan priorities:
  - Integrate revenue and expenditure operations performed in cash on treasury accounts into the state budget.
  - Enhance financial supervision of public institutions.
  - Modernize accounting functions to produce more reliable accounts in a reasonable time.
  - Strengthen collaboration between revenue collection units and spending units.
- Authorities’ recent PFM reforms and intentions:
  - Establishment of a single treasury account.
  - Unification of customs and tax statements.
  - Introduction of "budgeting by program objective" (BOP) with implementation in program mode as of January 2015; law governing BOP mode to be adopted by end-2014.
  - Adopted an action plan to become EITI-compliant during 2015.
  - Adoption of a public procurement code; requirement to finalize technical studies before monetary outlays; payment only after proof of performance.
  - Bechtel Corporation contributes to design and monitoring of PSGE infrastructure projects.

---

### Financial Sector, Data, and Structural Reforms

### Banking sector soundness and vulnerabilities
- Overall soundness:
  - Banks sufficiently capitalized with slightly higher return on assets and equity in 2013 compared to 2012.
  - Liquidity ratio has come down due to increasing credit to the economy, but remains high.
  - Regulatory capital has been decreasing, but is above the legal requirement of 8 percent.
  - Non-performing loans: low at 3.5 percent of total assets (2013).
  - Ratio of provisions to non-performing loans decreased in 2013, but remains at a comfortable level.
- Financial soundness indicators (selected exact series):
  - Regulatory capital to risk-weighted assets (percent): 19.4 (2008), 24.0 (2009), 22.6 (2010), 21.1 (2011), 17.1 (2012), 11.6 (2013).
  - Capital to total assets (percent): 10.7 (2008), 16.2 (2009), 11.3 (2010), 10.9 (2011), 10.0 (2012), 9.2 (2013).
  - Bank nonperforming loans to total assets (percent): 8.5 (2008), 7.2 (2009), 9.9 (2010), 4.4 (2011), 3.4 (2012), 3.5 (2013).
  - Bank provisions to nonperforming loans (percent): 61.4 (2008), 71.0 (2009), 56.8 (2010), 93.2 (2011), 84.2 (2012), 63.0 (2013).
  - Return on assets (percent): 1.8 (2008), 2.8 (2009), 0.5 (2010), 0.6 (2011), 1.4 (2012), 1.6 (2013).
  - Return on equity (percent): 20.8 (2008), 17.2 (2009), 5.8 (2010), 5.1 (2011), 13.9 (2012), 14.7 (2013).
  - Liquid assets to short-term liabilities (percent): 243.0 (2008), 197.0 (2009), 158.0 (2010), 137.9 (2011), 143.2 (2012), 125.2 (2013).
- Distressed public banks:
  - Three distressed public banks’ total assets amount to "9 percent of the banking system’s total and 3 percent of GDP."
  - These banks face significant undercapitalization, governance issues, high overhead costs, continued losses, and limited interbank relations.
  - Authorities have hired international advisors to assess needs and define an action plan.
  - Staff recommends developing resolution options with regional supervisor COBAC and taking timely action (likely fiscal costs) to safeguard financial stability.

### Financial access, intermediation, and microfinance
- Structure and depth:
  - Financial sector mainly comprises banks; three banks account for nearly 75 percent of total assets.
  - Lending to the private sector is 15 percent of GDP.
  - Total credit provided to households constituted 3 percent of GDP in 2013.
  - MFIs have been growing rapidly but provide only a small portion of loans: "MFIs 1% / Banks 99%."
- Access constraints and indicators:
  - Share of population with bank accounts remains low relative to sub-Saharan Africa and emerging market averages.
  - Reasons for not having an account include: "Too far away," "Too expensive," "Lack of documentation," "Don't have enough money to use them," "Lack of trust in financial institutions."
- Reform needs:
  - Develop regional bond market to levels similar to WAEMU.
  - Strengthen COBAC capacity to improve supervisory efficiency.
  - Establish a credit registry and improve company information and guarantees.

### Data quality, statistical weaknesses, and monitoring needs
- Data shortcomings:
  - Data comprehensiveness, availability and quality have serious shortcomings; Gabon lags relative to emerging economies and SSA peers.
  - Balance of payments statistics are particularly weak and inconsistent with oil production data; International Investment Position not elaborated.
  - Financial soundness indicators are produced with long lags.
  - Fiscal statements have been provided sporadically and untimely since 2012; they have not reflected rapid accumulation of arrears.
  - Household surveys carried out with very low frequency; latest social indicators survey was in 2012; latest unemployment figures date back to 2010.
- Fund jurisdictional issue:
  - Gabon maintains a 1.5% tax on wire transfers abroad not consistent with Article VIII, Section 2(a); proceeds fund Gabon’s health insurance scheme; staff does not recommend approval of this restriction.
- Recommended data actions:
  - Improve quality, timeliness, and transparency of statistics; release and update national accounts series; develop quarterly national accounts; improve government finance statistics reporting and submission to IMF STA.

---

### Public Investment, PSGE Track Record, and Structural Projects

### PSGE track record — industrial, agricultural, and infrastructure projects
- Industrial and agricultural development:
  - Establishment of a 1,126 hectare SEZ specialized in wood processing in Nkok.
  - Development of two palm oil plantations with over 100,000 hectares in total.
  - Development of a rubber plantation with over 28,000 hectares.
  - All palm oil and rubber plantation projects and the SEZ developed as joint ventures with OLAM.
  - Project costs: SEZ of Nkok estimated about US$400 million (most spent by OLAM); palm oil and rubber plantations estimated about US$1 billion.
  - Nkok SEZ production started in 2012 and over 70 foreign investors have signed up.
  - Palm oil and rubber plantation production expected to start in 2015 and 2019, respectively.
  - About 3,800 people employed by the plantations so far.
  - OLAM involved in a US$2 billion joint venture for a fertilizer plant in Port-Gentil free trade zone.
- Mining and value-added projects:
  - Manganese processing plant under construction at Ndjolé with expected production of 700,000 tons of manganese per year.
  - Metallurgical complex in Moanda-Franceville expected to process 20,000 metric tons of manganese and 40,000 metric tons of silico-manganese per year.
  - Industrial complex in Belinga estimated to cost US$4 billion to produce about 44 million tons of iron ore and 18 million tons of transformed iron per year.
- Ongoing infrastructure:
  - About 435 km of new paved roads constructed; work ongoing to pave 980 km more.
  - Agreement with Singapore Port Authority to modernize and extend Owendo and Port-Gentil ports; five docks in river tributaries built; two river ports built in Lambaréné and Port-Gentil.
  - Energy projects: Grand Poubara hydroelectric dam 160 MW (under construction); Empresse Eugenie hydroelectric dam 84 MW (under construction); Alenakiri gas-fired power plant upgrade expected to double capacity from 35MW to 70 MW.
- Human capital and business climate:
  - Mines and Metallurgy school expected to open in Moanda in September 2015.
  - Measures: Agence Nationale de la Promotion des Investissements; computerization of business start-up procedures; construction permit time reduced from over six months to ten days; one-stop shop for large companies at SEEG.

### PSGE targets and constraints
- Oil-related GDP: about 35 percent of GDP in 2014; oil exports accounted for about 80 percent of goods exports in 2014.
- PSGE target: create 325,000 new jobs by 2025.
- Constraints to non-oil expansion:
  - High transportation and labor costs; low labor productivity; lack of craftsmanship and technical know-how.
- Infrastructure and competitiveness targets:
  - Develop nationwide fiber optic infrastructure.
  - Double energy capacity to 1,000 MW.
  - Establish national network of 3,600 kilometers of paved roads and 3,000 kilometers of waterways by 2025.
  - Target to be one of the top 10 performers in Africa in Doing Business ranking by 2020.
  - Refocus education toward technical training in PSGE-targeted sectors.
- Staff additional recommendations:
  - Prioritize horizontal reforms (business climate, physical infrastructure, technical education).
  - Define clear targets for social indicators and conduct regular surveys to monitor progress.

---

### DSA, Projections, and Risk Matrix (selected numeric projections)

### Real sector and price projections (2012–20, selected series)
- GDP at constant prices (annual percent change): 5.5, 5.6, 5.1, 4.4, 5.5, 5.6, 5.7, 5.7, 5.9 (2012–20).
- Oil sector real growth (annual percent change): -4.4, -0.9, 2.5, 0.1, 2.0, 1.7, 1.6, 1.3, 1.1 (2012–20).
- Non-oil real growth (annual percent change): 10.4, 7.9, 5.9, 5.8, 6.5, 6.8, 6.9, 6.9, 7.1 (2012–20).
- Consumer prices, yearly average (percent): 2.7, 0.5, 4.5, 2.5, 2.5, 2.5, 2.5, 2.5, 2.5 (2012–20).

