IMF Mission Reaches Staff-Level Agreement with Gabon on a New Arrangement under the Extended Fund Facility

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AN International Monetary Fund, IMF, mission led by Boileau Loko, Mission Chief for Gabon, held virtual meetings during May 1 to June 7 to discuss IMF support for the authorities’ economic reform programme.

At the end of the mission, Loko issued the following statement:

“The Gabonese authorities and the IMF mission team have reached a staff-level agreement on economic and structural policies and reforms that would underpin a three-year arrangement under the EFF. The staff level agreement is subject to IMF management approval and Executive Board consideration, which is expected in the coming weeks.

“The Gabonese economy was gradually recovering from the 2014 oil price shock when it was hit by the Covid-19 pandemic in early 2020. Decisive confinement measures have helped save lives, but the pandemic and the fall in oil prices have severely hit the economy, increasing unemployment and poverty. Real GDP contracted by an estimated 1.8 percent in 2020. With a weak economy and increased COVID-19 related spending, the fiscal deficit has widened, and public debt increased in 2020. Emergency financing from the IMF through the Rapid Financing Instrument (US$299.61 million) helped meet urgent balance of payment needs in 2020. Growth is expected to resume in 2021 but the pandemic has fragilized the economic outlook and generated sizable financing needs over the medium term.

“In addition to bolstering the country’s response to the pandemic, the new IMF-supported home-grown program aims at reducing fiscal and debt vulnerabilities and fostering a high sustainable, green, and inclusive private sector-led growth. The authorities’ reform efforts will be anchored by five key pillars: achieving a fiscal consolidation to enhance debt sustainability while protecting growth, the environment, and the most vulnerable segment of the population; improving the fiscal framework and management; strengthening public debt management; enhancing financial sector stability and inclusion; and improving governance and advancing the fight against corruption, and promoting a friendly business climate.

“Protecting lives and livelihoods is the top immediate priority, but when the pandemic abates, an ambitious growth-friendly fiscal consolidation is essential to put public debt on a firm downward trajectory and supporting the recovery and the CEMAC regional strategy. The fiscal consolidation effort is centered on increasing non-oil revenue by reducing tax expenditure and improving tax administration. The authorities are committed to take important steps, including in the revised 2021 Finance Law, to rationalize tax exemptions and accelerate the digitalization of tax administration. On the expenditure side, the reforms aims at containing current spending, improving public expenditure governance, while continuing to strengthen social protection for the most vulnerable.

“Addressing deep governance and structural reforms are also critical to pave the way for strong, green, sustainable, and inclusive growth. Efforts are needed to improve public finance management, strengthen debt management, reduce fiscal risks, and enhance transparency in the management of state-owned enterprises and in the oil sector. In this context, the authorities are committed to apply to the Extractive Industries and Transparency Initiative by December 2021. Strengthening anti-corruption efforts, enhancing the financial sector, and promoting a business-friendly climate are also critical priorities. Finally, the authorities’ commitment to use public finances as a lever to promote the country’s green transition is welcome.

“The IMF staff team is grateful to the Gabonese authorities and other interlocutors for the candid and constructive discussions.

“The team met with General Coordinator of Presidential Affairs, Noureddine Bongo Valentin; Prime Minister, Rose Christiane Ossouka Raponda; Minister of Economy and Recovery, Nicole Janine Roboty Mbou; Minister of Budget and Public Accounts, Sosthène Ossoungou Ndibangoye; Minister of Employment, Public Service, Labor and Vocational Training Madeleine, Berre; Minister of Investments Promotion, Carmen Ndaot; Minister for the Promotion of Good Governance and the Fight against Corruption, Francis Nkea Ndzigue; Minister of Water, Forests, Sea, and Environment, Lee White; Minister of Health, Guy Patrick Obiang Ndong; Minister of Oil, Gas, and Mining, Vincent de Paul Massassa; BEAC National Director, Patrick Romuald Alili, other senior officials, development partners and representatives of the diplomatic community and the private sector.”

– June 10, 2021 @ 18:34 GMT |

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