Gabon: First and Second Reviews of the Extended Arrangement under the Extended Fund Facility, Requests for Waivers for Nonobservance of Performance Criteria, Establishment of Performance Criteria, and Financing Assurances Review-Press Release; Staff Report; Staff Supplement; and Statement by the Executive Director
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International Monetary Fund. African Dept.
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Publication Date:
08 Jul 2022
eISBN:
9798400213113
ISBN:
9798400213113
Language:
English
Keywords:
oil revenue; excl. IMF; financial support; financing gap; IMF staff calculation; interest arrears
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1. All restrictive anti-COVID measures were lifted on March 5, 2022, reflecting the low level of infection (Text Figure 1). Although vaccines are relatively available, the vaccination rate (11.6 percent by mid-April 2022) is below the SSA average, due to widespread hesitancy. The authorities’ goal is to vaccinate 60 percent of the eligible population by end-2022. Progress in the vaccination rate and the lifting of all anti-COVID measures would support the economic recovery started in 2021.

Abstract

1. All restrictive anti-COVID measures were lifted on March 5, 2022, reflecting the low level of infection (Text Figure 1). Although vaccines are relatively available, the vaccination rate (11.6 percent by mid-April 2022) is below the SSA average, due to widespread hesitancy. The authorities’ goal is to vaccinate 60 percent of the eligible population by end-2022. Progress in the vaccination rate and the lifting of all anti-COVID measures would support the economic recovery started in 2021.

Recent Developments, Outlook and Risks

A. Recent Developments

1. All restrictive anti-COVID measures were lifted on March 5, 2022, reflecting the low level of infection (Text Figure 1). Although vaccines are relatively available, the vaccination rate (11.6 percent by mid-April 2022) is below the SSA average, due to widespread hesitancy. The authorities’ goal is to vaccinate 60 percent of the eligible population by end-2022. Progress in the vaccination rate and the lifting of all anti-COVID measures would support the economic recovery started in 2021.

Text Figure 1.
Text Figure 1.

Gabon: COVID-19 Developments and Vaccination

Citation: IMF Staff Country Reports 2022, 216; 10.5089/9798400213113.002.A001

Sources: Gabon's Prime Minister Office — Prevention Committee against COVID-19; WHO; Our World in Data; and John Hopkins University School of Medicine.

2. Real GDP growth rebounded strongly in 2021 and early 2022. Real GDP grew by an estimated 1.5 percent in 2021, following a contraction of 1.9 percent in 2020 (Figure 1). Oil GDP fell by 4.9 percent, in part owing to compliance with the OPEC+ commitments. Non-oil real GDP increased by 2.8 percent on the back of a booming mining sector and the rebound in the wood and construction sectors. Growth in the services sector remained subdued as containment measures weighed on the trade and transportation sectors. Available 2022 Q1 indicators point to a continued recovery in wood and construction and a rebound in services. Construction and railway transport grew robustly at 21.0 and 23.5 percent (y/y), respectively. Oil and manganese production expanded by 3.0 and 8.5 percent (y/y).

3. Inflation is accelerating. The 12-month inflation picked up to 2.9 percent (e-o-p) in March 2022 from 1.7 percent (e-o-p) in December 2021, driven by increasing food prices, reflecting the impact of the war in Ukraine (Annex I). On March 28, the BEAC Monetary Policy Committee raised the policy rate from 3.50 percent to 4 percent and the rate on its marginal lending facility from 5.25 percent to 5.75 percent.

4. The current account deficit improved in 2021 and early 2022 on the back of higher oil prices, but vulnerabilities remain. The trade balance improved due to higher oil prices, robust non-oil commodity exports and a moderate increase in total imports. The current account deficit improved by 1.7 percentage points (ppts) to an estimated 5.2 percent of GDP in 2021. Nonetheless, Gabon’s external position is assessed to be weaker than the level implied by fundamentals and desirable policy settings (Annex II). The trade balance continued to improve in 2022 Q1 with a significant increase in oil export proceeds (Text figure 2). Nominal exports and imports of goods are estimated at about 22.2 percent and 12.6 percent (y/y) above their Q1 2020 (pre-pandemic) levels. However, the increasing trading partner concentration poses a risk (Text Figure 3).

Text Figure 2.
Text Figure 2.

