A mission from the International Monetary Fund (IMF) led by Mr. Joël Toujas-Bernaté visited Libreville from November 28 to December 11, 2012 to conduct the Article IV consultation discussions1 for 2012.
The mission had constructive meetings with Mr. Luc Oyoubi, Minister of Economy, Employment, and Sustainable Development; Mrs. Christiane Rose Ossouka Raponda, Minister of Budget, Public Accounts, and Civil Service; Mr. Régis Immongault, Minister of Industry and Mines; Members of Parliament on the Finance Committee of the National Assembly; and other senior officials. The mission also exchanged views with representatives of the private sector, civil society, and donors.
At the conclusion of the mission, Mr. Toujas-Bernaté made the following statement:
“Gabon is facing major economic and social development challenges. Although it has abundant natural resources that have raised the average per capita income to the level of middle-income countries, poverty and unemployment rates remain high, and the human development indicators are still similar to those of low-income countries. The Gabonese economy is still highly dependent on oil, which makes it vulnerable to the volatility of international prices. To address these challenges, in 2009 the new Gabonese authorities launched a wide-ranging development plan, The Emerging Gabon Strategic Plan, aimed at making Gabon a diversified emerging economy by 2025.
“The launch of the investment plan for infrastructure and the preparations for African Cup of nations (CAN 2012) contributed to the sustained growth of real GDP in 2011, estimated at 6.7 percent, despite a fall in oil production. High oil and manganese prices made it possible to record a large surplus on the external current account in 2011. By contrast, the nonoil primary fiscal deficit widened considerably in 2011–12, driven by the increase in public investment. It is projected that real GDP will rise by 6 to 7 percent in 2012, with the construction and public works, transportation, and other services sectors benefiting from the high level of public investment. The average annual inflation rate is expected to remain moderate at about 2.5 percent.
“Forecasts indicate that real GDP will grow by about 6-7 percent in 2013, supported by mining, timber processing business, and public investment. The main risk weighing on the country’s economic outlook is that of a drop in oil and manganese prices, as these products represent about 90 percent of all goods exported and 45 percent of nominal GDP.
“Given the broad scope of the authorities’ development objectives, the Article IV consultation discussions addressed the following issues: (i) to ensure the sustainability of public finances and the external accounts, taking into account the possible volatility of oil revenue; and (ii) to achieve strong and inclusive economic growth.
“The mission stressed the importance of ensuring efficient implementation of the wide-ranging public investment plan, aimed at removing the constraints related to the lack of infrastructure currently hampering private investment. To that end, the authorities should prepare annual budgets within a credible and sustainable framework, with a view to safeguarding macroeconomic stability in view of the risks of volatility in fiscal revenue. Current expenditure, which grew considerably in recent years, in particular the wage bill and spending on subsidies, should be controlled more effectively. The tax base for nonoil fiscal resources should be broadened at the same time as steps are taken to prevent the spread of tax exemptions. The mission also urged the authorities to pursue their ongoing efforts to improve the evaluation, selection, and monitoring of investment projects as well as the budgeting of their operating and maintenance costs. The ongoing reform of public financial management will help improve expenditure quality and free up additional resources for social spending and growth stimulation.
“The mission supports the authorities’ decision to focus their efforts on improving the business climate and human capital, without which the objectives of the development plan will be hard to achieve. The mission recommends that the authorities quickly take decisive actions to remove a number of obstacles to private investment, including by simplifying the administrative procedures for enterprise creation. An effective employment policy will be necessary for matching labor supply and demand and for reducing unemployment, including by improving vocational training. Reforms should be geared toward developing the financial sector, so that it can fully contribute to the financing of Gabon’s development.
“The mission confirmed that the IMF will continue to work with the Gabonese authorities to address these challenges. The Executive Board of the IMF is expected to consider the staff report on the 2012 Article IV consultation in February 2013. The mission wishes to thank the authorities for their warm hospitality as well as for their very close and constructive cooperation.”
1Under 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 authorities.
Source: International Monetary Fund (IMF) – Press Release – 13 December 2012