### External and reserves (selected)
- Current account (percent of GDP): 21.3, 14.8, 11.1, -4.0, -0.4, 0.3, -0.1, -1.8, -2.9 (2012–20).
- Gross official reserves imputed to Gabon (Billions of CFAF): 1,064.0, 1,315.8, 1,200.1, 1,187.6, 1,303.7, 1,275.6, 1,529.5, 1,787.1, 1,977.2 (2012–20).

### Central government finance (selected series, billions of CFA francs and percent of GDP where noted)
- Total revenue and grants (billion CFA francs): 2,638, 2,622, 2,370, 1,794, 2,098, 2,288, 2,457, 2,592, 2,760 (2012–20).
- Oil revenue (billion CFA francs): 1,531, 1,344, 1,226, 586, 805, 865, 893, 887, 881 (2012–20).
- Non-oil revenue (billion CFA francs): 1,107, 1,278, 1,143, 1,208, 1,295, 1,424, 1,565, 1,707, 1,881 (2012–20).
- Total public debt (percent of GDP): 21.1, 26.9, 27.7, 34.4, 35.7, 33.7, 33.2, 32.9, 31.9 (2012–20).
- Non-oil primary balance excluding capital transfers (NOPD) (billion CFA francs): -1,227, -1,039, -832, -694, -714, -680, -657, -654, -680 (2012–20).
  - As percent of non-oil GDP: -25.1, -19.6, -15.0, -11.6, -11.2, -9.8, -8.9, -8.2, -7.9 (2012–20).

### Public and external DSA indicators and risks
- Public DSA baseline nominal gross public debt (percent of GDP): 2013: 31.3; 2014: 26.9; 2015: 27.7; 2016: 34.4; 2017: 35.7; 2018: 33.7; 2019: 33.2; 2020: 31.9.
- External debt (baseline external debt-to-GDP): peak of 31.7 percent in 2016; declines to 28.1 percent in 2020.
- Sensitivity tests:
  - Non-interest current account shock and real exchange rate shock raise external debt to 41–42 percent of GDP by 2020.
  - Combined shocks and permanent one-quarter standard deviation shocks to growth, interest rate, and current account produce sizable upward shifts in debt trajectories.
- Market indicators in DSA context:
  - Bond Spread (bp) shown as 687.
  - Ratings displayed: Moody's Ba3 / S&P's BB- / Fitch BB-.

---

### Staff Appraisal and Policy Recommendations (summary)
- Macro context and imperative:
  - "Recent sharp decline in commodity prices will make additional fiscal adjustment inevitable."
  - Need to "ensure that the recent growth pick-up is not derailed."
- Fiscal strategy:
  - 2014 fiscal adjustment was warranted; more adjustment is needed in the medium run to repay arrears and control debt dynamics while improving investment quality.
  - Recommended measures:
    - Widen tax base by reducing exemptions and improving administration.
    - Contain growth in current spending, especially wage bill.
    - Phase out costly and inequitable fuel subsidies during low oil prices.
    - Improve public investment management: selection, preparation, execution and monitoring.
    - Protect priority infrastructure and social spending while rebuilding buffers.
- Financial sector and structural reforms:
  - Resolve three distressed public banks in consultation with COBAC; possibly accept fiscal costs to safeguard stability.
  - Improve financial depth and inclusion: establish credit registry; strengthen COBAC; develop regional bond market.
  - Improve land and commercial registries, streamline collateral and creditor enforcement, and strengthen court governance.
- Data and governance:
  - Improve quality, timeliness and transparency of fiscal and external statistics; increase frequency of household surveys; provide more public detail on budget execution.
  - Support EITI compliance; staff welcomes authorities’ efforts to become fully compliant by end-2015.
- Authorities’ commitments:
  - Recognize need for further adjustment and structural reforms; agreed on elimination of discretionary tax exemptions and progressive phase-out of fuel subsidies; committed to protect capital spending by shifting resources from current spending; pledged to strengthen PPP regulatory framework and tax collection.

*Source: IMF staff report — "1. Growth Performance" and associated excerpts (content unit: _cr1547).*

### 1. Growth Performance _____________________________________________________________________________4

### 1. Growth Performance

### Background: strategy to reverse economic and social decline
- Real GDP growth averaged less than 1 percent in the decade through 2009.
- Real per-capita GDP: US$11,100 in 2013.
- One third of the population remains below the poverty line.
- Formal unemployment is at 20 percent.
- President Ali Bongo Ondimba launched in 2010 the Plan Stratégique Gabon Emergent (PSGE), underpinned by a large US$12 billion public investment program.
- PSGE objectives:
  - (i) significantly accelerate economic growth and diversify its sources away from oil;
  - (ii) improve social indicators by having more inclusive and job-rich growth;
  - (iii) ensure sustainable management of natural resources for future generations.
- Two main pillars of PSGE: improve the level and quality of infrastructure, and raise the quality of human capital.

### Recent growth performance
- Real GDP growth averaged about 6 percent in the last four years (prior to 2015), driven by substantial scaling-up of public investment.
- By 2013 the overall budget surplus (commitment basis) had virtually disappeared from a high of about 6 percent of GDP in 2009.
- Average inflation projected in 2014: 4½ percent (driven by base effects in 2013).

### Competitiveness and structural constraints
- Gabon ranks considerably lower than comparators in most determinants of competitiveness (infrastructure, health, education) per the Global Competitiveness Index Comparison, 2014–15.
- Financial depth indicators (Text Table 1 summary highlights):
  - NPL/loans: Gabon 3.8; Emerging Countries 4.6; Emerging Countries Similar Income per Capita 4.5.
  - Borrowers from commercial banks (per 1,000 adults): Gabon 37.7; Emerging Countries 296.3; Emerging Countries Similar Income per Capita 378.2.
  - Account at a formal financial institution (% age 15+): Gabon 11.2; Emerging Countries 61.2; Emerging Countries Similar Income per Capita 57.5.
  - Domestic credit to private sector by banks (% of GDP): Gabon 11.2; Emerging Countries 61.2; Emerging Countries Similar Income per Capita 57.5.
  - Commercial bank branches (per 100,000 adults): Gabon 6.0; Emerging Countries 5.3; Emerging Countries Similar Income per Capita 5.7.
  - Private credit bureau coverage (% of adults): Gabon 0.0; Emerging Countries 43.7; Emerging Countries Similar Income per Capita 63.3.
  - Strength of legal rights index (0=weak to 12=strong): Gabon 6.6; Emerging Countries 20.1; Emerging Countries Similar Income per Capita 22.7.

### Regional role
- Gabon is the second largest economy in the CEMAC monetary and economic union, representing over one fifth of CEMAC’s nominal GDP.
- Gabon’s large oil wealth is a major source of foreign exchange to the union; Gabon’s economic evolution has significant spillover effects in CEMAC.

### Outlook and risks
- 2015 growth projected to slow to 4½ percent.
- Growth projected to average about 5.7 percent in the following five years (driven by public investment, non-oil natural resources, and services).
- Projected trend: gradual decline in oil output (driven by maturing wells), potentially mitigated by new extraction technologies and small-scale discoveries.
- Baseline projections assume:
  - implementation of additional fiscal adjustment beyond what authorities currently envisage;
  - some higher growth toward the end of the projection period driven by increased FDI and projects in SEZs (agro-industry, mining, wood processing).
- Foremost downside risks:
  - insufficient fiscal adjustment to very weak oil prices;
  - weak investment execution capacity;
  - could lead to depletion of fiscal buffers, reduced fiscal space, depressed aggregate demand and supply, and derailment of diversification strategy.
- With projected decline in oil exports, the external current account surplus is expected to turn negative over the medium term.

### Selected indicators and dynamics (high-level)
- Oil production and price: falling oil exports narrowing current account surplus (2009–14 trends shown).
- Exchange rates: Nominal effective exchange rate appreciated since late 2013.
- Inflation: year-on-year inflation increased after a one-off hike in 2013.
- Monetary aggregates: credit to the economy and M2 moderating after two years of high growth.

