Statement by an IMF Mission to GabonPress Release No. 10/449
November 19, 2010
A mission from the International Monetary Fund (IMF), led by Mr. Bernardin Akitoby, visited Libreville November 12-21, 2010 to conduct the 2010 Article IV Consultation1.
The mission had constructive discussions with the Minister of Economy, H.E. Magloire Ngambia; the Minister of Budget, H.E. Blaise Louembe; and other senior officials. It also met with donors, representatives of the private sector, and civil society.
Mr. Akitoby issued today, 19 November 2010, the following statement:
“Low prices and low demand for oil, manganese, and forestry products shrank the fiscal and current account surpluses in 2009 and turned growth moderately negative. Real GDP is forecast to increase to about 5.7 percent in 2010, reflecting increased public investment and a rebound in mining. Average annual inflation is projected to remain subdued. The non-oil primary deficit will deteriorate significantly, reflecting the increase in government investment and the fall in non-oil revenues.
“Real GDP growth in 2011 is forecast at 5.6 percent, supported by mining, wood processing, and public investment. Inflation is projected to rise to 2.3 percent due to further fiscal expansion. The foremost risk to the economic outlook is a decline in oil and manganese prices, because these commodities account for about 90 percent of total exports of goods and 45 percent of nominal GDP.
“The government aims to transform Gabon into an emerging economy through diversification away from oil and the promotion of a business friendly environment. Against this background, the Article IV consultation discussions focused on: (i) ensuring fiscal and external sustainability with dwindling oil reserves over the long term; (ii) accelerating growth to prepare for the post-oil era; and (iii) reforming the financial sector.
“The mission stressed that fiscal consolidation is needed to ensure economic stability. To this end, the authorities should link annual budgets to longer-term policies and fiscal sustainability objectives. The government’s ambitious capital budget should be anchored in a credible medium-term fiscal strategy to safeguard macroeconomic stability. The mission encouraged the authorities to continue their efforts to strengthen the appraisal, selection, and monitoring of investment projects and the budgeting of operation and maintenance costs. Ongoing financial management reforms will help improve the quality of spending and release resources for growth-enhancing spending and social outlays.
“The mission supports the government’s focus on improving the business environment and governance. The mission advised that the priorities are to (i) streamline administrative procedures; (ii) increase flexibility of labor markets by reforming labor laws; and (iii) reform the financial sector by drawing on the findings of the Financial Stability Assessment Program of the CEMAC (Communaute economique et Monetaire d’Afrique Centrale).
“The mission confirmed that the IMF will continue to work with the Gabonese authorities to address these challenges. The IMF Executive Board is expected to consider the staff report on the 2010 Article IV consultation in late January 2011.
The mission would like to thank the authorities for their warm hospitality and the very close and constructive cooperation.”
1 Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities.