IMF Executive Board Approves US$553.2 Million Extended Arrangement Under Extended Fund Facility for Gabon

Washington, DC: On July 28, 2021, the International Monetary Fund (IMF) approved a three-year extended arrangement under the Extended Fund Facility (EFF) for Gabon for SDR 388.8 million (about US$553.2 million), or 180 percent of Gabon's quota, to navigate the COVID-19 pandemic crisis and support the implementation of the authorities' 2021-23 Economic Recovery Strategy. The Board's approval allows for an immediate disbursement equivalent to US$115.25 million for budget support.

The government's proactive response helped contain the spread of COVID-19 and save lives. However, the pandemic and the fall in oil prices have severely hit the economy, increasing macroeconomic imbalances, and weighing on economic activity, unemployment, and poverty. While the economy is showing incipient signs of recovery, the outlook remains challenging and contingent on the pandemic path, effective rollout of the vaccines, and the implementation of structural reforms.

The authorities' program aims at bolstering the country's response to the pandemic, reducing fiscal and public debt vulnerabilities, and fostering sustainable, green, and inclusive private sector-led growth. To this end, efforts, including in improving governance and transparency to enhance domestic revenue, including from the oil and mining sectors, and spending efficiency, are essential to create fiscal space for much-needed investment and social spending. The Extended Arrangement will also support the broader CEMAC regional strategy reform agenda.

At the conclusion of the Executive Board's discussion, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair stated:

"Gabon's economy is gradually recovering after the COVID-19 pandemic-induced economic downturn in 2020. However, the pandemic and the sharp fall in oil prices have aggravated pre-existing economic and financial vulnerabilities, and the near-term outlook remains subject to considerable uncertainty and downside risks. A slow rollout of vaccines or further infection waves could delay the recovery to 2022 or beyond.

"The new arrangement under the Extended Fund Facility will support the country's post-pandemic recovery and anchor reform implementation. The overriding priority remains saving lives and livelihoods. As the crisis abates, the focus will shift to tackle longstanding structural issues to put public debt on a firm downward trajectory and foster a high, sustainable, green, and inclusive private sector-led growth.

"The pace of fiscal consolidation should be aligned with the recovery needs. Fiscal policy should continue supporting the recovery in the near term. Once the recovery is on a solid footing, a more ambitious fiscal consolidation will be needed to reduce public debt levels and vulnerabilities while securing a high and inclusive growth. To this end, efforts, including in improving governance and transparency to enhance domestic revenue and spending efficiency, are essential to create fiscal space for much-needed investment and social spending.

"Advancing the structural reform agenda will also be important to sustain a durable and inclusive recovery. Enhancing the banking sector and financial inclusion, improving the business environment, and strengthening the anti-corruption framework would address some longstanding bottlenecks in the economy and promote private investment and inclusive growth.

"Gabon's program is supported by the implementation of policies and reforms by the CEMAC regional institutions in the areas of foreign exchange regulations and monetary policy framework, and to support an increase in regional net foreign assets, which are critical to program's success."