---

### No Fiscal Adjustment Scenario (2014–2020) — comparative outcomes versus baseline
- Scenario assumptions (with respect to the baseline):
  - (i) lower increase in non-oil revenues because tax exemptions are not significantly eliminated;
  - (ii) the fuel subsidy scheme is not reformed;
  - (iii) other current spending items are not controlled and therefore grow in tandem with non-oil GDP throughout the projection period;
  - (iv) public investment also grows at the same rate as non-oil GDP from 2015.
- Key projection comparisons (2014–2020):
  - Gross Public Debt (Percent of GDP):
    - Baseline: trend shown in Figure 4.
    - No Fiscal Adjustment: considerably higher path (figure indicates divergence through 2020).
    - Government’s own debt ceiling: 35 percent of GDP (debt levels without adjustment would considerably surpass this ceiling).
  - Fiscal Overall Balance (Percent of GDP): No Fiscal Adjustment path shows deterioration relative to Baseline through 2020.
  - Non Oil Fiscal Balance (Percent of Non Oil GDP): No Fiscal Adjustment path shows substantially worse outcomes, with deeper deficits through 2020.

---

### Fiscal developments and policy response
- Fiscal deterioration driven by massive scaling-up of public investment:
  - Government expenditures rose from 38 percent of non-oil GDP in 2009 to 46.5 percent in 2013.
  - Non-oil primary deficit increased from 11.7 to 19.6 percent of non-oil GDP between 2009 and 2013.
- Financing pressures and arrears:
  - Public debt rose from 16.5 percent of GDP in 2011 to 27.6 percent in 2013.
  - Statutory advances at maximum permissible level, rapid draw-down of central bank deposits in 2014, significant accumulation of domestic payments and VAT arrears, and some external arrears.
- Authorities’ actions (2014–2015):
  - Eliminated most industrial diesel subsidies in January 2014.
  - Reduced very high capital spending (curbing public investment sharply in mid-2014).
  - Revised 2014 budget sharply cut capital spending by an amount equivalent to 12 percent of 2014 non-oil GDP.
  - Preliminary estimates: 2014 adjustment resulted in an overall surplus of 4½ percent of non-oil GDP on a commitment basis, enabling payment of about CFAF 435 billion in arrears.
  - 2015 budget (latest version to be sent to parliament) assumes Brent at US$45 per barrel, cuts spending on goods and services relative to 2014, substantially reduces oil subsidies, reschedules repayment of domestic arrears, and freezes public investment.
  - Authorities plan to issue a eurobond in 2015 (initial 2015 budget had planned a US$1 billion eurobond; staff baseline reduces eurobond issuance by half).
  - Staff baseline projects oil revenues based on a price of US$51 per barrel (January 20, 2015 WEO assumptions).
- Risks to financing:
  - Spread on Gabon’s 2013 eurobond climbed about 200 basis points between end-November 2014 and mid-January 2015.
  - Regional bond market tightening risk as many oil exporters seek additional financing.

### Implementation record of prior recommendations (2012 Article IV)
- Text Table 2: Status of key recommendations from 2012 Article IV Consultation:
  - Build larger fiscal buffers: Not done; deposits at BEAC have continued to decline.
  - Adopt oil price-smoothing rule for budget: Not done.
  - Greater control of wage bill: Not done.
  - Reduce fuel subsidies: Partly done; most industrial diesel subsidies eliminated in January 2014.
  - Curb sharp increase in public investment spending: Done in mid-2014; spending cut by more than 50 percent.
  - Improve business climate: Initial steps taken.
  - Address financial situation of weak public banks: Initial steps taken.

---

### Policy focus derived from consultation
- Main consultation objectives:
  - (i) create fiscal space necessary to finance the PSGE on a fiscally sustainable basis, keeping rapid public debt accumulation in check despite the collapse in oil prices;
  - (ii) adopt policies to strengthen competitiveness and promote economic diversification;
  - (iii) deepen the financial sector and enhance financial stability.
- Staff projection and policy intent for 2016 onwards:
  - Present an adjustment scenario aimed at controlling public debt levels and ensuring repayment of arrears, mainly by containing wage bill growth and considerably reducing oil subsidies.
- Structural priorities to raise medium-term growth potential:
  - Reduce horizontal binding constraints: infrastructure bottlenecks, lack of qualified labor, weak business environment.
  - Encourage FDI in mining, wood processing, agro-industry and SEZs to support non-oil growth.
  - Recognize that generous tax concessions for PSGE projects will limit near-term net fiscal revenue contributions.

---

### Key statistics and numeric values (preserved exactly as in source)
- Real GDP growth averaged less than 1 percent in the decade through 2009.
- Real per-capita GDP: US$11,100 in 2013.
- Formal unemployment: 20 percent.
- PSGE public investment program size: US$12 billion.
- Overall budget surplus: about 6 percent of GDP in 2009 (later virtually disappeared by 2013).
- Projected average inflation in 2014: 4½ percent.
- 2015 growth projection: 4½ percent.
- Projected average growth next five years: 5.7 percent.
- Government expenditures: 38 percent of non-oil GDP in 2009 rising to 46.5 percent in 2013.
- Non-oil primary deficit: 11.7 percent of non-oil GDP in 2009 rising to 19.6 percent in 2013.
- Public debt: 16.5 percent of GDP in 2011 rising to 27.6 percent in 2013.
- 2014 capital spending cut in revised 2014 budget: equivalent to 12 percent of 2014 non-oil GDP.
- 2014 preliminary overall surplus: 4½ percent of non-oil GDP on a commitment basis.
- Arrears paid in 2014: about CFAF 435 billion.
- 2015 budget oil price assumption (authorities’ latest version): Brent at US$45 per barrel.
- Staff baseline oil revenue assumption: US$51 per barrel (January 20, 2015 WEO assumptions).
- Government’s own gross debt ceiling: 35 percent of GDP.
- Eurobond spread: climbed about 200 basis points between end-November 2014 and mid-January 2015.
- Initial 2015 eurobond planned issuance: US$1 billion (may be revised down).

*Source: IMF staff report — "1. Growth Performance" (extracted content).*

### 13.      In this context, ensuring the fiscal sustainability of the PSGE requires revenue and

### _cr1547 - 13.      In this context, ensuring the fiscal sustainability of the PSGE requires revenue and

### Fiscal sustainability of the PSGE: measures and anchors
- Findings and assumptions
  - Staff’s macroeconomic framework assumes full implementation of upfront revenue and spending measures.
  - The framework assumes issuance of a US$500 million eurobond in 2015 (rather than a previously planned US$1 billion) and issuance of a US$250 million eurobond in 2016.
  - Staff recommends anchoring medium-term fiscal policy on:
    - a nonoil primary deficit of less than 10 percent of GDP, and
    - an overall surplus of at least 2 percent of GDP, to progressively rebuild fiscal buffers.
- Recommended revenue measures
  - Expand the non-oil revenue tax base, notably by reducing overly generous tax exemptions.
  - Eliminate discretionary tax exemptions.
  - Strengthen tax collection: greater emphasis on risk-based audits and enhanced customs controls (including use of scanners).
  - Ensure authorities are current on VAT refunds to improve tax system credibility.
- Recommended spending measures
  - Strictly contain growth in current expenditures, especially the wage bill.
  - Phase out substantial and poorly targeted fuel subsidies, leveraging the opportunity of low oil prices while protecting well-targeted social spending.
  - Avoid any increase in spending beyond current projections in the run-up to the 2016 elections.
  - Gradually increase capital spending to finance PSGE while accumulating government deposits to protect against exogenous shocks and without permanently violating the government’s debt ceiling.
- Public-private partnerships (PPPs)
  - Strengthen the legal environment to promote PPPs to help finance infrastructure.
  - Ensure necessary safeguards to avoid placing excessive risk on the government.

### Debt outlook, shock risks, and the need for buffers
- Projections and ceilings
  - Public debt is expected to continue its rapid upward trend in 2015 and 2016, slightly exceeding the 35 percent of GDP ceiling in 2016, and gradually decline afterwards as the government controls spending.
  - External debt is projected to increase up to 2016 and gradually decline afterwards.
- Shock scenarios and vulnerabilities
  - Lack of fiscal adjustment, GDP growth below projections, and/or shocks to government revenues would significantly accelerate public debt accumulation and could bring it considerably above the government’s ceiling.
  - External debt could substantially rise if the non-interest rate current account deteriorates and the real exchange rate depreciates.
  - The destabilizing impact of shock scenarios highlights the urgent need to accumulate fiscal buffers.
- Compliance
  - Throughout the projection period, Gabon would be in compliance with CEMAC’s convergence criteria, including the non-accumulation of government arrears criterion.

