The International Monetary Fund (IMF) has approved a three-year extended arrangement under the Extended Fund Facility (EFF) for Gabon for US$642 million in support of the authorities’ medium-term recovery program.
- The program will help Gabon ensure macroeconomic stability and lay the basis for sustainable and equitable growth.
- The three-year extended arrangement will help anchor prudent fiscal policies and a sustainable balance of payments position.
- Fiscal consolidation will help ensure debt sustainability and support the stabilization of the regional international reserve pool.
The EFF-supported program will help Gabon ensure macroeconomic stability and lay the basis for sustainable and equitable growth. It seeks to attain debt sustainability at the national level and help contribute to restoring and preserving external stability for the Central African Economic and Monetary Union (CEMAC).
The decision by the Executive Board on Monday, June 19, 2017, enables an immediate disbursement of US$ 98.8 million. The remaining amount will be phased over the duration of the program, subject to semi-annual reviews.
Following the Executive Board discussion on Gabon, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair said Gabon is facing significant macroeconomic challenges due to a sharp decline in oil prices.
Furusawa said growth has declined, fiscal and external buffers have diminished, and public debt levels have increased, ading that the authorities’ Fund-supported economic program appropriately focuses on addressing these large fiscal and external imbalances, as well as structural fiscal reforms to improve the efficiency and transparency of public spending, and policies to enhance financial sector stability and economic diversification.
He also said the three-year extended arrangement under the Extended Fund Facility will help anchor prudent fiscal policies and a sustainable balance of payments position.
“Fiscal consolidation will help ensure debt sustainability and support the stabilization of the regional international reserve pool. The authorities’ plan to contain current spending, while protecting critical social programs, and pursue non-oil revenue mobilization efforts through improvements in tax administration and streamlining of tax exemptions. Prudent financial management will help improve the efficiency and transparency of public spending, especially to prevent recurring problems of extra budgetary spending and arrears accumulation. Efforts to improve oil revenue management are also expected to play an important role,” he said.
“Further improvements to the business climate, particularly in the areas of starting a business, dealing with construction permits, registering property, paying taxes and enforcing contracts—would help diversify the economy. Improvements in the production and dissemination of economic statistics are also needed.
“The success of Gabon’s program will also depend on the implementation of supportive policies and reforms by the regional institutions,” he concluded.