Gabon: External Trade Developments

(Billion CFAF)

Citation: IMF Staff Country Reports 2022, 216; 10.5089/9798400213113.002.A001

Sources: Gabonese authorities; and IMF staff calculation.
Text Figure 3.
Text Figure 3.

Gabon: Trade Concentration1, 2

Citation: IMF Staff Country Reports 2022, 216; 10.5089/9798400213113.002.A001

Sources: ITC; and IMF staff calculations.1/ The Hirschman Herfindahl Index (HHI) is used to calculate market export concentration HHI=Σi=1N (XiXe)2, where: Xi = value of the exports to ith partner; Xe = total value of exports; n =number of export partners.2/ GFC refers to Global Financial Crisis. The 2019 data are based on mirror sources.

5. The banking sector appears broadly stable, and lending activity has picked up.1 At end-August 2021,2 the solvency ratio was about 18 percent (minimum at 9.5 percent) and the short-term liquidity ratio was 163.4 percent (minimum at 100 percent). The asset quality was reportedly stable with the overdue loans and NPL ratios at 10 and 8 percent, respectively, reflecting the impact of temporary forbearance measures implemented by COBAC (the regional supervisor) expected to end in June 2022. The exit from these measures and a full reflection of COVID-impacted loans would lead to an increase in the overdue loan and NPL ratios. The banks’ still high sovereign exposure, reaching almost a fourth of bank assets in Q3 2021, is of concern given the country’s relatively high debt level. Credit to the private sector grew robustly by an estimated 13.9 percent (y/y) at end-March 2022 as economic activity continues to gain momentum.

6. External market conditions continue to be relatively favorable, although spreads have increased. Gabon’s international bond spread declined to 474 basis points on April 21, 2022, but subsequently increased to 698 basis points on May 20, 2022 (Text Figure 4), reflecting tightening financial conditions and growing global uncertainties. The recent increase in spreads is similar to the one observed in peer countries and staff expects this to be temporary.

Text Figure 4.
Text Figure 4.

Gabon: Oil prices and EMBIG Spreads, December 2019-May 2022

Citation: IMF Staff Country Reports 2022, 216; 10.5089/9798400213113.002.A001

Source: Bloomberg LP.
Figure 1.
Figure 1.

Gabon: Real Sector Developments, 2020–22

Citation: IMF Staff Country Reports 2022, 216; 10.5089/9798400213113.002.A001

Sources: Gabonese authorities; and IMF Staff calculations and estimates.1/ Core inflation is headline inflation excluding food and energy.

7. Fiscal performance faced challenges in FY21. The non-oil primary deficit (NOPD) was contained at 7.1 percent of non-oil GDP (NOGDP), broadly in line with the program, despite underperforming non-oil revenue and overruns in some spending items (Text Table 1).

Text Table 1.

Gabon: Fiscal Developments in 2021

article image
Sources: Gabonese authorities; and IMF staff calculations.

Including special accounts.

  • Non-oil revenue was below the program target due to (i) difficulties in the implementation of a new income tax on foreigners, who are mostly involved in the informal sector; and (ii) subdued recovery in retail trade and transportation (Text Figure 5).

  • Primary current spending was contained below the revised budget appropriations by 0.5 ppt of NOGDP. Better control of spending by public entities and special accounts helped offset overruns in spending on transfers and on goods and services. The overrun in transfers reflects the impact of freezing the international fuel price passthrough mechanism in 2021 due to the pandemic and amid social tensions (about ½ percent of NOGDP).

  • Domestically financed capital spending was above the budget target by about 0.5 ppt of NOGDP as the authorities implemented some critical projects which could not be executed in 2020 due to the pandemic. However, total capital expenditure was lower than budgeted, reflecting a sizeable cut in foreign-financed capital spending.

  • Higher oil revenue reduced the overall deficit (cash basis) to 1.8 percent of GDP (from 2.4 percent in 2020).

Text Figure 5.
Text Figure 5.

Gabon: Fiscal Developments in 2021

Citation: IMF Staff Country Reports 2022, 216; 10.5089/9798400213113.002.A001

Sources: Gabonese authorities; and IMF staff estimates.