### Authorities’ views on fiscal and structural strategy
- Recognized needs and commitments
  - Authorities recognize the need for further adjustment given tight fiscal situation and collapse of oil prices, and the need to accelerate structural reforms to boost non-oil growth.
  - Agreed on elimination of discretionary tax exemptions and progressive phase-out of fuel subsidies, with stronger control of current expenditures after 2016.
  - Committed to protecting capital spending by shifting resources from current spending, notably on goods and services.
  - Committed to strengthening the PPP regulatory framework and redoubling tax collection efforts.
  - Action to improve revenue collection includes risk-based audits, enhanced customs controls (including scanners), and a survey of tax expenditure already undertaken.
  - Authorities committed to ensuring they are current on VAT refunds.

### Public finance management (PFM) issues and reforms
- PEFA assessment: key deficiencies identified
  - Low credibility of the budget due to frequent upward revisions and inadequate monitoring of arrears.
  - Weak accounting and financial reporting.
  - Insufficient monitoring and external audit, and lack of parliamentary review.
  - Weak internal controls.
  - Low transparency of budgetary transactions and of transfers to local authorities.
- Positive aspects noted
  - Annual budget prepared in a participatory process and within a medium-term framework.
- Further gaps highlighted
  - Gaps between budget transactions and accounting; delays in expenditure chain; inadequate financial information systems; a chasm between payroll and personnel files; weak ex-post internal controls.
  - Need to improve quality of spending, especially for investment (“investing in investment”) by enhancing selection, execution and monitoring.
  - Need to curtail high extra-budgetary spending that can lead to accumulation of arrears and to strengthen anti-corruption safeguards.
- Action plan priorities recommended
  - Improve completeness of transactions recorded in the state budget by integrating revenue and expenditure operations currently performed in cash on treasury accounts.
  - Enhance financial supervision of public institutions.
  - Modernize accounting functions to produce more reliable accounts within a reasonable time.
  - Strengthen collaboration between revenue collection units (Ministry of the Economy) and spending units (Ministry of the Budget).
- Authorities’ recent PFM reforms and intentions
  - Establishment of a single treasury account.
  - Unification of customs and tax statements.
  - Ongoing process to introduce "budgeting by program objective" (BOP) with budget implementation in program mode as of January 2015; law governing BOP mode to be adopted by end-2014.
  - Adopted an action plan to become EITI-compliant during 2015.
  - Adoption of a public procurement code, requirement to finalize technical studies before monetary outlays, and requirement to effect payments only after proof of performance.
  - Bechtel Corporation contributes to design and monitoring of PSGE infrastructure projects.

### Improving competitiveness for diversification and structural transformation
- Context and targets
  - Oil-related GDP accounted for about 35 percent of GDP and oil exports accounted for about 80 percent of goods exports in 2014.
  - PSGE target: create 325,000 new jobs by 2025.
  - Key non-oil sectors targeted: agro-industry, wood processing, industrial fishing, and service exports.
- Constraints to non-oil expansion (value chain analyses)
  - High transportation and labor costs.
  - Low labor productivity.
  - Lack of craftsmanship and technical know-how.
- Policy actions taken
  - 2010 ban on export of raw logs.
  - Special Economic Zone (SEZ) established at Nkok and a free-trade zone being established in Port-Gentil with very generous incentives for exporters of more than 75 percent of production (examples of incentives listed in source).
  - Time to start a business cut to two weeks in SEZ of Nkok; construction permit time reduced from more than six months to ten days.
- Infrastructure, business climate, and human capital objectives
  - Develop nationwide fiber optic infrastructure.
  - Double country’s energy capacity to 1,000 MW.
  - Establish a national network of 3,600 kilometers of paved roads and 3,000 kilometers of waterways by 2025.
  - Target to be one of the top 10 performers in Africa in Doing Business ranking by 2020.
  - Refocus educational system toward technical training in PSGE-targeted sectors.
- Additional recommendations from staff
  - Prioritize “horizontal” reforms (business climate, physical infrastructure, quality of technical education) to attract labor-intensive industries without direct government assistance.
  - Define clear targets for social indicators and conduct regular surveys to monitor progress.
- Exchange rate and external stance
  - Real effective exchange rate overvalued by 9 to 15 percent.
  - Current account forecast: surplus of 11 percent of GDP in 2014 to a deficit of about 4 percent in 2015.
  - Medium-term current account deficit projected to moderate on higher processed wood and manganese exports.
  - Deficit expected to be financed with FDI inflows into strategic sectors and with external borrowing by the government, consistent with debt sustainability.
- Authorities’ views on competitiveness strategy
  - Concurred on need to improve infrastructure, human capital, and accelerate business climate reforms.
  - Noted creation of Agence Nationale de la Promotion des Investissements and efforts to improve technical education.
  - Plan to establish a specialized court for mediating industrial disputes in 2015.
  - Argued that high labor costs, small economy size, and international competition justify offering incentives and affordable electricity for SEZs.

### Enhancing financial access and financial stability
- Structure and concentration
  - Financial sector mainly comprises banks; three banks account for nearly 75 percent of total assets.
  - Banking activity concentrated on large companies financing large-scale projects.
  - Lending to the private sector is 15 percent of GDP.
- Depth and instruments
  - Financial intermediation limited and below emerging-market peers.
  - Nascent regional bond market has limited depth and short maturity profiles.
  - Nine microfinance institutions (MFIs) and eight insurance companies operate in Gabon.
  - Banking supervision is carried out by regional authority COBAC, which faces serious capacity constraints.
- Financial access constraints and indicators
  - Share of population with bank accounts has increased but remains below sub-Saharan Africa and emerging market averages.
  - Total credit provided to households constituted 3 percent of GDP in 2013.
  - SMEs face lower access to finance due to absence of credit bureaux and lack of company information and guarantees—contributors to low credit supply and high lending rates.
  - Low financial deepening and access and high banking sector liquidity reduce effectiveness of monetary policy transmission.
  - Exchange rate peg has anchored inflation expectations and inflation is quite low.
- Reform needs
  - Additional efforts required to develop regional bond market to levels similar to WAEMU.
  - Strengthen COBAC capacity to improve supervisory efficiency.

*Source: IMF staff report (selected excerpts).*

### 28.      Although the overall banking sector in Gabon remains liquid, profitable, and generally

### Although the overall banking sector in Gabon remains liquid, profitable, and generally

### Banking sector soundness — key findings
- Overall financial soundness indicators show that the banks were sufficiently capitalized with slightly higher return on assets and equity in 2013 compared to 2012.
- Liquidity ratio: "has come down as a result of increasing credit to the economy, but remains high."
- Regulatory capital: "has been decreasing, but is above the legal requirement of 8 percent."
- Non-performing loans: "low at 3.5 percent of total assets."
- Ratio of provisions to non-performing loans: "decreased in 2013, although it is still at a comfortable level."
- Direct government exposure: "banks are not very exposed to the government directly," but "the weakening government balance sheet will undoubtedly have a negative impact on the banking system through increasing NPLs."
- Main transmission channel of fiscal weakness to banks: "the weakening financial situation of firms that rely on government contracts."

### Distressed public banks — scope, issues, and recommended actions
- Scope:
  - The three distressed public banks’ total assets amount to "9 percent of the banking system’s total and 3 percent of GDP."
- Problems:
  - Facing structural problems leading to "significant undercapitalization."
  - One bank "has had serious governance issues."
  - High overhead costs relative to peers and inability to generate sufficient revenues from lending activities.
  - Continued losses, but "limited interbank relations with other banks."
- Actions taken by authorities:
  - Authorities acknowledged severity and "initiating the process of assessing the financial needs to define an action plan."
  - Authorities "have hired international advisors to assess the banks, and to define an action plan and a financing package."
- Staff recommendations:
  - "Developing resolution options in consultation with the regional bank supervisor, COBAC, and subsequently taking timely action—which will likely have fiscal costs—to safeguard financial stability."
  - "Developing resolution options and subsequently taking timely action in collaboration with the regional supervisor."

### Financial access, intermediation, and microfinance observations
- Low financial intermediation: Domestic credit to private sector (percent of GDP) depicted as low relative to EM average and EM income peer group in the figure.
- Low financial access: Account at a formal financial institution (% age 15+) for Gabon is low relative to EM comparators.
- Reasons for not having an account in Gabon include: "Too far away," "Too expensive," "Lack of documentation," "Don't have enough money to use them," "Lack of trust in financial institutions."
- Microfinance institutions (MFIs):
  - MFIs "have been growing rapidly."
  - However, "they provide only a small portion of loans."
  - Loans to private sector in 2013: "MFIs 1% / Banks 99%."

