- The Gabonese government has secured its first IMF assistance, totalling US$ 102 million, since the country in mid-2002 started its overdue economic reform programme. Gabon is among sub-Saharan Africa's richest countries but has experienced economic problems due to a rapidly falling oil production, high debts, widespread corruption and outdated economic policies.
The International Monetary Fund (IMF) today announced it had approved a 14-month about US$ 102 million arrangement for Gabon "to support the country's economic programme." The approval opens the way for the immediate release of about US$ 20 million, an IMF statement says.
The IMF economic programme for Gabon was approved after Gabonese authorities in mid-2002 agreed to start wide-ranging reforms of the country's outdated economic policies. Libreville authorities understood the need of change after real GDP had detracted by 1.9 percent in 2000, grown by 2.0 percent in 2001 and by 0.0 percent in 2002. This poor performance was mostly due to a detraction in Gabon's oil sector, which is foreseen to continue.
Gabon certainly needs help to reform its economy. Even with a pro-growth economic programme for the next years, the economic outlook is negative. This year, the IMF expects a 2.0 percent growth of real GDP, which will turn into an expected detraction by 0.7 percent next year.
These negative figures are based on a foreseen significant growth in the country's non-oil sectors; by between 3 and 4 percent this and next year. This expected non-oil sector growth nevertheless is checked by a foreseen 12 percent detraction of the Gabonese oil sector in 2005.
As these negative outlooks have been known for a while, Gabon in 2002 agreed to reform its economic policies to be able to receive aid from the IMF and other financial institutions. Measures were taken to strengthen the public finances and advance structural reforms, in order to boost non-oil economic growth. In addition, Gabon has taken steps toward improved governance, including an enhanced transparency and fighting corruption.
According to the IMF, Gabon faces "serious challenges stemming from declining oil production, a heavy debt burden and weak social indicators." The economic reform package was elaborated in cooperation with IMF staff and is monitored by the Fund.
The reform programme seeks to deepen structural reforms, including privatisation and governance at all levels of the public administration, in order to promote growth in the economy's non-oil sector and place the public debt on a sustainable path. It further aims at improving the efficiency of public investment and includes a yet-to-be approved programme to fight poverty.
The efforts to reform Gabon's economy however still are at a mere beginning. According to the IMF's Anne Krueger, "the authorities will need to vigorously implement the economic programme to ensure its success. In particular, the program depends crucially on growth in the non-oil sectors of the economy. Progress in programme implementation will therefore need to be monitored carefully," she added.
Nevertheless, the reform programme already is believed to have brought its first positive results. With a real GDP growth of 2.8 percent in 2003, Gabon's macroeconomic performance last year was better than expected, according to the IMF. "A higher-than-anticipated rise in oil GDP, more than offset lower-than-expected growth of non-oil GDP," the Fund commented.
The IMF thus today found that Gabonese reform efforts now were on track, thus leading to the approval of its first US$ 102 million credit to support the country's economic programme.
Further IMF packages are planned for the near future. When Gabonese authorities present a Poverty Reduction Strategy - planned for 2005 - the IMF is set to start financing national efforts to cut back on poverty through further economic reforms. Later on, Gabon also may apply for assistance to reduce its debts through the "Heavily Indebted Poor Countries" (HIPC Initiative).
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