- Oil production is dropping each and every year in Gabon, causing the entire economy to contract. Also the non-oil sector is developing at a very slow pace, the newest data on Gabon's economy reveal. A quick recovery is not to be expected.
According to the latest Gabon report by the International Monetary Fund (IMF), published today, the national economy has declined by almost 10 percent during the last five years. Although the most of this detraction happened in one year - 1999 - Gabon has not been able to return to economic growth.
- Owing mainly to the drop in oil production, according to the IMF assessment, "Gabon's economy continues to face major challenges, including a high debt burden, the need to diversify the economy more rapidly, to promote growth, and to combat poverty."
Oil production dropped by about 17 percent between 1999 and 2002, although in 2002 the decline was very small. An additional slight decline is expected in 2003. A recovery of the sector is ruled out as there are almost no oil and gas explorations going on in Gabon.
As the oil sector slowly is declining, Gabonese efforts have been focused on strengthening alternative industries. Activity in the non-oil sector, which in 2000 and 2001 showed significant recovery after the recession of 1999, however weakened markedly in 2002, when real growth fell to less than 1 percent from 5 percent in 2001. Some pick-up was however projected in 2003.
Economic results in 2002 had been disappointing, the newest statistics demonstrated. Last year, real GDP stood still at 0.0 percent. While the oil sector as part of GDP had declined by 1.4 percent, the modest 0.6 percent growth in the non-oil sectors had not been enough to create real growth. 2003 could be similar.
The IMF team emphasised that the expected progressive contraction in the oil sector and oil revenues - with the depletion of hydrocarbon reserves over the coming years - "lends urgency to the need to diversify the economy and foster environmentally sustainable, non-oil sector growth, in order to ensure that adequate resources will be available to address the key challenges facing the country."
The agency's report was very critical on Gabon's late reaction to the emerging economic crisis. There had been an "absence of sustained adjustment policies," which had contributed to Gabon's "uneven economic performance over the past three years." The report also spoke of "weaknesses in the implementation of previous adjustment programmes."
However, since 2002 authorities had focused on strengthening budgetary management and programme monitoring to ensure that their long-term efforts were underpinned by solid foundations. Efforts in the second half of 2002 had focused on improving governance, reforming tax and customs administrations, strengthening the Budget and Treasury Departments, restructuring public enterprises, and promoting private investment.
According to the IMF, "an austerity budget was adopted for 2003," which aims at raising non-oil revenue and reducing substantially the non-oil primary fiscal deficit. Its implementation in the first half of 2003 had however only been "satisfactory".
The IMF team commended the Gabonese authorities for "moving to break with their past uneven record of economic performance and embarking on a program of prudent fiscal policies and far-reaching structural reforms that could facilitate the resumption of external financial support and lay the basis for higher sustainable economic growth and enhanced social sector development."
They further particularly welcomed the "actions taken to enhance public resource management and governance" - to be understood as efforts against the rampant corruption, which observers see as the principal reason for the economic failure of Gabon. Also the implementation of the anticorruption legislation and actions to improve the private investment climate, foster competitiveness and strengthen social services were welcomed.
Several recommendations were given the Gabonese authorities, most of them being classical programmes of structural reforms. The IMF however also "urged the authorities to lower the government wage bill to bring it into line with a shrinking of oil revenues." Civil servants only recently had achieved rising salaries and an overturning of this would definitively be an unpopular step.
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