### Data quality, statistical weaknesses, and monitoring needs
- Monitoring requirements: "monitoring of the Gabonese economy and of the PSGE requires substantial improvements in the quality, timeliness, and transparency of statistics."
- Data shortcomings:
  - "Data comprehensiveness, availability and quality in Gabon have serious shortcomings."
  - Gabon lags relative to emerging economies and even SSA countries of much lower income per capita.
  - Balance of payments statistics: "particularly weak, showing significant inconsistencies between oil exports and production data and not elaborating International Investment Position data."
  - Financial soundness indicators: "very weak, and are produced with long lags."
- Fiscal data provision:
  - Since the 2012 Article IV mission "the provision of public financial statements to staff has been only sporadic."
  - Fiscal statements: "provided... in an untimely manner" and "have not reflected the rapid accumulation of arrears in recent years."
  - Need: "improve the quality and frequency of their fiscal statements to better monitor the fiscal sustainability of the PSGE."
- Social indicators:
  - Household surveys "carried out with very low frequency."
  - "The latest survey of social indicators in Gabon took place in 2012 and focused only on demographics and health."
  - "Gabon’s latest unemployment figures date back to 2010."
- Fund jurisdictional issue:
  - Gabon maintains "a 1.5% tax on wire transfers abroad that is not consistent with Gabon’s obligations under Article VIII, Section 2(a) of the Articles of Agreement."
  - Proceeds used "to fund Gabon’s health insurance scheme."
  - Authorities "have exempted a number of transactions from this tax (notably, all interbank transfers), but do not propose eliminating the tax."
  - Staff position: "Staff does not recommend approval of this restriction."

### Fiscal and structural policy analysis and recommendations (Staff appraisal)
- Macro context:
  - "Recent sharp decline in commodity prices will make additional fiscal adjustment inevitable."
  - Need to "ensure that the recent growth pick-up is not derailed."
- Fiscal strategy and measures:
  - 2014 fiscal adjustment "rightly decided" given weak oil revenues.
  - "Fiscal measures implemented in 2014 and the revised 2015 budget to be sent to parliament... are steps in the right direction, but clearly more adjustment is needed in the medium run."
  - Need to "repay arrears and control the debt dynamics, while significantly improving the quality of investment."
- Revenue-side recommendations:
  - "Compensate for declining oil revenues by widening the tax base, notably by reducing tax exemptions and improving tax administration."
  - "Improving the management of oil revenues over the medium term will be crucial."
- Expenditure-side recommendations:
  - "Containing the growth in current spending, especially in the wage bill."
  - "Seizing the opportunity of low oil prices to phase out costly, inefficient, and inequitable fuel subsidies."
  - After recent reduction in investment, emphasis on "improving the quality of investment ('investing in investment')" by addressing weaknesses in investment prioritization, project preparation, execution and monitoring.
- Structural and governance recommendations to boost growth and inclusion:
  - "Improve financial depth and inclusion, and forcefully address financial weaknesses of three public banks."
  - "Improving the operations of land and commercial registries, streamlining procedures for recording and enforcing guarantees, and strengthening creditor rights enforcement by enhancing governance of the relevant courts."
  - Support for program budgeting from 2015 and need to "enhance training in the use of new monitoring and accounting tools."
  - Need for "better coordination between the Ministries of the Economy and the Budget, especially in treasury management, to eliminate the frequent accumulation of payment arrears."
  - Transparency: "More details on public finances should be provided to the general public, including on budget execution."
  - Support for EITI compliance: "Staff welcomes the authorities’ renewed efforts to become fully compliant with EITI standards by end-2015."

*INTERNATIONAL MONETARY FUND — Gabon staff report (excerpt)*

### 44.      It is expected that the next Article IV consultation will be held on the standard

### It is expected that the next Article IV consultation will be held on the standard 12-month cycle.

### Real sector — growth, inflation, and sectoral composition
- GDP at constant prices (annual percent change): 5.5, 5.6, 5.1, 4.4, 5.5, 5.6, 5.7, 5.7, 5.9 (2012–20).
- Oil sector real growth (annual percent change): -4.4, -0.9, 2.5, 0.1, 2.0, 1.7, 1.6, 1.3, 1.1 (2012–20).
- Primary oil real growth (annual percent change): -4.2, -5.3, -0.9, -6.0, 0.1, -0.4, -0.6, -1.3, -1.6 (2012–20).
- Non-oil real growth (annual percent change): 10.4, 7.9, 5.9, 5.8, 6.5, 6.8, 6.9, 6.9, 7.1 (2012–20).
- GDP deflator (annual percent change): -16.8, -2.7, -4.6, -9.4, 2.6, 1.9, 0.5, 0.0, 0.6 (2012–20).
- Consumer prices, yearly average (percent): 2.7, 0.5, 4.5, 2.5, 2.5, 2.5, 2.5, 2.5, 2.5 (2012–20).
- Consumer prices, end of period (percent): 2.2, 3.3, 1.5, 2.5, 2.5, 2.5, 2.5, 2.5, 2.5 (2012–20).

### External sector — trade, terms of trade, and reserves
- Exports, f.o.b. (annual percent change): 9.1, -6.0, -5.7, -41.3, 13.3, 9.7, 6.3, 3.7, 1.1 (2012–20).
- Imports, f.o.b. (annual percent change): -4.2, 9.0, 4.5, -22.4, 8.6, 9.6, 9.6, 9.0, 7.9 (2012–20).
- Terms of trade (deterioration = –) (annual percent change): -14.2, 1.7, -5.9, -40.2, 11.6, 6.2, 2.7, 0.1, -0.8 (2012–20).
- Current account balance (billion CFA francs): 1,760, 1,261, 947, -324, -353, 2, -12, -189, -327 (2012–20).
- Current account (percent of GDP): 21.3, 14.8, 11.1, -4.0, -0.4, 0.3, -0.1, -1.8, -2.9 (2012–20).
- Gross official reserves imputed to Gabon (Billions of CFAF): 1,064.0, 1,315.8, 1,200.1, 1,187.6, 1,303.7, 1,275.6, 1,529.5, 1,787.1, 1,977.2 (2012–20).

### Central government finance — revenue, expenditure, balances
- Total revenue and grants (billion CFA francs): 2,638, 2,622, 2,370, 1,794, 2,098, 2,288, 2,457, 2,592, 2,760 (2012–20).
- Oil revenue (billion CFA francs): 1,531, 1,344, 1,226, 586, 805, 865, 893, 887, 881 (2012–20).
- Non-oil revenue (billion CFA francs): 1,107, 1,278, 1,143, 1,208, 1,295, 1,424, 1,565, 1,707, 1,881 (2012–20).
- Total expenditure and net lending (billion CFA francs): 2,420, 2,468, 2,118, 2,043, 2,178, 2,281, 2,397, 2,547, 2,759 (2012–20).
- Current expenditure (billion CFA francs): 1,427, 1,419, 1,477, 1,439, 1,517, 1,547, 1,577, 1,628, 1,727 (2012–20).
  - Wages and salaries (billion CFA francs): 515, 553, 681, 733, 741, 755, 767, 781, 834 (2012–20).
  - Interest payments (billion CFA francs): 87, 152, 251, 144, 141, 169, 177, 175, 185 (2012–20).
- Capital expenditure (billion CFA francs): 995, 925, 601, 599, 580, 653, 745, 843, 956 (2012–20).
  - Domestically financed capital expenditure (billion CFA francs): 813, 655, 331, 321, 138, 392, 483, 573, 673 (2012–20).
  - Foreign financed capital expenditure (billion CFA francs): 183, 271, 270, 278, 442, 261, 262, 270, 284 (2012–20).
- Overall balance (commitment basis) (billion CFA francs): 218, 154, 251, -249, -78, 96, 14, 7, 4 (2012–20).
- Overall balance (cash basis) (billion CFA francs): 196, 20, -184, -304, -189, -102, 61, 47, 4 (2012–20).
- Net domestic financing (billion CFA francs): -3.6, -10.1, 2.7, 0.6, -1.6, 1.4, -2.6, -2.3, -1.5 (2012–20).
- Net external financing (billion CFA francs): -0.4, 9.7, 0.6, 4.5, 4.6, 0.1, 1.8, 1.7, 1.5 (2012–20).
- Total public debt (percent of GDP): 21.1, 26.9, 27.7, 34.4, 35.7, 33.7, 33.2, 32.9, 31.9 (2012–20).
- External public debt (including to the Fund) (percent of GDP): 17.2, 24.0, 24.3, 30.5, 31.5, 29.3, 28.9, 28.7, 28.1 (2012–20).
- Non-oil primary balance excluding capital transfers (NOPD) (billion CFA francs): -1,227, -1,039, -832, -694, -714, -680, -657, -654, -680 (2012–20).
  - As percent of non-oil GDP: -25.1, -19.6, -15.0, -11.6, -11.2, -9.8, -8.9, -8.2, -7.9 (2012–20).

