Context and risks. The pandemic may have a long-lasting impact on CEMAC’s growth potential, which is already curtailed by structural, governance, and transparency issues. The policy response from national and regional authorities in 2020 helped mitigate the economic fallout. CEMAC, however, experienced a severe recession in 2020, fiscal and external deficits increased, and public debt rose with some countries having debt sustainability issues. The region is facing an increasing dilemma between internal and external stability, as external reserves fell sharply between mid-2020 and March 2021. A moderate recovery in economic growth is expected from 2021. Supported by lower than previously projected total external financing of €4.8 billion over 2021–23, international reserves build-up would be slower than pre-pandemic. This outlook is highly uncertain and contingent on the evolution of the pandemic and the vaccination program. Other significant risks include delayed implementation of the ongoing or possible new Fund-supported programs, uncertainties in filling large external financing needs, oil prices, and a possible deterioration in the security situation.
The economic shock associated with the COVID-19 pandemic is set to have long-lasting effects on the economic outlook for CEMAC. The pandemic itself seems to be now broadly under control in the region, and the policy response from national and regional authorities, supported by significant emergency financing by the Fund, helped mitigate the initial economic fallout. With lower medium-term oil prices, the outlook projects that CEMAC’s fiscal and external adjustments will be slower than previously envisaged, entailing large external financing needs (around €6.6 billion for 2021–23). Gross international reserves will now reach the equivalent of 5 months of imports by 2025 vs. 2022 pre-pandemic, while net foreign assets (NFA) will be below previous expectations. Public debt would remain at elevated levels, albeit on a declining trend after the increase in 2020. This outlook is highly uncertain and contingent on the evolution of the pandemic and its impact on oil prices. Other significant risks include: delayed implementation of the ongoing or a second phase of new Fund-supported programs, difficulties in filling large external financing needs, and a deterioration in the security situation.
Since the approval of the first RFI request on April 9, 2020 (IMF Country Report No 20/109), weaker external demand and a more pronounced impact of containment measures have further deteriorated growth prospects and worsened external and fiscal positions. The authorities are requesting a purchase under the Rapid Financing Instrument (RFI) of 50 percent of quota (SDR 108 million) to be used as budget support to help address urgent balance of payment (BoP) needs and mitigate the risk of disorderly fiscal or BoP adjustment. This additional request will bring the total purchases under the RFI to 100 percent of quota in 2020.
The development of infrastructure is one of the pillars of the Emerging Gabon Strategic Plan (PSGE). Implemented as of 2012, the PSGE has been establishing priority strategic guidelines to transform Gabon into an emerging economy by 2025. Its primary aims are to ensure and expedite the country’s sustainable development and growth by focusing on potential growth sectors. Public investment grew continuously from 2009 to 2013, when it peaked at 15.2 percent of GDP; it averaged 5.7 percent growth from 1990 to 2018. At the same time, private investment declined, as did growth and public capital stock. These outcomes indicate that public investment in Gabon does not drive growth and that investment expenditure does not automatically translate into actual accumulation of assets, which raises questions about the efficiency of those outlays.
The COVID-19 pandemic and concurrent collapse in oil prices are expected to put the economy under extreme stress, particularly in a context of limited buffers. Economic growth will slow, and the fiscal and external positions will weaken, creating significant additional financing needs in 2020.
Tighter macroeconomic and financial policies helped to avert a deeper crisis, and gross external reserves increased more rapidly in recent months, largely exceeding the mid-2019 target. However, reserves are still below the level appropriate for commodityexporting economies (5 months of imports) to absorb terms of trade shocks. Fiscal consolidation has been tilted towards cuts in public investment. This, together with a lack of significant progress in structural reforms, has weighed on growth which remains too low. The outlook for 2019 and beyond foresees further improvement in regional reserves assuming CEMAC countries remain committed to their program objectives and new programs with CAR and Equatorial Guinea could start around end-2019. This outlook is subject to potentially significant risks, including: a significant slowdown in global growth and associated decline in oil prices; a deterioration in the security situation in some countries; and weaker implementation of IMF-supported programs.
Prudent macroeconomic policies, supported by the Extended Arrangement,
have contributed to Gabon’s economic recovery. Growth is picking up, the fiscal and
external positions have improved, public debt has started to decline, and Gabon has
contributed to the rebuilding of regional international reserves. Challenges remain,
though, as buffers are still insufficient and deep-rooted institutional and structural
weaknesses continue to constraint growth and poverty reduction. Almost one-third of
the population still lives below the poverty line.
Political risks appear to have subsided with the completion of legislative and local elections in October. The economy is slowly recovering, fiscal consolidation has continued, inflation has remained low, and the trade balance has improved. The recovery is expected to firm up in 2019 and the medium-term outlook is still promising, although risks remain mostly tilted to the downside.
Mr. Mario de Zamaroczy, Mr. Vincent Fleuriet, and Mr. Jose G Gijon
This paper discusses possible reserve management approaches in the Central African Economic and Monetary Community (CEMAC). The paper looks beyond the region’s current oil crisis and proposes a new approach to international reserve management in the medium term.
Ms. Dalia S Hakura, Mr. Adrian Alter, Matteo Ghilardi, Mr. Rodolfo Maino, Mr. Cameron McLoughlin, and Mr. Maximilien Queyranne
La situation d'endettement de la république du Congo s'est considérablement améliorée depuis 2010, grâce à l'allégement de la dette obtenu dans le cadre de l’initiative en faveur des pays pauvres très endettés et de l’initiative d’allégement de la dette multilatérale engagées par le FMI et la Banque mondiale. D'importantes recettes pétrolières ont permis au pays d'accroître ses dépenses et ses réserves de change. Cependant, la pauvreté et l’inégalité restent comparativement élevées. Ce document examine les défis que doit relever le Congo pour gérer les recettes qu’il tire des ressources naturelles et assurer une croissance soutenue et inclusive.