- High oil prices, improved prospects for oil production and improved economic policies by Libreville authorities have led to a more optimistic forecast of economic growth in Gabon. Unsustainable debt levels and decades of failing investments in the social sector however assure that Gabon's road towards economic recovery will still be long.
The newest review of Gabon's economic performance, released by the International Monetary Fund (IMF) today, concludes on rapid progress by Libreville authorities. Only in mid-2002, the country started its overdue economic reform programme after it was plagued by economic problems due to a rapidly falling oil production, high debts, widespread corruption and outdated economic policies.
In its May review of Gabon's economy, the IMF was still sceptical regarding the country's possibilities to achieve quick growth. Real GDP growth would be around zero this year and the next years even if the Gabonese non-oil sectors were able to achieve a strong growth. This was due to a foreseen 12 percent detraction of the Gabonese oil sector in 2005, according to the IMF's May report.
The Fund is however slightly more optimistic only four months after its latest review. Libreville has been aided by high oil prices as production still is somewhat detracting and new interest in the country's potentially undiscovered oil resources - in particular by US oil companies - has caused IMF analysts to become more optimistic.
According to IMF Deputy Director Agustín Carstens, Gabon's economic outlook is now "positive because of favourable oil prices, improved prospects for oil production, and the authorities' commitment to economic adjustment and reform."
During the last 14 months, Libreville authorities have been subjected to the implementation of an IMF-prescribed programme "structural reforms" to be able to draw substantial loans at favourable rates from the Fund. In particular, the Gabonese government was urged to increase transparency to put an end to its reputed high levels of corruption and to improve control of galloping spending.
According to Mr Carstens, Gabon's implementation of the IMF programme "was off to a good start." Budgetary performance in the first half of 2004 had been in line with objectives and progress had been made in the implementation of structural reforms, particularly in the fiscal area. There had also been "progress in improving the transparency and efficiency of budgetary management," said Mr Carstens, however adding that "these efforts should be intensified."
While the IMF official made a positive assessment of recent economic trends in Gabon, he however warned of the "considerable vulnerabilities" of the national economy. This principally included oil prices and the country's heavy debt burden. Libreville authorities had "wisely chosen to use the oil revenue windfall to repay public debt," thus strengthening the government's position in the banking system, added Mr Carstens.
Other problems facing the government of Gabon where the country's "weak" social indicators. Despite of decades of very high oil revenues, the Gabonese population has not achieved a remarkably higher literacy rate, life expectancy or health service coverage than other countries in the region. Consequently, the government by early 2005 is expected to present a poverty reduction strategy to the IMF.
The immediate reforms facing Libreville authorities are however a programme to promote economic diversification and growth in the non-oil sector. This is to include strong privatisation efforts, as is typical for IMF-supported programmes. Several state companies soon will be for sale.
According to Mr Carstens, "the key reforms that are being tackled include privatisation of Gabon Télécom, restructuring of Air Gabon and admitting private capital in the enterprise." Further, authorities were to improve of the general investment climate and the regulatory framework, reform the forestry sector and strengthen of governance.
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