IMF Staff Completes Staff Visit to Gabon

IMF News, August 2, 2017

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Mission led by Alex Segura-Ubiergo visited Libreville from July 26 to August 2 to monitor economic developments and conduct discussions with the authorities.
End-of-Mission press release; views are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board.
The team will return to Libreville in October to conduct discussions for the first review of the Extended Fund Facility for Gabon.

“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:
- slowdown in economic activity,
- large declines in oil exports and fiscal revenues,
- deterioration in the balance of payments.
Early signs of stabilization during the first half of 2017:
- Recovery of international energy prices benefiting the oil sector.
- Rapid expansion in other resource sectors: manganese mining, wood, and agri-business.
- Construction showing greater resilience than anticipated.
- Preliminary customs data: exports boosted by 38 percent (y/y) at end June; imports declined by 21 percent.
- Improving trade balance has helped moderate the decline in the level of imputed international reserves of Gabon at BEAC.
Remaining vulnerabilities:
- Commercial and services sectors are in recession.
- Bank deposits and credit to the economy have declined.
- Arrears remain a drag on economic activity.

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.
The Executive Board’s decision 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.
Program objectives:
- Restore macroeconomic stability and lay the basis for inclusive 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).

Revenue mobilization:
- Encourage reforms to increase non-oil revenue collections, especially at customs where performance has been lagging.
- Greater revenue mobilization should help protect spending on critical health, education and social protection programs for vulnerable groups.
Arrears:
- Restoring confidence requires decisive progress in the implementation of the authorities’ plan to clear arrears.
- The decisive implementation of government plans to clear arrears will be key to increase the resilience of the financial sector.
- Recommendation to publish quarterly reports on the amount and composition of arrears.
Public finance management and transparency:
- Welcome progress on structural reforms, including the adoption of new expenditure procedures and stronger controls to prevent extra budgetary spending.
- Additional reforms needed to increase efficiency and transparency of public spending:
- 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.
- Greater dissemination of economic information.
- Cost-benefit analysis of public investment projects that exceed CFAF 20bn.
Business environment and diversification:
- Ongoing reforms to improve the business environment in support of the diversification strategy should be pursued vigorously.
- These reforms have the potential to lift growth towards 5 percent over the medium term.

The mission met with Minister of Economy Immongault Tatagani, Budget Minister Otounga Ossibadjouo, the National Director of BEAC, other senior government officials, representatives of the private sector, civil society, and the diplomatic community.
Press officer contact listed: Andrew Kanyegirire; Phone: +1 202 623-7100; Email: MEDIA@IMF.org.

IMF Staff Completes Staff Visit to Gabon — Press Release No. 17/313 (August 2, 2017).