### Fiscal ratios (percent of GDP) and fiscal structure
- Total revenue and grants (percent of GDP): 54.1, 49.4, 42.8, 29.9, 32.8, 33.1, 33.2, 32.6, 32.1 (2012–20).
- Oil revenue (percent of GDP): 31.4, 25.3, 22.1, 9.8, 12.6, 12.5, 12.1, 10.2, 10.2 (2012–20).
- Non-oil revenue (percent of GDP): 22.7, 24.1, 20.6, 20.1, 20.3, 20.6, 21.1, 21.5, 21.9 (2012–20).
- Total expenditure and net lending (percent of GDP): 49.6, 46.5, 38.2, 34.1, 34.1, 33.0, 32.4, 32.0, 32.1 (2012–20).
- Capital expenditure (percent of GDP): 20.4, 17.4, 10.8, 10.0, 9.1, 9.5, 10.1, 10.6, 11.1 (2012–20).
- Public debt (percent of GDP): 21.1, 26.9, 27.7, 34.4, 35.7, 33.7, 33.2, 32.9, 31.9 (2012–20).

### Monetary sector and credit
- Broad money (annual percent change): 15.7, 8.8, 1.4, 4.2, 4.0, 5.5, 4.8, 4.8, 8.3 (2012–20).
- Credit to the economy (annual percent change): 24.1, 23.6, -7.5, 7.2, 7.5, 9.0, 7.3, 7.4, 9.3 (2012–20).
- Velocity ratio of non-oil GDP over broad money: 2.4, 2.4, 2.5, 2.6, 2.6, 2.7, 2.8, 2.8, 2.8 (2012–20).
- Broad money (in percent of overall GDP): 24.6, 26.0, 26.3, 29.0, 27.9, 27.3, 27.0, 26.7, 27.2 (2012–20).
- Reserve money (annual percent change): 40.7, -32.6, -2.7, -8.3, -5.1, 2.5, 1.9, 2.0, 5.4 (2012–20).

### Balance of payments — components and financing
- Exports of goods (fob) (billion CFA francs): 5,730; 5,216; 4,914; 3,197; 3,605; 3,912; 4,109; 4,217; 4,263 (2012–20).
  - Hydrocarbons (billion CFA francs): 4,749; 4,198; 3,800; 2,020; 2,348; 2,526; 2,605; 2,588; 2,572 (2012–20).
- Imports of goods (fob) (billion CFA francs): -1,643; -1,732; -1,809; -1,555; -1,681; -1,824; -1,974; -2,131; -2,300 (2012–20).
- Goods (net) (billion CFA francs): 4,087; 3,483; 3,106; 1,642; 1,924; 2,088; 2,135; 2,086; 1,963 (2012–20).
- Services (net) (billion CFA francs): -990; -944; -972; -914; -877; -929; -981; -1,014; -989 (2012–20).
- Income (net) (billion CFA francs): -1,185; -1,121; -1,031; -903; -926; -968; -1,004; -1,098; -1,146 (2012–20).
- Financial account (billion CFA francs): -964; -269; -1,063; 311; 151; -602; 664; 473; 309 (2012–20).
  - Direct investment (net) (billion CFA francs): 425; 478; 481; 585; 634; 657; 666; 702; 727 (2012–20).
  - Other investment assets and liabilities (net) (billion CFA francs): -1,389; -747; -1,544; -274; -483; -717; -399; -255; -141 (2012–20).

### Financial soundness indicators (banking sector)
- Regulatory capital to risk-weighted assets (percent): 19.4 (2008), 24.0 (2009), 22.6 (2010), 21.1 (2011), 17.1 (2012), 11.6 (2013).
- Capital to total assets (percent): 10.7 (2008), 16.2 (2009), 11.3 (2010), 10.9 (2011), 10.0 (2012), 9.2 (2013).
- Bank nonperforming loans to total assets (percent): 8.5 (2008), 7.2 (2009), 9.9 (2010), 4.4 (2011), 3.4 (2012), 3.5 (2013).
- Bank provisions to nonperforming loans (percent): 61.4 (2008), 71.0 (2009), 56.8 (2010), 93.2 (2011), 84.2 (2012), 63.0 (2013).
- Return on assets (percent): 1.8 (2008), 2.8 (2009), 0.5 (2010), 0.6 (2011), 1.4 (2012), 1.6 (2013).
- Return on equity (percent): 20.8 (2008), 17.2 (2009), 5.8 (2010), 5.1 (2011), 13.9 (2012), 14.7 (2013).
- Liquid assets to short-term liabilities (percent): 243.0 (2008), 197.0 (2009), 158.0 (2010), 137.9 (2011), 143.2 (2012), 125.2 (2013).

### Social and development indicators (Millennium Development Goals snapshot)
- Primary completion rate, total (% of relevant age group): 70 (1990), 68 (1995), 72 (2000), 69 (2005), .., 88 (2012).
- Immunization, measles (% of children ages 12-23 months): 76 (1990), 75 (1995), 55 (2000), 55 (2005), 57 (2009), 74 (2012).
- Mortality rate, infant (per 1,000 live births): 68 (1990), 65 (1995), 63 (2000), 59 (2005), 54 (2009), 43 (2012).
- Mortality rate, under-5 (per 1,000): 93 (1990), 98 (1995), 98 (2000), 82 (2005), 75 (2009), 65 (2012).
- Maternal mortality ratio (per 100,000 live births, modeled estimate): 260 (1990), 250 (1995), 260 (2000), 260 (2005), 260 (2009), 316 (2012).
- Internet users (per 100 people): 0.0 (1990), 0.0 (1995), 0.0 (2000), 1.2 (2005), 4.9 (2009), 6.7 (2012).
- Mobile cellular subscriptions (per 100 people): 0 (1990), 0 (1995), 10 (2000), 54 (2005), 93 (2009), 180 (2012).

### Risk Assessment Matrix — key risks, likelihoods, and expected impacts
- Global risk: Side-effects from global financial conditions.
  - Staff assessment: High (probability of 30 percent or more).
  - Expected impacts: Gabon would find it difficult to issue new sovereign bonds at competitive interest rates.
- Global risk: Persistent dollar strength.
  - Staff assessment: Medium (probability between 10 and 30 percent).
  - Expected impacts: Dollar strength would help mitigate the revenue impact of oil price falls in local currency, but FX debt service would also increase; the mitigation effect would dominate.
- Global risk: Protracted period of slower growth in advanced and emerging economies.
  - Staff assessment: High.
  - Expected impacts: Lower oil exports would sharply reduce government revenue and increase public debt; financing for infrastructure would be curtailed; demand for non-oil exports and FDI in non-oil sectors would likely be lower, negatively affecting diversification and potential non-oil growth.
- Domestic risk: Loosening of fiscal policy and weak investment execution capacity.
  - Staff assessment: Medium to High.
  - Expected impacts: A loose and inefficient fiscal policy would raise inflation, undermine competitiveness, inhibit non-oil growth, negatively impact the poor, and scaling-up capital spending could strain absorptive capacity and increase corruption and waste.
- Domestic risk: Failure of full materialization of the diversification strategy due to insufficient fiscal space and weak implementation of structural reforms.
  - Staff assessment: Medium.
  - Expected impacts: Investment and growth would remain hampered by a poor business environment; non-hydrocarbon sectors would remain rudimentary with few job opportunities; regional integration and cooperation would remain limited.
  - Staff assessment (overall): High for the economic and social consequences.
  - Expected impacts if realized: Economic diversification and job creation would be much lower than hoped for; continued social inequalities could fuel social tensions; duplication of development projects across the sub-region would waste resources and lose growth opportunities.

