IMF Staff Completes Mission for the Combined First and Second Reviews of the Extended Fund Facility (EFF) for the Republic of Gabon

IMF News, May 20, 2022

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Canonical URL: IMF Staff Completes Mission for the Combined First and Second Reviews of the Extended Fund Facility (EFF) for the Republic of Gabon

IMF staff led by Mr. Boileau Loko visited Gabon from May 12 to 20, 2022 to hold discussions on the combined first and second reviews of the arrangement under the EFF, approved in July 2021.
End-of-mission press release: views expressed are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board. This mission will not result in a Board discussion.
Discussions on measures needed to complete the first and second reviews and on economic policies and structural reforms will continue in the coming weeks to agree on the main parameters of the 2022 revised budget.

Economic growth recovered in 2021, reaching an estimated 1.5 percent.
Growth should accelerate to 2.8 percent in 2022.
Recent historical performance: -1.9 percent in 2020.
Key downside risks identified:
- Intensification of the war in Ukraine and its effects on global growth.
- Resurgence of the pandemic.
- A reversal in oil price.

Performance against quantitative program targets in 2021 was mixed under pandemic conditions.
Public finances in 2021 were marked by:
- Underperformance in non-oil revenues.
- Some overspending on subsidies due to the price freeze on petroleum products at the pump.
Public investment execution:
- Overall below forecasts.
- Overrun in domestically financed capital spending.
- Significant fall in externally financed capital spending helped contain the deficit at 7.1 percent of non-oil GDP, as originally planned.

Agreed need to accelerate public finance, governance, and structural reforms to:
- Strengthen domestic revenues.
- Improve public financial management.
- Support a return to strong, inclusive growth.
- Improve debt sustainability.
Draft revised 2022 budget should prioritize increasing fiscal space and protecting the most vulnerable in the face of war-related and oil-price shocks.
Urgency of reducing tax exemptions and expenditures was emphasized.
Authorities agreed to:
- Publish the report on the audit of spending related to the COVID-19 pandemic.
- Finalize the decree on publication of the names and nationalities of beneficial owners of entities awarded public procurement contracts.
IMF staff encourage authorities to step up efforts to avoid the accumulation of domestic and external arrears.

Continue governance efforts to ensure all government oil resources are transferred to the Treasury Single Account at the BEAC.
Need for greater transparency in the oil sector to assess:
- Costs of oil production.
- Cross debt between the government, public enterprises, and oil companies, including offsetting of VAT credits.
Improvements called for:
- Avoidance of pre-financing operations linked to future government revenues.
- These improvements would facilitate liquidity and public financial management.

Authorities and mission agreed on the need to protect the most vulnerable from increases in oil and food prices caused, in particular, by the war in Ukraine.
IMF staff encourage continuing subsidies only for the pump prices of kerosene and butane, described as "the two products most widely consumed by the most disadvantaged segments of the population."
Strengthened social protection for the most vulnerable is necessary.

IMF staff encourage accelerating reforms to strengthen the banking sector.
Improve the business environment to promote private sector development.
Emphasis on promoting private investment and strengthening social protection to achieve strong, sustainable, and inclusive growth.

IMF team met with:
- Ms. Nicole Jeanine Lydie Roboty Mbou, Minister of Economy and Recovery;
- Ms. Édith Ekiri Mounombi Oyouomi, Minister of the Budget and Public Accounts;
- Mr. Francis Nkea Ndzigue, Minister for the Promotion of Good Governance and the Fight against Corruption;
- Mr. Guy Patrick Obiang Ndong, Minister of Health and Social Affairs;
- Mr. Vincent de Paul Massassa, Minister of Oil and Gas.
Team also met with partners, private sector leaders, and the diplomatic community.
Mission expressed thanks to the Gabonese authorities for constructive discussions and warm hospitality.

Source: IMF press release, May 20, 2022.