8. The authorities have mostly relied on domestic financing and a drawdown in deposits to finance the fiscal deficit. Despite a better-than-anticipated overall balance and higher-than-projected issuance of regional bonds, government deposits at the central bank declined by about 1.2 percent of GDP, compared to end-December 2020, and well below the end-December 2021 program objective. This reflects higher than programmed domestic debt payment (including the repayment of debt due by SOGARA, the national refinery, to oil companies), larger domestic deficit and the non-disbursement of budget support by the AfDB (CFAF 33 billion). Overall, net financing from domestic sources reached 1.6 percent of GDP. On the other hand, the authorities accumulated new payment arrears on external debt (FCFA 32.8 billion) and domestic debt (FCFA 91.2 billion). Total public debt declined to about 66 percent of GDP from 78 percent in 2020.

9. The end-2021 and end-2020 stock of domestic arrears were revised upward. The National Refinery and the National Electricity and Water company debt to oil companies due to unpaid fuel and gas purchase were not recorded in domestic public debt arrears at the time of the 2021 revised budget. Preliminary indications suggest that total debt due by the Refinery amounted to CFAF 12 billion at end 2021 (0.1 percent of GDP). The 2020 stock, estimated at CFAF 220 (2.5 percent of GDP) in the program was subsequently revised upward to CFAF 305 billion (3.5 of GDP).

B. Outlook and Risks

10. Macroeconomic conditions are projected to improve gradually (Text Table 2). Non-oil real GDP growth is revised down to 2.4 percent in 2022, from 3 percent at the time of the program approval, reflecting the stronger base in 2021. The war in Ukraine is expected to boost exports of oil and manganese and improve the current account (Annex I). High oil prices will also increase oil revenues and strengthen the overall fiscal position although higher food and energy prices will add to inflation and political pressures for additional implicit and explicit subsidies. The overall fiscal balance will turn positive, reaching 0.9 percent of GDP from a deficit of 1.8 percent of GDP in 2021. Inflation (e-o-p) is projected to increase to 4.6 percent in 2022 as higher food and fuel prices feed through to domestic inflation. Non-oil growth is expected to return to its pre-pandemic trend by 2023, reflecting good prospects in the mining sector and strong momentum in the construction and services sectors. Over the medium term, the overall fiscal balance and the debt profiles are expected to improve more than initially envisaged owing to several factors, including higher oil prices and less ambitious public investment. This will help strengthen further regional reserves. Increasing oil prices, the momentum in mining and wood exports, and the planned fiscal consolidation will help limit the current account deficit below 3 percent of GDP in the medium term. Public debt is projected to decline to 52.6 percent of GDP in 2022 and further below 50 percent over the medium term, reflecting the programmed fiscal consolidation, higher oil prices, projected growth, and expected improvements in debt management.

Text Table 2.

Gabon: Key Economic Indicators, 2019–27

article image
Sources: Gabonese authorities; and IMF staff estimates and projections.

11. The outlook remains subject to considerable uncertainty and a range of risks (Annex III). On the downside, lower global growth due to intensification of the war in Ukraine and of global geopolitical tensions could negatively affect inflation, the fiscal and external positions, and growth. A sharper slowdown in China, a key trading partner for Gabon, could weigh on oil and manganese exports. Outbreaks of highly contagious COVID-19 variants -particularly in view of the slow vaccination uptake-could delay the recovery. Postponement of some external budget support, as occurred in 2021, would open a fiscal financing gap in 2022. Political stability could be challenged and pressure on public spending could increase ahead of the 2023 presidential election. On the upside, higher oil and manganese prices and accelerated reform implementation could improve the fiscal and external positions and boost growth.

Program Performance

12. Overall program performance has been mixed with some delays in structural reforms (MEFP, Tables 1 and 2).

  • All end-July 2021 quantitative performance criteria (PCs), except the continuous PC on external arrears accumulation and the PC on the net domestic financing of the central government (NDF) were met. The three end-July ITs were missed.

  • Out of the four end-December 2021 PCs, the controlling QPCs for the first and second reviews, two were missed: the PC on NDF and the PC on disbursing and guaranteeing of external debt were met. The NOPD was below the program nominal target but exceeded the adjusted target by ½ percent of NOGDP, reflecting the non-disbursement of the 2021 AfDB budget support due to delays in the required parliamentary authorization. The PC on central bank net claims on government (NCG) was missed by a large margin, reflecting a significant drawdown in deposits due to the need to compensate for the shortfall in budget support, a larger domestic deficit, and higher domestic arrears repayments. The continuous PC on external arrears was also missed, in part due to a lack of coordination between the General Directorate of Debt and the Treasury and weak cash management. The IT on social spending was met but the ITs on non-oil tax revenue and on domestic arrears were missed.

