IMF Executive Board Concludes 2024 Article IV Consultation with Gabon

May 28, 2024

Washington, DC: On May 24, 2024, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation [1] with Gabon.

Gabon’s post-pandemic recovery held up well in the face of recent shocks. The economy hit a soft patch in 2023, following a series of logistics disruptions, political uncertainty, and high fuel prices for businesses, but it is set to resume its potential growth of around 3 percent this year as shocks dissipate. Inflation has receded to below the 3 percent regional ceiling by the BEAC and should remain within target in the absence of further shocks. Tailwinds from robust oil prices in the last few years have also supported the external position.

At the same time, fiscal imbalances widened significantly: large nonoil deficits in 2022-23 led to a rapid accumulation of arrears, pushed public debt to an estimated 70½ percent of GDP, above the CEMAC ceiling, and weighed down on reserve accumulation.

Going forward, the outlook will face significant headwinds. The prospect of gradually declining oil wealth is weighing on the long-term outlook for growth and the external position given a still moderate diversification away from oil. Growth is thus projected to slow to around 2⅔ percent over the long term, which is insufficient to revive decades-long stagnation in income per capita, and current account surpluses are expected to gradually dwindle. If not addressed, fiscal imbalances will create near-term liquidity risks and long-term sustainability risks, which could destabilize the macroeconomic outlook. The economic outlook will thus hinge on authorities’ ability to address these risks, correct the fiscal position and make progress on transparency and diversification reforms.

Executive Board Assessment[2]

Executive Directors agreed with the thrust of the staff appraisal. They welcomed Gabon’s rebound in growth and decline in inflation following multiple domestic shocks. However, they noted that the currently expansive fiscal policy stance and long‑standing structural and governance weaknesses, magnified by external risks, pose significant challenges for the economy. Directors emphasized that Gabon’s economic outlook will depend on the authorities’ ability to pivot towards a more transparent and inclusive model of governance, while correcting the fiscal imbalances and diversifying the economy to boost growth and address the high levels of poverty.

Directors emphasized the urgency of decisive fiscal consolidation to ensure fiscal sustainability, while safeguarding the ability to meet large social and development needs. They encouraged improving spending efficiency and increasing fiscal space through revenue measures. They noted that ensuring a sustainable medium‑term fiscal position would require the adoption of a strong fiscal framework to guide policies towards sustainability. Directors noted that firm commitment to good public financial management practices will be critical to strengthen the fiscal position. They commended the consolidation of the Treasury Single Account and the digitalization of government services and encouraged the authorities to address remaining gaps in the frameworks for the governance of public enterprises, debt and investment management, and wage bill and civil service management. Directors emphasized that strengthening Gabon’s fiscal position will be critical to ensuring CEMAC’s external sustainability.

Directors underscored the importance of improving governance and transparency of fiscal accounts. They welcomed the commitment on this front signaled by the authorities and noted that transparent reporting of recent fiscal accounts is an important initial step. Directors called for further efforts, including to initiate comprehensive accounting and reporting of public sector fiscal accounts, assets and liabilities, to disclose mining contracts, and to better gauge the potential revenue contribution of the mining sector.

Directors agreed that economic diversification is essential to bringing about sustainable improvement in Gabon’s living standards. They noted that cross‑cutting initiatives to strengthen governance, improve the business environment and ensure reliability of energy and transport infrastructure would be a cost‑effective approach to supporting private sector growth. Directors encouraged strengthening financial sector soundness, including by reducing risks from the bank‑sovereign nexus, repaying government arrears, and addressing the remaining deficiencies in the AML/CFT framework. Initiatives to address climate‑related vulnerabilities should also be prioritized.

Directors highlighted the need to improve the timeliness, coverage, and accuracy of economic statistics to promote transparency and to serve as a stronger basis for decision‑making.

Directors encouraged the authorities to continue their engagement with the Fund, including through capacity development, to support their reform efforts.

It is expected that the next Article IV consultation with Gabon will be held on the standard 12‑month cycle.

Gabon: Selected Economic Indicators, 2022–25

2022

2023

2024

2025

Prel.

Proj. 1/

National income and prices
(annual percentage change)

Real GDP

3.0

2.3

2.9

2.7

Oil

2.5

2.7

1.7

-0.8

Non-oil

3.1

2.2

3.1

3.3

Real GDP per capita

1.8

0.0

0.7

0.5

GDP deflator

13.6

-7.2

-0.2

-1.8

Consumer prices (average)

4.3

3.6

2.1

2.2

Consumer prices (end of period)

5.4

2.3

2.2

2.2

Terms of trade

12.3

-21.0

10.6

-1.7

Real effective exchange rate

-0.7

2.3

…

…

National accounts (percent of GDP)

Gross national savings

40.6

38.6

35.9

35.7

Gross domestic investment, of which:

30.0

34.2

32.0

32.9

Public investment

1.8

3.1

3.8

3.9

Broad money

15.2

9.7

2.7

0.9

Credit to the economy

15.1

16.4

8.2

4.7

Total public debt

63.7

70.5

73.1

78.9

Total public debt (percent of non-oil GDP)

113.2

113.0

115.5

120.0

Overall fiscal balance

-0.7

-1.8

-4.2

-6.4

Non-oil primary balance
(percent of non-oil GDP)

-14.1

-14.3

-15.0

-14.9

Government revenues

18.4

19.9

18.5

17.5

Oil

9.8

9.9

8.2

6.9

Non-oil (percent of non-oil GDP)

15.4

16.0

16.2

16.2

Government expenditure

19.1

21.7

23.0

23.9

External sector
(percent of GDP, unless otherwise indicated)

Current account, of which:

10.7

4.4

3.9

2.8

Exports of goods and services

45.2

41.1

40.5

38.7

Imports of goods and services

27.1

30.4

30.5

30.3

External public debt

34.5

34.1

30.2

26.7

Gross international reserves
(billions of US Dollars)

1.4

1.4

1.4

1.0

Gross international reserves
(in months of next year's imports)

2.8

2.7

2.5

1.9

Memorandum items

Nominal GDP (billions of CFA Francs)

13,118

12,447

12,782

12,893

Nominal GDP per capita (US Dollars)

9,752

9,290

9,308

9,148

Nominal non-oil GDP (billions of CFA Francs)

7,385

7,761

8,093

8,474

CFA Franc per US Dollars (average)

622.4

606.5

…

…

Crude oil price (Brent, US Dollars per barrel)

99.0

82.3

80.6

75.6

Sources: Gabonese authorities
and IMF staff estimates and projections.

1/ Projections are based on unchanged policies.

2/ As indicatively imputed to Gabon from the regional CEMAC pool.


[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.

[2] 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. An explanation of any qualifiers used in summings up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm .

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