The staff report for the Request for Stand-By Arrangement on Gabon highlights economic developments and policies. A higher-than-anticipated rise in oil GDP more than offset lower-than-expected growth of non-oil GDP. Overall fiscal performance was strong, as the non-oil primary deficit was reduced by 8.6 percentage points to 8.2 percent of non-oil GDP in 2003. The authorities have strengthened their medium-term program to address the weaknesses in public finances that came to the fore under the staff-monitored program (SMP) and to tackle the impediments to private sector development while improving social indicators.
The staff report for the First Review Under the Stand-By Arrangement (SBA) on Gabon focuses on economic developments and policies. The economy is little diversified and heavily dependent on oil production, which is on a downward trend; the debt burden is high; and social indicators are weak. The program supported by the 14-month SBA aims at promoting non-oil GDP growth through wide-ranging structural reforms, while sustaining fiscal adjustment and improving public expenditure management. Progress has been made on the structural front, notably in the forestry sector and in the areas of privatization and budgetary management.
The continued decline in oil production and the absence of sustained adjustment policies have contributed to Gabon's uneven economic performance over the past three years. To strengthen further the track record before discussing a possible IMF-supported program, a staff-monitored program has been established for the period September–December 2003. The authorities emphasized their determination to confront the challenges facing the country by pursuing policies aimed at diversifying the economy, sustaining growth, and reducing poverty while containing financial imbalances.
An analysis of data for 39 sub-Saharan African countries during 1985–96 indicates that the variations in tax revenue-GDP ratios within this group are influenced by economic policies and the level of corruption. Namely, these ratios rise with declining inflation, implementation of structural reforms, rising human capital (a proxy for the provision of public services by the government), and declining corruption. The paper confirms that the tax revenue ratio rises with income, and that elements of a country’s tax base (such as the share of agriculture in GDP and the degree of openness) influence tax revenue.
International Monetary Fund. External Relations Dept.
Since 2003, Gabon’s economy has recorded positive growth, low inflation, and significantly stronger fiscal and external positions as a result of the government’s far-reaching program of economic and structural reforms, high oil prices, and external debt rescheduling, the IMF said in its annual economic review. The IMF Executive Board commended the authorities for the progress made but stressed that with prospects of declining production in the oil sector, high external debt, and widespread poverty, challenges remained. Looking ahead, Gabon will face the challenges of managing the transition from a highly oil-dependent economy to a more diversified one that encourages private sector initiative and helps to eradicate poverty.