*International Monetary Fund staff summary based on the Gabon country report content provided.*

### Appendix I. PSGE Track Record

### Appendix I. PSGE Track Record

### Industrial and Agricultural Development
- Several projects realized to enhance industrial and agricultural development, mainly as joint-ventures with international investors.
- Key achievements:
  - Establishment of a 1,126 hectare SEZ specialized in wood processing in Nkok (near Libreville).
  - Development of two palm oil plantations with over 100,000 hectares in total.
  - Development of a rubber plantation with over 28,000 hectares.
  - All palm oil and rubber plantation projects and the SEZ developed as joint ventures with the Singapore-based multinational corporation OLAM.
- Project costs and spending:
  - Project costs are estimated at about US$400 million for the SEZ of Nkok, most of which has been spent by OLAM.
  - Project costs are estimated at about US$1 billion for the palm oil and rubber plantations.
- Timelines and uptake:
  - Production in the Nkok SEZ started in 2012 and over 70 foreign investors have signed up.
  - In the palm oil and rubber plantations, production is expected to start in 2015 and 2019, respectively.
- Employment:
  - So far, about 3,800 people have been employed by the plantations.
- Additional OLAM involvement:
  - OLAM is involved in a US$2 billion joint venture project with the government for the development of a fertilizer plant in the free trade zone of Port-Gentil.

### Adding Value-Added to Manganese and Iron Exports
- Manganese and iron processing plants are being constructed to increase value-added.
- Projects and expected outputs:
  - Manganese processing plant under construction in the manganese deposit of Ndjolé with expected production amounts to 700,000 tons of manganese per year.
  - A metallurgical complex being built in the Moanda-Franceville mining area expected to process 20,000 metric tons of manganese and 40,000 metric tons of silico-manganese on average per year.
  - Another industrial complex estimated to cost US$4 billion will be built in Belinga to produce about 44 million tons of iron ore and 18 million tons of transformed iron on average per year.

### Ongoing Infrastructure Projects
- Road construction:
  - About 435 km of new paved roads have been constructed.
  - Work is ongoing to pave 980 km more.
- Ports and river transport:
  - An agreement was signed with Singapore Port Authority to modernize and extend the ports of Owendo and Port-Gentil.
  - Five docks in river tributaries have been built throughout the country.
  - Two river ports were built in the cities of Lambaréné and Port-Gentil.
- Energy infrastructure:
  - Ongoing construction of the 160 MW capacity-Grand Poubara hydroelectric dam.
  - Ongoing construction of the 84 MW-capacity Empresse Eugenie hydroelectric dam.
  - Upgrading project for the Alenakiri gas-fired power plant (in Libreville) expected to double capacity from 35MW to 70 MW.

### Human Capital Development and Business Climate Reforms
- Technical education and training:
  - A Mines and Metallurgy school is expected to open in the metallurgical complex of Moanda in September 2015.
- Measures to improve the business climate:
  - Adoption of a special agency to promote investments (Agence Nationale de la Promotion des Investissements).
  - Computerization of procedures required to open a business.
  - Reduction in construction permits processing delays which fell from over 6 months to 10 days.
  - Adoption of a one-stop shop for large companies at the national company for water and electricity (SEEG) to reduce connection delays.

*Source: Appendix I. PSGE Track Record (as provided).*

### 2020. The public DSA shows that the macroeconomic framework presented in this staff report would

### _cr1547 - 2020. The public DSA shows that the macroeconomic framework presented in this staff report would

### Public DSA — baseline findings and projections
- Under the staff-report macroeconomic framework, public debt:
  - "briefly exceed[s] the government’s debt ceiling in 2016 and gradually decrease[s] from 2017."
- Table 1 (Public Sector DSA — Baseline Scenario, in percent of GDP unless otherwise indicated) key series (selected years where shown):
  - Nominal gross public debt: 2013: 31.3; 2014: 26.9; 2015: 27.7; 2016: 34.4; 2017: 35.7; 2018: 33.7; 2019: 33.2; 2020: 31.9
  - Public gross financing needs (selected years): 2013: -1.2; 2014: 3.9; 2015: -0.2; 2016: 6.3; 2017: 3.1; 2018: 3.4; 2019: 1.8; 2020: 2.5; (cumulative indicated: 3.6, 5)
  - Real GDP growth (in percent): 2013: 2.5; 2014: 5.6; 2015: 5.1; 2016: 4.4; 2017: 5.5; 2018: 5.6; 2019: 5.7; 2020: 5.7; 2021(?): 5.9 (table shows sequence through 2020)
  - Inflation (GDP deflator, in percent): 2013: 7.2; 2014: -2.7; 2015: -4.6; 2016: -9.4; 2017: 2.6; 2018: 1.9; 2019: 0.5; 2020: 0.0; 2021: 0.6 (sequence as presented)
  - Nominal GDP growth (in percent): 2013: 10.0; 2014: 2.7; 2015: 0.2; 2016: -5.4; 2017: 8.2; 2018: 7.6; 2019: 6.3; 2020: 5.7; 2021: 6.5
  - Effective interest rate (in percent): 2013: 5.7; 2014: 8.7; 2015: 6.3; 2016: 5.0; 2017: 5.0; 2018: 5.0; 2019: 4.7; 2020: 4.7; 2021: 4.6
- Contribution to change in gross public sector debt (selected items, percent of GDP):
  - Change in gross public sector debt (cumulative row): 2013: -5.1; 2014: 5.8; 2015: 0.8; 2016: 6.7; 2017: 1.3; 2018: -2.0; 2019: -0.5; 2020: -0.3; 2021: -1.0; cumulative: 4.2
  - Primary deficit: 2013: -7.7; 2014: -3.6; 2015: -4.6; 2016: 1.3; 2017: -1.0; 2018: -2.0; 2019: -2.4; 2020: -2.2; 2021: -1.8; cumulative: -8.0
  - Primary (noninterest) revenue and grants (percent of GDP): cumulative 144.5 (annual series: 2013: 28.0; 2014: 30.8; 2015: 27.8; 2016: 22.3; 2017: 24.1; 2018: 24.4; 2019: 24.6; 2020: 24.6; 2021: 24.6)
  - Primary (noninterest) expenditure (percent of GDP): cumulative 136.5 (annual series: 2013: 20.3; 2014: 27.2; 2015: 23.2; 2016: 23.6; 2017: 23.0; 2018: 22.4; 2019: 22.3; 2020: 22.4; 2021: 22.8)
  - Automatic debt dynamics (percent of GDP): 2013: -1.8; 2014: 0.4; 2015: 4.5; 2016: 3.0; 2017: -1.0; 2018: -0.9; 2019: -0.5; 2020: -0.3; 2021: -0.6; cumulative: -0.3
  - Real interest rate contribution (percent of GDP): 2013: -1.0; 2014: 2.4; 2015: 3.0; 2016: 4.3; 2017: 0.7; 2018: 1.0; 2019: 1.3; 2020: 1.5; 2021: 1.2; cumulative: 10.1
  - Real GDP growth contribution (percent of GDP): 2013: -0.5; 2014: -1.1; 2015: -1.4; 2016: -1.3; 2017: -1.7; 2018: -1.9; 2019: -1.8; 2020: -1.8; 2021: -1.8; cumulative: -10.3
- Market and sovereign indicators shown:
  - Bond Spread (bp) 3/: 687 (as shown near table header)
  - Ratings (Moody’s, S&P’s, Fitch) displayed as Moody's Ba3 / S&Ps BB- / Fitch BB-

### Alternative scenarios and shocks (public DSA)
- Historical scenario:
  - "financial needs are much lower than in the baseline" and this "translates into a reduction in public debt levels over the projection period."
  - Figure 1 underlying assumptions (Historical Scenario): Real GDP growth series shown 2015–2020 as 4.4, 3.2, 3.2, 3.2, 3.2, 3.2; Inflation sequence identical to baseline; Primary Balance series reported as -1.3, 6.7, 6.7, 6.7, 6.7, 6.7; Effective interest rate series slightly different (5.0, 5.0, 5.2, 5.2, 5.4, 5.7).
- Constant Primary Balance scenario:
  - Primary Balance held at -1.3 for 2015–2020; other macro variables as in baseline.
- Constant primary fiscal deficit scenario (policy risk):
  - "Assuming that the primary fiscal balance remains in deficit (equivalent to 1.3 percent of GDP) ... leads to a substantial accumulation of public debt, surpassing 60 percent of GDP."
- Growth (supply) shock:
  - "Assuming real GDP growth is 1 percentage point lower in the projection period (a supply shock) leads to a substantial increase in public debt up to almost 60 percent of GDP."
- Combined shock:
  - "A combined shock of a reduction in government revenues by 2 percentage points of GDP (which could result if oil prices decline by 20 percent, for example) and a reduction in GDP growth by 1 percentage point" produces public debt dynamics similar to the 1 percentage point growth shock.