  • End-March 2022 data suggest some improvement in program performance. Although, the ITs were not recalibrated to account for new developments, including the impact of the war in Ukraine, available data indicate that the non-oil primary deficit is well below the program target. The IT on central bank net claims on the government was missed but government deposits at the central bank increased by about CFAF 100 billion (0.7 percent of GDP) since end-December 2021. The continuous PC on external arrears was breached.

  • Seven out of the 14 structural benchmarks (SBs) through May 2022 were met and four were subsequently implemented. Two SBs are set as prior actions. The last SB on review of tax exemptions will be fully implemented with the introduction of the pending tax exemptions measure in the 2022 revised budget. The submission of this revised budget to the Parliament is a prior action.

Policy Discussions

There was a broad consensus on policies and measures to (i) rebuild fiscal and external buffers and preserve debt sustainability while strengthening social protection; (ii) improve domestic revenue collection, governance, and PFM, and limit fiscal risks and arrears; and (iii) strengthen financial soundness and the business environment. These reforms will support a return to strong and inclusive growth.

A. Fiscal Policy

13. The authorities intend to ease the pace of fiscal adjustment in 2022 to accommodate spending pressures emerging from the war in Ukraine (Text Table 3). In their 2022 supplementary budget, the authorities have decided to keep pump prices constant for kerosene and butane gas (the two products most consumed by the most vulnerable households) and to gradually increase the prices of other petroleum products, starting with those used by businesses (MEFP, ¶12). In this context, additional fuel and wheat subsidies will amount to about CFAF 80 billion (1 percent of non-oil GDP or 0.6 percent of GDP). Higher subsidies together with lower non-oil revenue (by 1 ppt of NOGDP) contributed to increase the NOPD to about 6.2 percent of NOGDP, 1.3 ppts of NOGDP above the initial program target for 2022 and 0.9 percent below the 2021 deficit. Higher oil prices and oil revenue (+1.3 ppt of GDP) will improve the overall balance (cash basis) by 1.2 ppts of GDP relative to the program due to the increase in interest payments (+0.1 ppt of GDP). The authorities will use the full amount of their 2009 SDR allocation and about 15 percent of the 2021 SDR allocation to repay domestic debt and improve the composition of domestic financing. The remaining SDRs will be kept in international reserves at the Central Bank to help rebuild regional reserves (MEFP, ¶12).

Text Table 3.

Gabon: Projected Fiscal Developments in 2022

article image
Sources: Gabonese authorities; and IMF staff projections and estimates.

14. Staff underscores the need to gradually phase out fuel subsidies while developing targeted measures to protect the most vulnerable. Staff’s advice is a return to the automatic fuel price adjustment, with full-passthrough on all products except on Butane and Kerosene, mostly consumed by the poor. This will help limit subsidies and reduce leakages to businesses and high-income households (Text Figure 6). The authorities agreed with staff but indicated that their option of protecting all households is based on the absence of well-targeted social safety nets and the need to avoid social tensions, particularly given difficulties already faced by households during the pandemic. Staff underscored that these subsidies should end by end-December 2022 for all products, except kerosene and Butane. Staff also urged the authorities to work closely with the World Bank to finalize the database of the most vulnerable by end-December 2022, and subsequently develop well-targeted measures.

Text Figure 6.
Text Figure 6.

Gabon: Fuel Consumption and Subsidies in 2021

Citation: IMF Staff Country Reports 2022, 216; 10.5089/9798400213113.002.A001

Sources: Gabonese authorities; and IMF staff estimates.

15. Sustained implementation of planned revenue reforms is critical to revert to initial medium-term non-oil tax revenue program targets and support fiscal consolidation (Text Figure 7). Non-oil revenue shortfalls are projected at around 1 percent of NOGDP in 2022 compared to the initial program, reflecting delays in the adoption and implementation of some revenue measures envisaged under the program. The authorities are committed to including the remaining tax measures as agreed in the initial program (MEFP, ¶10) in the revised 2022 budget, and further enhancing the data exchange platform between tax and customs administrations and fully implementing the IT measures. Preliminary indications show these measures will yield 1.6 percent of NOGDP in 2023. Staff underscored the need to continue strengthening tax administration and rationalizing tax exemptions, including by ensuring an adequate fiscal analysis of the impact and control of laws promoting new exemptions (through the effective implementation of a Tax Policy Unit and the Overview Committee on Tax Benefits).

