News Brief: IMF Completes the First and Second Review Under the Stand-By Arrangement for Gabon
July 13, 2001
The Executive Board of the International Monetary Fund (IMF) today completed the first and second review of Gabon's performance under a 18-month, SDR 92.58 (about US$116 million) Stand-By arrangement. So far, Gabon has drawn up to SDR 13.22 million (about US$17 million) from the arrangement. Today's review opens the way for a release of SDR 26.44 million (about US$33 million) under the arrangement, which the authorities, however, are not expected to request as they intend to treat the arrangement as precautionary in 2001.
In commenting on the Executive Board's decision to complete the review of Gabon's arrangement, Mr. Eduardo Aninat, Deputy Managing Director, stated:
"The Executive Board reviewed Gabon's progress under the program. High oil prices, in conjunction with continued strong fiscal consolidation, led to significant improvements in the government's net position vis-à-vis the banking system and Gabon's net foreign assets. Non-oil GDP growth was stronger than initially anticipated as business confidence began to improve and investment picked up. In this regard, the regularization and significant repayment of government debt to domestic enterprises have been helpful. At the same time, improvement in the short-term financial prospects was not as strong as initially anticipated, as a result of higher-than-foreseen external and domestic debt-service payments. The medium-term outlook remains a concern because of the heavy external debt burden and the expected sharp decline in oil output.
"The structural reform agenda has encountered significant delays, in particular the privatization of public enterprises and the elaboration of anticorruption laws. Progress has been made, however, in improving the transparency of public finances, in particular with the implementation of the budget information system and the initiation of the financial audits of the oil companies.
"In order to build a solid foundation for sustained economic growth and poverty reduction, the authorities need to create an economic environment conducive to private sector activity and job creation. This requires not only continued efforts to improve business confidence, but also the reallocation of resources toward social and critical infrastructural projects. In this regard, the authorities' commitment to continue fiscal consolidation, save any windfall oil revenue in the "Account for Future Generations" at the BEAC, and enhance the efficiency and sharpen the pro-poor focus of investment is essential. It is also important to continue the reforms of the regulatory framework, including the implementation of the labor, mining, and forestry codes, and to accelerate privatization, so as to complete the offer for sale of key public enterprises before the end of the year. The ongoing preparation of a participatory poverty reduction strategy is also of critical importance.
"A key challenge is to further improve governance, in particular the transparency in public finances. The authorities are, therefore, urged to fully implement the budget information system and publish government accounts in a timely manner. It is also essential to ensure a prompt adoption and implementation of the anticorruption laws, including the establishment of a fully independent anticorruption agency. Moreover, it is important to effectively implement the new and strengthened procedures for public tenders without delay, and to increase the frequency of the financial audits of the oil companies to once a year.