## IMF Executive Board Approves US$642 Million Extended Arrangement Under the Extended Fund Facility (EFF) for Gabon

_IMF News, June 20, 2017_

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## Bibliographic details
- Published: June 20, 2017

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### Approval and financing
- On June 19, 2017, the International Monetary Fund (IMF) approved a three-year extended arrangement under the Extended Fund Facility (EFF) for Gabon for SDR 464.4 million (about US$642 million), or 215 percent of Gabon’s quota, in support of the authorities’ medium-term recovery program.
- The Executive Board’s decision enables an immediate disbursement of SDR71.43 million, about US$ 98.8 million.
- The remaining amount will be phased over the duration of the program, subject to semi-annual reviews.

### Program objectives and pillars
- Principal aims:
  - Ensure macroeconomic stability and lay the basis for sustainable and equitable growth.
  - Attain debt sustainability at the national level.
  - Help contribute to restoring and preserving external stability for the Central African Economic and Monetary Union (CEMAC).
- The EFF-supported program is built on three key pillars:
  - Well-balanced fiscal consolidation that minimizes the impact on growth and protects vulnerable groups.
  - Structural reforms to improve the efficiency and transparency of public spending.
  - Policies to enhance financial sector stability and economic diversification.

### Fiscal policy targets and revenue measures
- Fiscal targets:
  - Reduce the overall deficit (on a cash basis) to 4.6 percent of GDP in 2017 from 6.6 percent in 2016.
  - Reduce the non-oil primary deficit to 8.9 percent of non-oil GDP from 11 percent.
- Revenue and expenditure measures:
  - Protect social sector expenditure and redirect a portion of budget resources to health care, education, and social protection.
  - Improve non-oil revenue mobilization, boost tax compliance, and combat tax evasion.
  - Modernize tax filing and payment procedures.
  - Broaden the tax base through the reduction of special tax regimes and exemptions, particularly on VAT.
  - Create a revenue authority.
- Public finance management:
  - Implement a strategy for the full repayment of arrears over the EFF-supported program period.
  - Accelerate public finance management reforms, including implementing CEMAC directives, improving budget transparency and public investment management, and strengthening financial oversight of public companies and government agencies.

### Financial sector stability and structural reforms
- Financial sector priorities:
  - Safeguard financial sector stability and promote financial inclusion.
  - Expeditiously resolve the three distressed public banks.
  - Strengthen the supervisory framework for commercial banks to support financial intermediation and private-sector led growth.
- Structural reforms to support diversification:
  - Further improvements to the business climate, especially in starting a business, dealing with construction permits, registering property, paying taxes, and enforcing contracts.
  - Improve production and dissemination of economic statistics.
  - Large scale investments in agriculture and logistics are projected to develop a competitive advantage in agri-business and unlock downstream activity in other non-oil commodity sectors.

### Recent economic developments and outlook
- Macroeconomic context since mid-2014:
  - The decline in oil prices generated large drops in oil exports and fiscal revenues.
  - Gabon is facing slowing growth, rising public debt levels, and insufficient fiscal and external buffers.
- Key statistics and developments:
  - Growth declined to 2.1 percent in 2016, down from 3.9 percent in 2015.
  - Despite substantial fiscal adjustment since 2014, the overall fiscal position deteriorated substantially.
  - The current account deficit widened sharply in 2016, moving to a deficit of over 10 percent of GDP, from an average surplus of about 14 percent of GDP over the 2010-14 period.
  - Average inflation picked up to 2 percent in 2016, but remains within the CEMAC convergence criterion.
- Medium-term outlook:
  - The medium-term economic outlook remains favorable, provided prudent policies are implemented as planned.
  - Growth can return to previous levels of 4-5 percent, supported by ongoing diversification strategy and large-scale investments in agriculture and logistics.

### Governance and regional considerations
- The program builds on the strategy set out by the CEMAC heads of state at their December 2016 summit in Yaoundé:
  - Maintain the current exchange rate peg while implementing substantial fiscal adjustments in each country and tightening monetary policy at the regional level.
- The success of Gabon’s program will depend on implementation of supportive policies and reforms by regional institutions.

*Press Release No. 17/233 — IMF Communications Department, June 20, 2017.*

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## References

- [Mitsuhiro Furusawa](http://www.imf.org/external/np/omd/bios/mf.htm)
- [PRESS CENTER](http://presscenter.imf.org/)
- [http://www.imf.org/external/country/GAB/index.htm](http://www.imf.org/external/country/GAB/index.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2017/06/20/imf-executive-board-approves-us642-million-extended-arrangement-under-the-eff-for-gabon_