Text Figure 7.
Text Figure 7.

Gabon: Primary Deficit and Public Debt, 2021–26

Citation: IMF Staff Country Reports 2022, 216; 10.5089/9798400213113.002.A001

Sources: Gabonese authorities; and IMF staff calculations.

16. Enhancing transparency in the reporting of oil revenues is paramount. Staff and the authorities concurred that improving governance in the oil sector could rapidly yield additional revenue to help finance much-needed development spending. In this context, in addition to completing the remaining EITI-related steps, the authorities are committed to (i) ensuring that all oil revenues are channeled through the Treasury; (ii) carrying out an audit of cost oil and of the level of cross-debt (including VAT arrears) between the government, SOEs, and the five largest private oil companies; (iii) revisiting the rules governing the trading activity of the Gabon Oil Company (GOC) to ensure regular and effective transfers of government profit oil; and (iv) carrying out a financial audit of the SOGARA to assess its viability (MEFP, ¶14).

17. Reprioritizing and improvement of spending efficiency should continue. The authorities will continue to tighten wage payment controls to contain the wage bill and accelerate SOE reforms to reduce subsidies (MEFP, ¶20). They also plan to enhance transparency, governance and anti-corruption efforts in spending. Effective implementation of the decree requiring the publication of the names and nationalities of beneficial owners of entities awarded public procurement contracts will be a major step. The authorities will continue to implement the recommendations of the February 2022 PIMA follow-up mission (MEFP, ¶25).

18. Continued efforts are needed to improve the fiscal framework and address the perennial issue of accumulation of domestic arrears more firmly. This will entail further:

  • Improving cash management procedures (MEFP, ¶¶22-23), including a full-fledged TSA, and revamping the VAT escrow account (end-June 2022 SB).

  • Enhancing fiscal transparency and reporting, and management of fiscal risks (MEFP, Country Report No. 2021/189, ¶¶37–40, 49–51) by (i) facilitating the automated communication between the different financial information systems; (ii) making budget execution more reliable and facilitating reporting; (iii) better recording earmarked revenues and special accounts operations in the budget; (iv) improving the quality and expanding the coverage of fiscal reports to include all public entities in line with CEMAC directives’ provisions; (vi) strengthening governance of SOEs and public agencies, by updating the legal framework governing State/SOE relationships and requesting that SOEs publish annual reports in line with corporate best practices; and (vii) creating the needed tags both on the budget classification side and the Chart of Accounts to allow the mapping of the data between the Treasury and Budget information systems. Robust expenditure control will help minimize the use of exceptional procedures (that avoid regular budget execution steps), limit domestic arrears, and reduce corruption vulnerabilities.

19. Adequate social spending and a stronger social safety net remain key priorities. The pandemic crisis and the fallout of the war in Ukraine on domestic fuel and food prices have reinforced the need for stronger social protection. The authorities have updated the database of the most vulnerable populations —Gabonais Economiquement Faibles (GEF). The next steps, to be implemented with the help of the World Bank, include a census of GEF based on new criteria by end-December 2022 (SB, MEFP, ¶30).

20. Adhering to a prudent debt strategy and improving debt management are critical. The debt sustainability analysis shows that Gabon’s public debt remains sustainable but not with a high probability (Annex IV and Table 9). Absent adverse shocks or slippages, the envisaged fiscal consolidation will be sufficient to put debt on a firm downward path. However, financing needs and debt service will remain high in the medium term, limiting fiscal space and highlighting rollover risks. Staff encouraged the authorities to improve debt management in line with the TA delivered during FY2019 (MEFP, ¶26).

21. Together with measures to avoid the accumulation of new arrears, the authorities have developed a five-year clearance plan of existing stock of domestic arrears. The total stock of audited and validated domestic arrears amounted to CFAF 442.3 bn (5 percent of GDP) at end-December 2020. The authorities envisage to clear this stock by 2025 (Text Table 4). Staff welcomes this plan and urges the authorities to identify all other existing domestic arrears, including salary arrears and arrears with certain public entities (MEFP, ¶27), and revise the clearance plan.

