IMF Completes First and Second Reviews Under Extended Arrangement under Extended Fund Facility with Gabon

  • Program implementation has been mixed amid pandemic-related disruptions.
  • A nascent economic recovery is underway, and the medium-term outlook is broadly positive amidst higher oil prices, but it remains subject to considerable uncertainty. The war in Ukraine will affect the economy through higher food and fuel prices.
  • The completion of the first and second reviews under the EFF-supported program allows the authorities to draw SDR 116.1 million (US$155.29 million).
  • Washington, DC: On June 27, 2022, the Executive Board of the International Monetary Fund completed the First and Second Reviews of the Extended Arrangement under the Extended Fund Facility (EFF) for Gabon. The completion of the reviews enables the immediate disbursement of SDR 116.1 million (US$155.29 million), bringing total disbursements under the extended arrangement to SDR 197.1 million (about US$263.63 million). The extended arrangement was approved by the IMF Board on July 28, 2021, to help Gabon respond to the economic fallout from the COVID-19 pandemic and to support the authorities’ economic and financial reform program (seePress Release No. 21/233).

    Gabon’s economy was hit by the COVID-19 pandemic, with a decline in real output of 1.9 percent in 2020. Growth recovered to an estimated 1.5 percent in 2021, on the back of a booming mining sector and the rebound in the wood and construction sectors. Growth in the services sector remained subdued as containment measures weighed on the trade and transportation sectors. Higher oil prices contributed to strengthening the fiscal and external positions and reducing public debt.

    The outlook remains positive. GDP growth is expected at 2.4 percent in 2022 driven by a continued recovery in wood and construction and a rebound in services. Russia’s war in Ukraine and related surge in commodity prices will boost oil exports and revenues and further improve the fiscal and external positions. However, the cost of fuel subsidies will weigh on the budget and higher food prices will add to inflationary pressures. Higher oil revenues will help accommodate the increase in fuel and food subsidies to the most vulnerable and rebuild fiscal and external buffers.

    Uncertainty around the economic outlook is elevated, with the balance of risks tilted to the downside . Outbreaks of highly contagious COVID-19 variants, particularly in view of the slow vaccination uptake, a potentially sharper slowdown in China, the intensification of the Russia’s war in Ukraine, and possible social tensions ahead of the 2023 presidential elections, pose significant risks to the outlook. On the upside, higher oil prices and accelerated reforms are expected to strengthen domestic revenue and improve public financial management; governance and the business environment will support a return to strong and inclusive growth while safeguarding debt sustainability.

    At the conclusion of the Executive Board’s discussion, Mr. Okamura, Deputy Managing Director and Acting Chair stated:

    “The economy is gradually recovering from the 2020 recession owing to the strong policy response to the COVID-19 pandemic and the rise in oil prices. Growth has gained momentum, the fiscal and external positions have strengthened, and public debt has declined. The outlook is broadly positive but remains subject to various risks, including from the spillovers from Russia’s war in Ukraine, a possible sharper slowdown in China, and a potential resurgence of the COVID-19 pandemic.

    “Fiscal policy should continue to support the ongoing recovery while preserving debt sustainability and protecting the most vulnerable groups amid the rising fuel and food prices and inflationary pressures. Increasing domestic revenue collection and improving public finance management will help rebuild policy space for essential development outlays. Expediting the design of well-targeted social safety nets will also be critical to providing adequate support to vulnerable households and strengthening social protection.

    “Addressing structural reforms, including governance and corruption weaknesses is paramount to achieve strong and inclusive growth. Enhancing the banking sector and implementing an effective financial inclusion strategy, improving the business environment, and strengthening the anti-corruption framework will help address bottlenecks in the economy and promote private investment.”

    Gabon: Selected Economic Indicators

    Population (2017, UN est.):

    2.01 million

    Per capita GDP (2017):

    US$ 7,490

    Quota:

    SDR 216.0 million

    Literacy rate (2012):

    82.3 percent

    Main products and exports:

    Crude petroleum; Manganese ore.

    Poverty rate (2017):

    32.4 percent

    Key export markets:

    China; European Union, Australia

    Macroeconomic Indicators

    2019

    2020

    2021

    2022

    2023

    Prel.

    Proj.

    Proj.

    Output (change in percent)

    Real GDP

    3.9

    -1.9

    1.5

    2.8

    3.7

    Non-oil GDP

    3.3

    -1.8

    2.8

    2.4

    4.5

    Prices (change in percent)

    Inflation (End of period)

    1.0

    1.6

    1.7

    4.6

    2.0

    Inflation (Average)

    2.0

    1.3

    1.1

    3.5

    3.2

    Central Government Finances (percent of GDP)

    Revenue

    19.5

    17.6

    14.7

    16.2

    17.6

    Expenditure and net lending

    18.2

    19.8

    16.6

    14.9

    14.5

    Fiscal Balance (cash basis)

    0.8

    -2.4

    -1.8

    0.9

    3.2

    Total Public Debt

    59.8

    78.3

    65.8

    52.6

    50.8

    Central Government Finances (percent of Non-oil GDP)

    Revenue and grants

    29.0

    23.4

    23.7

    29.6

    29.8

    Oil

    11.2

    9.0

    8.5

    12.9

    12.6

    Non-oil

    17.8

    14.4

    15.0

    16.0

    17.1

    Expenditure and net lending

    27.0

    26.3

    26.7

    27.3

    24.6

    o/w Current

    19.8

    21.6

    21.4

    20.6

    17.9

    o/w Capital

    4.2

    3.6

    3.9

    4.2

    4.3

    Non-oil primary balance

    -5.8

    -7.4

    -7.1

    -6.2

    -3.4

    Basic non-oil primary balance 1/

    -4.2

    -4.2

    -6.1

    -6.2

    -5.1

    Money and Credit

    Broad Money (change in percent)

    1.2

    6.8

    5.5

    10.5

    16.5

    Credit to the private sector (change in percent)

    2.5

    5.2

    15.8

    14.9

    11.1

    Balance of Payments

    Current account (percent of GDP)

    -5.0

    -6.9

    -5.2

    0.8

    -1.1

    FDI (percent of non-oil GDP)

    7.3

    7.8

    7.9

    8.0

    7.9

    CEMAC Foreign Reserves (months of extrazone imp.)

    3.6

    3.3

    3.9

    4.1

    4.3

    External Debt (percent of GDP)

    39.2

    46.0

    37.8

    31.5

    31.0

    Sources: Gabonese authorities; World Development Indicators; and IMF staff estimates and projections.

    1/ Excluding capital spending financed with external resources.

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