### External debt sustainability — baseline and scenarios
- External debt level and composition (as reported):
  - External debt rose from US$2.1 billion in 2009 to about US$4.3 billion in 2013 (equivalent to 24.8 percent of 2013 GDP).
  - By end-2013: multilateral debt 13 percent of total external debt; bilateral debt 23 percent; commercial institutions 24 percent; financial markets 40 percent.
- Baseline external debt path (External Debt Sustainability Framework Table 2 and text):
  - Baseline external debt-to-GDP: peak of 31.7 percent in 2016; declines to 28.1 percent in 2020.
  - Table 2 baseline series (selected years, external debt in percent of GDP): 2010: 14.4; 2011: 12.4; 2012: 17.6; 2013: 24.8; 2014: 22.5; 2015: 30.5; 2016: 31.7; 2017: 29.5; 2018: 29.1; 2019: 28.7; 2020: 28.1
  - Change in external debt (selected years): 2010: -3.6; 2011: -2.0; 2012: 5.2; 2013: 7.1; 2014: -2.2; 2015: 8.0; 2016: 1.1; 2017: -2.2; 2018: -0.4; 2019: -0.4; 2020: -0.6
- Baseline assumptions for external financing:
  - Macroeconomic framework assumes issuance of eurobonds for US$500 million in 2015 and US$250 million in 2016 (half of prior intentions), and that the international bond for US$1 billion issued in 2007 is not rolled over.
- External shocks and scenario outcomes:
  - Historical scenario: "main variables are assumed to be the same as in the past ten years" — leads to a "drastic reduction in external debt" because historical financial needs are lower.
  - One-quarter standard deviation permanent shocks applied to real interest rate, growth rate, and current account balance show more adverse outcomes.
  - Non-interest current account shock and real exchange rate shock are particularly severe: external debt increases by 2020 up to 41 percent and 42 percent of GDP, respectively.
- Table 2 selected macro external indicators (projections and historical averages):
  - External debt-to-exports ratio (in percent): projections show series: 2010: 29.4; 2011: 23.2; 2012: 24.3; 2013: 38.2; 2014: 36.9; 2015: 71.0; 2016: 70.9; 2017: 65.6; 2018: 65.2; 2019: 66.0; 2020: 67.3 (as presented)
  - Gross external financing need (in billions of US dollars) series: 2010: -0.8; 2011: -2.3; 2012: -3.1; 2013: -1.6; 2014: -1.4; 2015: 1.1; 2016: 0.3; 2017: 0.4; 2018: 0.3; 2019: 0.6; 2020: 0.9
  - Key macro assumptions (selected): Real GDP growth series shown as 6.3, 0.0, 5.5, 5.6, 5.1, 3.2, 3.7, 4.4, 5.5, 5.6, 5.7, 5.7, 5.9 across the table horizon; Nominal external interest rate (in percent) series includes values such as 6.9, 6.1, 5.7, 9.2, 5.7, 6.1, 1.3, 5.3, 5.8, 5.5, 5.4, 5.5, 5.6 (as presented)

### Risk assessment (public and external)
- Public DSA risk signals (Figure 2 heat map and commentary):
  - Vulnerabilities highlighted include gross financing needs, debt level, share of short-term debt, public debt in foreign currency, and public debt held by non-residents.
  - Bond spread shown as 687 bp in table header context.
- External DSA bound tests (Figure 3 summary):
  - Interest rate shock, current account shock, combined shocks, and real depreciation shocks produce sizable upward shifts in external debt-to-GDP trajectories (examples cited: CA shock up to 41 percent of GDP; combined shock up to 37 percent; 30 percent depreciation shock up to 42 percent).
  - Figure captions note individual shocks are permanent one-half standard deviation shocks and combined tests include permanent 1/4 standard deviation shocks to real interest rate, growth rate, and current account balance.

### Policy recommendations, adjustments, and authorities’ intentions
- Fiscal policy and debt sustainability:
  - Need for further fiscal adjustment to rebuild buffers and preserve medium-term fiscal sustainability; recommended measures include:
    - Curb growth in current spending, including the wage bill.
    - Effectively phase out general oil subsidies.
    - Safeguard priority infrastructure and social spending.
    - Expand non-oil tax base by reducing tax exemptions and improving tax administration.
    - Improve public investment management and transparency of natural resource revenues (commitment to become EITI-compliant during 2015 noted).
- Authorities’ stated measures and intentions (as reported in staff report and authorities’ statement):
  - 2014 mid-year budget reduction (halving public investment spending); revision of the 2015 budget with conservative oil price and exchange rate assumptions.
  - Adoption of measures: suppression of petroleum subsidies; creation of an oil price stabilization fund; launch of civil service reform; merger of two public works agencies; short-term measures to improve non-oil revenue and reduce nonessential expenditures.
  - Plan to finance part of infrastructure through international capital markets (eurobond issuance envisaged in 2015); intention to reschedule domestic debt if needed.
  - Commitment to strengthen public financial management and tax administration with Fund technical assistance; ongoing PEFA and TA engagements referenced.
- Structural and financial sector recommendations:
  - Boost external competitiveness through structural reforms to reduce factor costs (address infrastructure bottlenecks in energy and transport; boost investment in human capital; strengthen business regulatory framework).
  - Improve financial depth and inclusion (establish a credit registry; strengthen COBAC supervisory capacity; resolve three distressed public banks; monitor microfinance).
- Data and statistical recommendations:
  - Improve data quality and timeliness; address shortcomings in fiscal data timeliness and coverage, balance of payments and financial stability data quality, and labor cost/productivity information.
  - Release and update national accounts series, develop quarterly national accounts, and improve government finance statistics reporting (move toward GFSM updates and submission to IMF STA).

### Key projections and summary indicators (selected consolidated table entries)
- From the staff report summary table ("Gabon: Selected Economic Indicators, 2012–20"):
  - Real GDP growth: 2012: 5.5; 2013: 5.6; 2014: 5.1; 2015: 4.4; 2016: 5.5; 2017: 5.6; 2018: 5.7; 2019: 5.7; 2020: 5.9
  - GDP deflator: 2012: -16.8; 2013: -2.7; 2014: -4.6; 2015: -9.4; 2016: 2.6; 2017: 1.9; 2018: 0.5; 2019: 0.0; 2020: 0.6
  - Consumer prices (yearly average): 2012: 2.7; 2013: 0.5; 2014: 4.5; 2015–2020: 2.5 (each year)
  - Total revenue (percent of GDP): 2012: 6.1; 2013: -0.6; 2014: -9.6; 2015: -24.3; 2016: 17.0; 2017: 9.0; 2018: 7.4; 2019: 5.5; 2020: 6.5
  - Overall balance (commitment basis, percent of GDP): 2012: 2.6; 2013: 1.8; 2014: 2.9; 2015: -3.1; 2016: -0.9; 2017: 0.1; 2018: 0.6; 2019: 0.4; 2020: 0.0
  - External public debt (including to the Fund, percent of GDP): 2012: 17.2; 2013: 24.0; 2014: 24.3; 2015: 30.5; 2016: 31.5; 2017: 29.3; 2018: 28.9; 2019: 28.7; 2020: 28.1
  - Total public debt (percent of GDP): 2012: 21.1; 2013: 26.9; 2014: 27.7; 2015: 34.4; 2016: 35.7; 2017: 33.7; 2018: 33.2; 2019: 32.9; 2020: 31.9

*Source: IMF staff report excerpts and associated DSA tables and figures as presented in the supplied content.*

### Conclusion

### Conclusion

### Implementation and recent policy actions
- Gabonese authorities continued to implement their ambitious development plan in 2013 and 2014, and strengthened its social component to ensure a more inclusive growth.
- The pace of implementation was adjusted to make it consistent with the country’s absorptive capacity and level of resources.
- More recently, authorities took additional adjustment measures to cope with the oil price shock, including the decision to set up an oil revenue stabilization fund to shield the budget from oil price swings in the future and hence preserve the fiscal sustainability of the PSGE.

### Near-term outlook and commitments
- Authorities agree that maintaining growth momentum in 2015 represents a significant challenge given the current adverse external conditions.
- They are committed to pursuing prudent macroeconomic policies and structural reforms in order to improve the competitiveness of the economy and rebuild buffers.
- Authorities will continue to monitor economic developments and take additional actions to meet their policy objectives as needed.

*Source: _cr1547 - Conclusion*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2015/_cr1547.pdf_