Abstract
Gabon continues to enjoy record high oil prices, buoying both exports and government revenues. The critical medium-term challenge facing Gabon is managing the transition from an economy highly dependent on oil to a diversified economy that harnesses private sector initiative, and makes decisive progress in poverty reduction. The fiscal policy stance requires significant tightening. Raising economic growth and reducing poverty necessitate the acceleration of the structural reform agenda. Fostering transparency is a key ingredient to strengthening governance and accountability in Gabon.
June 5, 2006
1. This statement provides additional information that has become available since the circulation of the staff report. It does not alter the thrust of the staff appraisal.
2. Preliminary data for the first quarter of 2006 suggest that economic activity has remained buoyant. A slowdown in oil and manganese production, due to temporary rather than permanent factors, was more than offset by continued strong growth in commerce, services, and construction. The authorities’ projection of 3½ percent growth in non-oil GDP in 2006 remains well within reach.
3. Inflation picked up in April 2006 from very low levels, reaching 1.8 percent year-on-year. The main source of the increase is imported food products.
4. Preliminary fiscal data for the first quarter of 2006 indicate that the fiscal slippages of 2005 have not yet been fully reversed. The non-oil primary deficit reached 2½ percent of projected non-oil GDP by end-March, reflecting continued high levels of expenditures on transfers and goods and services, confirming that significant fiscal adjustment is needed to return to a sustainable medium-term path.