Text Table 4.

Gabon: Domestic Arrears, 2020–25

(Billions of CFAF)

article image
Source: Gabonese authorities.

B. Other Structural Reforms

22. Structural reforms need to continue to achieve program objectives to support sustainable and inclusive growth. Specific steps include:

  • Enhancing the banking system. Good progress has been made on the liquidation of the three public banks (MEFP, ¶32). The liquidators’ work is almost over, but the completion of the overall process requires the setup of a defeasance structure, an entity which will be tasked to transparently sell and secure the proceeds from the sale of remaining assets and to settle remaining liabilities. The authorities should work closely with COBAC and remain vigilant towards any emerging risks in the financial system. Additional efforts to monitor and improve banks’ asset quality will be key, including through the repayment of domestic debt and the strengthening of the capacity and independence of the commercial court of Libreville. (MEFP, ¶34).

  • Strengthening the governance and transparency of public financial institutions (CDC, FGIS). Significant efforts have been made to implement the recommendations of recent audit reports and the two institutions have certified their 2021 financial statements and the authorities reiterated their commitments to ensure that the other two non-financial companies (GOC and SOGARA) will also publish their certified statements (MEFP, ¶24).

  • Developing a national financial inclusion strategy. The authorities have drafted a national financial inclusion strategy covering 2022–27 (MEFP, ¶33). The next steps include the finalization of this strategy after discussion with all stakeholders, the creation of a unit to coordinate and pilot the strategy, and the finalization of the methodology to monitor progress in achieving key objectives.

  • Improving governance and strengthening the anti-corruption framework in line with the authorities’ commitment under the program (Original MEFP, ¶¶31, 49, 65–70). Some progress has been made to improve transparency and governance, particularly in the oil sector. The authorities have joined the EITI and are committed to launch audits of cost-oil of oil companies and of the national refinery. In addition, they are determined to strengthening the anti-corruption framework and the asset declaration regime for public officials by (i) increasing the capacity of the Commission to Combat Illicit Enrichment (CNLCEI); and (ii) amending the asset declaration legal framework to bring it into alignment with the applicable international best practice, including by ensuring the publication of an annual report by the CNLCEI, with monitoring (25 percent) of asset declarations by category of public official (end-December 2022 SB), and (iii) publishing the results of the audit for all COVID-19 related expenditures on the government website (prior action).

  • Strengthening the AML/CFT framework. The on-site component of Gabon’s anti-money laundering and combating the financing of terrorism (AML/CFT) mutual evaluation took place in April 2022. The authorities should ensure swift and effective implementation of the recommendations made in the context of the mutual evaluation.

  • Transition plan towards a green economy. The government intends to develop a carbon credit trading mechanism at the national level, in line with the Paris Agreement on climate change, to help finance policies and actions in favor of forest conservation (Annex V).

Program Issues

23. The authorities are requesting waivers for non-observance of the two PCs for December 2021 that were not observed as well as the continuous PC on the non-accumulation of new external arrears based on the temporary nature of the deviation and corrective actions.

  • The waiver on the non-observance of the NOPD is requested based on the temporary nature of the deviation, reflecting late disbursement of the AfDB budget support. The authorities will continue to apply their expenditure regulation mechanism to closely monitor spending and avoid fiscal slippages.

  • The PC on NCG was missed by a large margin, reflecting a significant drawdown in deposits due to the need to compensate for the shortfall in budget support, a larger domestic deficit, and higher domestic arrears repayments. A waiver for the non-observance is requested on the basis of corrective actions. In this context, the, authorities pointed to the rebuilding of deposits since the beginning of the year, reflecting prudent fiscal policy and efforts to save oil revenue windfalls. The authorities have also taken steps to enhance budget execution and cash management to limit the accumulation of new domestic arrears.

  • The continuous PC on external arrears was also missed, in part due to a lack of coordination between the General Directorate of Debt and the Treasury and weak cash management. A waiver of non-observance is requested on the basis of corrective actions. The authorities have cleared most of external arrears (Text Table 5) as of June 14, 2022 and are committed to clear the remaining arrears (CFAF 11.09 billion) before the Board meeting (LOI, and MEFP, ¶27). They have reinstated the measures that served well to avoid the accumulation of external arrears at the end of the previous EFF-supported program (MEFP, ¶26). These include weekly meetings between Treasury and Debt Units, and close monitoring of payment deadlines to ensure timely transfers of funds for payment to the Central Bank. The authorities reaffirmed their commitment to remain current on external payments.

