-
Initial signs of economic recovery noted, but Gabon’s short-term
outlook remains difficult.
-
Arrears remain a drag on economic activity. Government expressed
commitment to a rapid solution.
-
Decisive Implementation will be key to ensure the success of the
authorities’ program. Progress on structural reform implementation
so far is welcome.
An International Monetary Fund (IMF) mission led by Alex Segura-Ubiergo
visited Libreville from July 26 to August 2 to monitor economic
developments and conduct discussions with the authorities.
On June 19, 2017, the IMF Executive Board approved an SDR 464.4 million
(about US$642 million) extended arrangement under the Extended Fund
Facility for Gabon, or 215 percent of Gabon’s IMF quota, in support of
Gabon’s medium-term recovery program
(See Press Release 17/233)
.
The EFF-supported program will help Gabon restore macroeconomic stability
and lay the basis for inclusive growth. It seeks to attain debt
sustainability at the national level and help contribute to restoring and
preserving external stability for the Central African Economic and Monetary
Union (CEMAC). The Executive Board’s decision has enabled a 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.
At the conclusion of the visit, Mr. Segura-Ubiergo issued the following
statement:
“Gabon’s near-term economic outlook remains difficult, with overall growth
expected to be modest at about 1 percent in 2017. Since 2014, the reduction
in international oil prices has been associated with a slowdown in economic
activity, large declines in oil exports and fiscal revenues, and a
deterioration in the balance of payments.
“Despite the challenging outlook, there are some early signs that the
economy has begun to stabilize during the first half of 2017. The oil
sector has benefited from the recovery of international energy prices since
their low point in early 2016. In addition, other resource sectors such as
manganese mining, wood, and agri-business are expanding rapidly, and
construction is showing greater signs of resilience than anticipated.
Preliminary customs data show that growth in Gabon’s extractive industries
boosted exports by 38 percent (y/y) at end June, while imports declined by
21 percent. This improving trade balance has helped to moderate the decline
in the level of imputed international reserves of Gabon at BEAC.
Nonetheless, the economy still faces significant vulnerabilities. The
commercial and services sectors are in recession and bank deposits and
credit to the economy have declined.
“The mission encouraged the authorities to pursue reforms to increase
non-oil revenue collections, especially at customs where performance has
been lagging. Greater revenue mobilization efforts should help protect
spending on critical health, education and social protection programs in
favor of vulnerable groups of the population. In addition, restoring
confidence in the economy will require frequent communication with
stakeholders and decisive progress in the implementation of the
authorities’ plan to clear arrears.
“The mission welcomed recent progress on structural reforms, including the
adoption of new expenditure procedures and stronger controls to prevent the
emergence of extra budgetary spending. Additional reforms to increase the
efficiency and transparency of public spending will also be key. This will
require strict respect of budget rules, improvements in public procurement
to reduce the use of non-competitive bids, more frequent use of feasibility
studies to prioritize public investment projects, and greater dissemination
of economic information. Going forward, the publication of quarterly
reports on the amount and composition of arrears, and cost-benefit analysis
of public investment projects that exceed CFAF 20bn will be crucial steps
in this direction.
“The decisive implementation of the government plans to clear arrears will
also be key to increase the resilience of the financial sector, while
ongoing reforms to improve the business environment in support of the
diversification strategy should also be pursued vigorously, as they have
the potential to lift growth towards 5 percent over the medium term.
“The team will return to Libreville in October to conduct discussions for
the first review of the Extended Fund Facility for Gabon.
“The mission met with Minister of Economy Immongault Tatagani, Budget
Minister Otounga Ossibadjouo, the National Director of BEAC, and other
senior government officials, representatives of the private sector, civil
society, and the diplomatic community. The mission would like to thank the
Gabonese authorities for the constructive discussions and warm
hospitality.”
