This 2001 Article IV Consultation highlights that the fiscal and structural reform efforts in Gabon continued during 2001 under the government’s program supported by an 18-month Stand-by Arrangement, approved on October 23, 2000. Non-oil economic activity in Gabon rose by 4 percent in 2001, following a severe contraction in 1999 and a moderate recovery in 2000. Private investment picked up as confidence strengthened further, helped by substantial repayments of government domestic debt. Services, agriculture, and wood processing were the main sectors contributing to growth.

Abstract

This 2001 Article IV Consultation highlights that the fiscal and structural reform efforts in Gabon continued during 2001 under the government’s program supported by an 18-month Stand-by Arrangement, approved on October 23, 2000. Non-oil economic activity in Gabon rose by 4 percent in 2001, following a severe contraction in 1999 and a moderate recovery in 2000. Private investment picked up as confidence strengthened further, helped by substantial repayments of government domestic debt. Services, agriculture, and wood processing were the main sectors contributing to growth.

This statement provides information that has become available since the circulation of the staff report (SM/02/81) to the Executive Board on March 11, 2002. It does not alter the thrust of the staff appraisal.

1. Since the change of government in January 2002, no data on budget execution in 2002 have been communicated to staff. Nevertheless, there are indications that non-oil revenue during the first three months of 2002 is below expectation. Furthermore, external arrears are being incurred vis-a-vis bilateral creditors in 2002 in addition to the arrears outstanding at end-2001 (amounting to almost 2 percent of GDP), and government use of BEAC advances has remained close to the statutory ceiling.

2. The new Minister of Finance has expressed reservations on the reliability of the integrated budget information system (CRYSTAL). He ordered its suspension and an “audit” of the system is being carried out by two external experts. The system—introduced in early 2001 with FAD support—has been a key element of the government’s program and has contributed to the improvement of the control and transparency of public finances (para. 18 of SM/02/81). Staff urges the authorities to address any problems of the system and move rapidly to its full implementation.

3. The preparation of a draft revised 2002 budget has been slow (in part owing to the above-mentioned problems with Crystal), and may take several more weeks. One of the new tax measures introduced with the 2002 budget, adopted in November 2001, the “contribution for road development” (CRD), was recently suspended. The preparation of new tax measures, such as increasing domestic petroleum prices—instead of the CRD, as had been proposed by staff (see para. 27 of SM/02/81)—is still in an initial stage. To minimize the accumulation of payments arrears, tax collection needs to be improved and a strict cash management approach is imperative, as recommended in para 32 of SM/02/81.

4. With regard to Air Gabon, there has been progress with the conversion of the June 2001 contract to purchase four new planes into lease contracts. The authorities have confirmed the cancellation of the original purchase contract and the use of the down payment made last year for the lease payments for two 747s and two 737s (operational leases for five to seven years). The authorities are aware of the need to consider the net present value of projected lease payments as potential nonconcessional debt, in line with the 2000 Guidelines on Performance Criteria with Respect to Foreign Debt.

5. Compared to the situation described in para. 20 of SM/02/81, further delays are expected in the adoption of the draft anticorruption laws. The authorities have indicated that they share the staffs concerns on previous draft laws. With the help of a United Nations’ expert, they are preparing revised draft anticorruption laws to be submitted to parliament in due course. To that effect, they have decided not to promulgate the draft laws adopted by the National Assembly and the Senate, currently under reconciliation by the joint parliamentary committee. With regard to the petroleum audits, the financial audits for the two main petroleum companies (Elf and Shell) were launched this month, together with those for two smaller companies (Amerada-Hess and Perenco), all by an international auditing firm (para. 18 of SM/02/81).

Gabon: Staff Report for the 2001 Article IV Consultation
Author: International Monetary Fund