  • Gabon has outstanding sovereign external arrears to multilateral, official bilateral and commercial creditors. The authorities are in the process of clearing the external arrears with respect to multilateral and official bilateral creditors and plan to complete clearance before the Executive Board meeting. In respect of external commercial arrears and in line with the Fund’s Lending-into-Arrears Policy, staff has ascertained that Gabon is making a good faith effort to clear arrears with these commercial creditors. As prompt Fund financial support is considered essential for the successful implementation of Gabon’s program and Gabon is pursuing appropriate policies, the Fund may provide financing to Gabon notwithstanding its external arrears to commercial creditors, which the authorities have committed to clear by the time of the Board meeting.

Text Table 5.

Gabon: External Arrears, 2021–22

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Source: Gabonese authorities.

Board meeting for program approval.

24. The authorities and staff reached an understanding to propose updated program conditionality as follows (MEFP, Tables 1, 3 and 4):

  • New PCs and ITs were proposed for end-June 2022, end-December 2022, and end-June 2023 as well as new ITs for end-September 2022 and end-March 2023. These reflect the changing environment, including the impact of the war in Ukraine.

  • A new PC is proposed with a first test date at end-December 2022, elevating the indicative target on non-oil tax revenue, given the need for strong-revenue based fiscal consolidation to provide additional space for development outlays.

  • The following three prior actions have been established: (i) submission to Parliament of the 2022 supplementary budget consistent with program objectives; (ii) the publication on the government website of the results of the audit for all COVID-19 related expenditures; and (iii) the publication of a ministerial decree requiring that legal persons bidding on public procurement contracts declare the names and nationalities of their beneficial owners, and that those names and nationalities be published online for all legal persons awarded such contracts.

  • Seven new SBs are proposed (MEFP, Table 4), based notably on IMF TA on tax expenditure, cash management, and PIMA.

25. The program is fully financed in the next 12 months and there are good prospects of full program financing for the remaining period for the Fund-supported program. Financing needs for the next twelve months will be met by a combination of external borrowing, budget support, and Fund financing (Text Table 6). The authorities are also discussing potential budget support from the World Bank and the BADEA, which have not been included in the macroeconomic framework.3 The projected financing gap for the period 2022–24 amounts to 4.4 percent of GDP and the IMF is expected to provide financing of 1.8 percent of GDP, contributing about 41 percent of exceptional financing. As normally the case for currency union members, the EFF purchase will be on-lent to the government via the Central Bank to help mitigate the impact of the pandemic and support the reform agenda.

Text Table 6.

Gabon: External Financing, 2021-24

(Billions of CFAF)

article image
Sources: Gabonese authorities; and IMF staff estimates and projections.

Amortization in 2021 includes repayment of Eurobond.

26. Capacity to repay. Gabon’s capacity to repay the Fund is expected to be adequate but subject to risks. The total amount of outstanding credit from the Fund will amount to 367.4 percent of quota in 2022 and decline to 359.1 percent of quota in 2023. Outstanding obligations to the Fund based on existing and prospective drawings would peak at 4.7 percent of GDP in 2022 and 10.6 percent of exports of goods and services in 2023. Obligations to the IMF will rise from 5.9 percent of Gabon’s imputed international reserves in 2022 to 14.5 percent in 2024. Vulnerabilities remain, given gross financing needs and debt-profile risks. In addition, Gabon relies on the regional reserve pool, which has not recovered despite higher oil prices.

