Front Matter

Front Matter Page

© 2009 International Monetary Fund

March 2009

IMF Country Report No. 09/107

Gabon: Second and Third Reviews Under the Stand-By Arrangement and Requests for Waiver of Nonobservance of Performance Criteria and Modification of Performance Criterion—Staff Report; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Gabon

In the context of the second and third reviews under the Stand-By Arrangement for Gabon and its requests for a waiver of nonobservance of a performance criteria and modification of performance criterion, the following documents have been released and are included in this package:

  • The staff report for the Second and Third Reviews Under the Stand-By Arrangement and Requests for Waiver of Nonobservance of Performance Criteria and Modification of Performance Criterion, prepared by a staff team of the IMF, following discussions that ended on December 16, 2008, with the officials of Gabon on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on February 17, 2009. The views expressed in the staff report are those of the staff team and do not necessarily reflect the views of the Executive Board of the IMF.

  • A Press Release summarizing the views of the Executive Board as expressed during its March 4, 2009 discussion of the staff report that completed the review.

  • A statement by the Executive Director for Gabon.

The documents listed below have been separately released.

  • Letter of Intent sent to the IMF by the authorities of Gabon*

  • Memorandum of Economic and Financial Policies by the authorities of Gabon*

  • Technical Memorandum of Understanding*

  • *Also included in Staff Report

The policy of publication of staff reports and other documents allows for the deletion of market-sensitive information.

Copies of this report are available to the public from

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Telephone: (202) 623-7430 • Telefax: (202) 623-7201

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International Monetary Fund

Washington, D.C.

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INTERNATIONAL MONETARY FUND

GABON

Second and Third Reviews Under the Stand-By Arrangement and Requests for Waiver of Nonobservance of Performance Criteria and Modification of Performance Criterion

Prepared by the African Department

(In consultation with other departments)

Approved by David Nellor and David Marston

February 17, 2009

  • Mission: December 5–16 in Libreville. The team met with Prime Minister Eyeghé Ndong, Finance Minister Blaise Louembé, other senior officials, and representatives of the business and donor community.

  • Staff team: Messrs. Wakeman-Linn (head), Srour, Iossifov (all AFR), Cherif (FAD), and Thiam (resident representative). Mr. Nguema Affane, advisor to the Executive Director, participated in the discussions.

  • Stand-By Arrangement (SBA): The Executive Board approved a three-year SBA for SDR 77.15 million (50 percent of quota) on May 7, 2007, and completed the first review on December 19, 2007. The authorities are treating the SBA as precautionary.

Contents

  • Executive Summary

  • I. Recent Developments and Program Performance

  • II. Program Discussions

    • A. Macroeconomic Framework and Risks to the Outlook

    • B. The Budget in 2009 and the Medium Term

    • C. Structural Fiscal Reforms

    • D. Promoting the Private Sector

  • III. Program Monitoring and Amendments

  • IV. Staff Appraisal

  • Tables

  • 1. Selected Economic Indicators, 2006–11

  • 2. Summary of Real Sector Developments, 2007–11

  • 3. Central Government Accounts, 2007–11 (billion of CFA Francs)

  • 4. Central Government Accounts, 2007–11 (percent of non-oil GDP)

  • 5. Balance of Payments, 2007–11

  • 6. Monetary Survey, 2007–09

  • 7. Central Bank and Commercial Banks, 2007–09

  • 8. Financial Soundness Indicators for the Banking Sector, 2004–September, 2008

  • 9. Public External Debt, 2007–11

  • 10. Stock of Domestic Government Liabilities, 2007–11

  • 11. Indicators of External Vulnerability, 2004–08

  • 12. Capacity to Repay the Fund, 2007–14

  • 13. Quantitative Performance Criteria for the SBA, end-2007 and March and June, 2008

  • 14. Structural Measures Under the SBA

  • 15. Quantitative Performance Criteria and Indicative Targets for the SBA, end-2008 and 2009

  • 16. Revised Purchase Schedule and Terms Under the SBA, 2007–10

  • Box

  • 1. Response to Global Economic Slowdown

  • Appendix

  • 1. Assessing External Debt Sustainability

  • Attachments

  • I. Letter of Intent

  • II. Technical Memorandum of Understanding

Executive Summary

  • Performance under the program has been mixed. Non-oil economic growth was robust prior to the onset of the international financial crisis, spurred by high oil and commodity prices. However, little progress has been made to bring the non-oil fiscal deficit to a sustainable position, as rising international oil prices increased fuel subsidies, and domestic tensions made it difficult to increase domestic fuel product prices as called for under the program.

  • As a result, completion of the second review, which was originally scheduled in March 2008, has been repeatedly delayed. The recent sharp decline in oil prices provides a window of opportunity to eliminate fuel subsidies, a window the authorities are determined to exploit.

  • The main objectives of the program for 2009 and the medium term are to reduce the non-oil primary deficit, improve public financial management and the quality of spending, and promote the non-oil private sector.

  • The international crisis has underscored the need to diversify the economy. Efforts are especially needed to improve the business climate, build infrastructure, and deepen financial intermediation.

  • The authorities addressed many of these concerns when they recently implemented an automatic fuel price adjustment mechanism, passed a 2009 budget consistent with the program's objectives, and developed contingency plans in event of further economic deterioration. On that basis, staff supports the authorities' request for waivers for nonobservance of the performance criteria and recommends completion of the second and third reviews.

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INTERNATIONAL MONETARY FUND

GABON

Second and Third Reviews Under the Stand-By Arrangement and Requests for Waiver of Nonobservance of Performance Criteria and Modification of Performance Criterion-Informational Annex

Prepared by the African Department

(In consultation with other departments)

Approved by David Nellor and David Marston

February 17, 2009

  • Relations with the Fund. Gabon has been a member of the International Monetary Fund since 1963. CEMAC member countries accepted the obligations of Article VIII in June/July 1996. The economic program of the government is supported by a three-year precautionary Stand-By Arrangement with the IMF, approved on May 7, 2007. The Executive Board completed the first review under the SBA in December 2007.

  • Relations with the World Bank. The World Bank has a base-case assistance program for Gabon that includes lending operations in the urban, natural resources, and infrastructure sectors.

  • Exchange rate regime: Gabon is a member of the Central African Economic and Monetary Community (CEMAC). The common currency, the CFA franc, is pegged at the fixed exchange rate of 655.957 CFA franc per euro. Gabon's exchange system is free of restrictions on payments and transfers for current international transactions.

  • Statistical Issues. Gabon has subscribed to the General Data Dissemination System (GDDS). While data are adequate for surveillance purposes, staff analysis was affected by the timeliness and coverage of fiscal data, the poor quality of balance of payments data, and the limited information on labor cost and productivity. Publication by the IMF of the statistical appendix for Gabon has been discontinued since, with Fund technical assistance, Gabon has posted most data on the internet (www.stat-gabon.ga/Home/Index1.htm).

Contents

  • Annexes

  • I. Relations with the Fund

  • II. Relations with the World Bank

  • III. Statistical Issues

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Press Release No.09/59

FOR IMMEDIATE RELEASE

March 4, 2009

International Monetary Fund

Washington, D.C. 20431 USA

Telephone 202-623-7100

Fax 202-623-6772

www.imf.org

Gabon: Second and Third Reviews Under the Stand-By Arrangement and Requests for Waiver of Nonobservance of Performance Criteria and Modification of Performance Criterion: Staff Report; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Gabon
Author: International Monetary Fund