- Increasing revenues from the oil sector and reforms to control government spending have re-established the control over Gabon's economy. The government is now in such a strong balance of payments position that it does not need to draw on loans earlier agreed upon. Gabon rather has speeded up down-payments of older loans.
According to the latest review of Gabon's economy by the International Monetary Fund (IMF), the country is in no current need of financial support from abroad. Gabon originally was to receive an IMF loan of US$ 21 million at this stage, being part of an arrangement to support the country's economic reform programme.
This, the Fund and Libreville authorities found, was not necessary anymore. "Because of a strong balance of payments position, the authorities are now treating the arrangement as precautionary and a disbursement is not contemplated at this time," the IMF said in a statement this night. The government of Gabon may however cash in the US$ 21 million loan at a later stage if the situation grows worse.
New oil discoveries resulting in a growing production and higher oil prices on the world market have strongly contributed to the turn-around in Gabon's economy. Only two years ago, the country faced a crisis as oil production was rapidly falling and government expenditures remained very high and non-transparent.
Decades of large oil revenues had caused unwise spending, large-scale corruption and a total dependence of the oil sector. Poverty nevertheless remained widespread and the country underdeveloped. Gabon - until recently the richest country in sub-Saharan Africa - thus decided to seek help from the IMF. The conditions for such assistance were widespread economic reform.
According to Anne Krueger, acting IMF chairperson, Gabon is implementing these reforms in a "satisfactory" manner. The Libreville government had met almost structural benchmarks all structural benchmarks and was congratulated for its "strong ownership" of the reform programme.
Gabon's structural reform agenda focuses on stimulating private sector-led non-oil growth and accelerating economic diversification. Fighting corruption to improve the investment climate has become a priority and the government recently established the National Commission Against Illicit Enrichment. Increasing transparency and accountability has already been noted in the oil sector and new reforms in the forestry sector have the same aim.
Ms Krueger of the IMF however noted that Gabon's economy still is "highly dependent on a declining oil sector." With continuing widespread poverty, the government of Gabon was now facing the challenge of consolidating and reinforcing its reform successes. It was especially important to "raise the growth rate of the non-oil sector and vigorously address poverty reduction," Ms Krueger said.
With the current oil revenue windfall, Gabonese authorities are in a position to advance these reforms without financial support from abroad. Actually, the government continues paying down the unsustainable state debt. Gabon could now "set in motion a virtuous cycle that significantly reduces the weight of debt service on the public finances and the vulnerability of the economy to swings in oil prices," Ms Krueger noted optimistically.
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