## IMF Survey : Gabon Seeks to Diversify its Economy as Oil Revenues Decline

_IMF News, March 21, 2016_

## Source details

**Canonical URL:** [IMF Survey : Gabon Seeks to Diversify its Economy as Oil Revenues Decline](https://www.imf.org/en/news/articles/2015/09/28/04/53/socar032116a)

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## Bibliographic details
- Published: March 21, 2016

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### Macroeconomic shock and outlook
- Oil prices have declined by about 75 percent over the past 18 months; they used to be a little over $100 per barrel and now they’re about $30 per barrel.
- Growth declined to about 4 percent in 2015.
- Growth is expected to decline further to just over 3 percent—about 3.2 percent—in 2016.
- Between 2010 and 2014, the growth rate was around 6 percent.
- Oil in 2014 contributed to about 45 percent of government revenue and about 85 percent of exports.

### Immediate fiscal and revenue responses (short run)
- Raise additional revenue outside of the oil sector, notably by reducing the extent of tax exemptions.
- Better control the growth of the wage bill to contain spending.
- Reprioritize capital spending to focus on projects with the highest benefits or highest economic returns so the government can live within its means.

### Social protection and distributional considerations
- Adjust spending in line with available revenue while protecting the most vulnerable.
- Strengthen the social safety net by:
  - Developing the agricultural sector (reduce food imports; produce food more cheaply locally).
  - Improving rural access roads and availability of agricultural inputs.
  - Introducing or expanding cash transfers for the most vulnerable segments of the population, particularly in urban areas.

### Structural diversification and medium- to long-term reforms
- Principal strategic objective: diversify the economy to reduce dependence on oil and increase resilience to external shocks.
- Authorities’ strategic plan: PSGE (Plan Stratégique Gabon Emergent).
- Key areas of focus under PSGE:
  - Development of infrastructure, especially transport (roads, ports, railways) and improving availability of electricity.
  - Increase value added through Special Economic Zone (Nkok near Libreville) with emphasis on industries such as wood processing.
  - Improve business climate nationwide to promote investment.
  - Invest in human capital—particularly vocational training—to address shortage of qualified manpower and support diversification into new economic activities.

### Key policy priorities (three stated priorities)
- Boost the growth rate through implementation of structural reforms to elevate long-run growth.
- Diversify the economy to make it more resilient to external shocks (for example, oil price declines).
- Safeguard long-run fiscal sustainability to avoid significant increases in public debt that would jeopardize strategic objectives in both the short run and the long run.

*IMF Survey interview with Montfort Mlachila; March 21, 2016.*

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## References

- [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)
- [PRESS CENTER](http://presscenter.imf.org/)
- [IMF Country Focus](https://www.imf.org/en/news/country-focus)
- [IMF Survey Interview](https://www.imf.org/en/news/search)
- [Press release](http://www.imf.org/external/np/sec/pr/2016/pr1681.htm)
- [Read the report](http://www.imf.org/external/pubs/cat/longres.aspx?sk=43802.0)
- [Selected issues](http://www.imf.org/external/pubs/cat/longres.aspx?sk=43803.0)
- [Gabon and the IMF](http://www.imf.org/external/country/gab/index.htm)
- [Sayeh blog: Competitiveness in SSA: Time to move ahead](https://blog-imfdirect.imf.org/2016/01/28/competitiveness-in-sub-saharan-africa-time-to-move-ahead/)
- [Weaker growth](http://www.imf.org/external/pubs/ft/survey/so/2015/car102715a.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/socar032116a_