Abstract
This paper examines Gabon’s request for a Stand-By Arrangement in support of its economic program. The arrangement provides access at 50 percent of quota. Given its strong balance of payments position, it intends to treat the arrangement as precautionary. Gabon is ineligible for support under the Policy Support Instrument, which is limited to Poverty Reduction and Growth Facility-eligible countries. The critical objectives of the government’s program are to prepare the economy for the post-oil era and to make decisive progress in poverty reduction.
1. This statement provides information that has become available since the circulation of the staff report. It does not alter the thrust of the staff appraisal.
2. Non-oil growth remained buoyant during the first quarter of 2007. Production and exports in the timber and mining sectors, as well as in services, have been particularly strong and, if maintained, could raise non-oil GDP growth in 2007 above program projections of 5¾ percent. At the same time, 12-month inflation at end-March reached 6¼ percent, a slight decline from end-December.
3. Oil production during the first quarter of 2007 remained below expectations. This trend, which started in 2006, would need to reverse if program projections for the full year are to be attained. However, the renewed rise in international oil prices buoyed exports receipts and fiscal oil revenue, which reached targeted levels.
4. Monetary developments are consistent with the robust economic expansion. International reserves at the regional central bank have continued to increase and commercial banks’ credit to the private sector expanded by 43 percent in the year ending February 2007, reflecting the strengthening economic prospects for the non-oil sector.
5. Budgetary developments through February are in line with fiscal consolidation objectives and the non-oil primary deficit remained below expectations. Both current and capital expenditure were below target, more than offsetting a shortfall in non-oil revenue.