By Dipo Olowookere
The International Monetary Fund (IMF) has disclosed that Gabon has suffered a significant decline in income after the sharp drop in oil prices starting in 2014.
But despite this, the global financial institution is holding discussions with the country’s authorities on a possible financial arrangement under the Extended Fund Facility (EFF).
From February 14-28, 2017, an IMF team headed by Mr Alex Segura-Ubiergo visited Libreville towards this and posited that short-term economic prospects remain challenging due to the negative performance of the oil sector (a traditional source of growth in the economy) and the sharp decline in oil revenues, which has triggered a need to adjust government spending and has reduced the capacity of the government to support economic activity, especially through public investment.
The team said as in other CEMAC countries, decisive action to address short-term challenges is needed.
“At the same time, Gabon’s medium-term economic prospects remain strong thanks to recent efforts to diversify the economy and attract investment in new strategic sectors, especially mining, forestry, and agri-business.
“The team encouraged the authorities to continue to pursue this strategy, which would help the economy become more resilient to shocks and less dependent on its oil sector,” the IMF team added.
Mr Segura-Ubiergo said further that, “The team made substantial progress in gathering economic data and taking stock of the authorities’ reform proposals, including the recent initiatives to launch an economic recovery plan.
“The government’s intentions to reduce non-priority spending, increase allocations for priority social programs, address inefficiencies in public spending, and mobilize non-oil revenues seem adequate, but specific policy measures and targets still need to be designed and spelled out with more precision.
“It will be particularly important to strike the right balance between the need to adjust and the importance of protecting vulnerable groups of the population.
“Upon return to Washington, the team will continue to engage with the authorities, with a view to reaching a common understanding toward a set of policies that could form the basis of an EFF-supported arrangement.
“While the specific details of this program are still under discussion, the government and the team agreed that it was important to act expeditiously.
“Gabon’s active role in its discussions with the IMF and within the CEMAC region are contributing positively to the search for a coordinated solution to the current economic challenges.
“The team met with Prime Minister Issoze-Ngondet, Minister of Economy Immongault Tatagani, several sectoral government ministers, the national director of BEAC, and other senior government officials, representatives of the private sector, civil society, and the diplomatic community.
“The team would like to thank the Gabonese authorities for the constructive discussions and their hospitality.”