27. Regional assurances. BEAC has provided updated policy assurances in CEMAC countries Fund-supported programs. While the end-December 2021 regional policy assurance on NFA was not implemented, the deviation was temporary, and the relevant target was reached in early January 2022. In its follow-up letter of policy support of June 2022, BEAC reiterated its commitment to maintaining an appropriate monetary policy stance, together with member states implementing fiscal adjustment agreed in the context of IMF-supported programs, to support an external reserves build-up. As part of measures to support the reserve position, it has (i) raised its the policy rate (TIAO) and marginal lending facility by 50 basis points in March 2022 to help contain higher inflationary pressures; (ii) increased the interest rate on the liquidity absorption window by 25 basis points in February 2022 to reduce the excess liquidity, stimulate the interbank market, and improve monetary policy transmission; and (iii) reduced weekly liquidity injections to 180 billion in March 2022. BEAC will also continue to work towards effective application of the foreign exchange regulation, including by starting implementation of the recently agreed adaptations for the extractive in January 2022. The regional assurances on regional NFA are critical for the success of Gabon’s Fund-supported program and will help bolster the region’s external sustainability.

28. Safeguards assessment. A 2022 update safeguards assessment found that the BEAC has maintained strong governance arrangements following legal reforms in 2017. The BEAC also completed its multi-year initiative in 2019 to transition to International Financial Reporting Standards (IFRS), strengthening its financial reporting practices. The external audit arrangements continue to be robust. Nonetheless, the internal audit mechanism faces capacity constraints and is not yet fully aligned to international practices. The BEAC also needs to strengthen its risk management and cyber resilience and develop business continuity and disaster recovery plans.

29. Statistical issues. Gabon will continue aligning its data to international standards with STA support. Data on balance of payments and financial soundness indicators are provided with long delays and suffer serious weaknesses. Inadequate treatment of government securities in monetary data complicates reconciliation between fiscal and monetary data. The authorities are committed to reducing data lags and improving the quality of information provided to the Fund and the expected timeline for this. Staff encourages the authorities to implement STA recommendations on improving the timeliness of FSI indicators, and the treatment of government securities in monetary statistics.

Staff Appraisal

30. The economy is gradually recovering, and the outlook remains positive but with significant downside risks. Growth is picking up slowly, both fiscal and external positions have strengthened, and public debt has declined. The war in Ukraine and related surge in commodity prices will boost oil exports and revenues and further improve the fiscal and external positions. However, the cost of fuel subsidies will weigh on the budget and higher food prices will add to inflationary pressures. Higher oil revenues will help accommodate the increase in fuel and food subsidies to the most vulnerable and rebuild fiscal and external buffers. The low vaccination rate, a sharper slowdown in China, the intensification of the war in Ukraine, and social tensions ahead of the 2023 presidential elections pose significant risks to the outlook. Reforms to strengthen domestic revenue and improve public financial management; governance and the business environment will support a return to strong and inclusive growth while safeguarding debt sustainability.

31. The revised 2022 budget appropriately prioritizes protecting the most vulnerable while rebuilding fiscal and external buffers. The revised budget accommodates spending pressures emerging from higher fuel and food prices. Staff agreed with the need to provide adequate support to the vulnerable households in the current context of soaring food and fuel prices. Staff encourages the authorities to continue strengthening social protection, including through well-targeted social safety programs. Staff welcomes the authorities’ plan to save part of oil revenues windfall and part of the 2021 general SDR allocation to rebuild fiscal buffers and increase regional reserves and reduce domestic debt. Staff strongly encourages the authorities for a steady implementation of their domestic arrears’ clearance plan and of measures to avoid the accumulation of new domestic arrears.

32. The program’s focus on addressing structural reforms, including significant governance weaknesses in the oil sector remains critical. The authorities should continue improving governance and transparency to further enhance domestic revenue and PFM and reduce vulnerability to corruption. Major and welcome steps are the country’s adhesion to the EITI, the forthcoming publication of the COVID-19 spending audit report, and the forthcoming publication of the decree regarding the publication of the names and nationalities of beneficial owners of legal persons bidding on public procurement contracts. Staff encourages the authorities to deliver on their ambitious agenda to increase domestic revenue and improve PFM. Stronger budget execution and cash management will also help address the perennial issue of domestic arrears more firmly. Enhancing the banking system, improving governance, and strengthening the anti-corruption framework will help promote private investment and unlock the country’s growth potential.

33. Staff calls for enhanced program implementation. Several end-December 2021 quantitative targets were not met, and many SBs were implemented with delays. Going forward, closer and more effective coordination across public institutions, including the Ministry of Economy, the Ministry of Budget and the Central Bank will be needed to ensure effective program implementation. Staff welcomes the establishment of a new program implementation unit at the Ministry of Economy. The resumption of weekly meetings between the Treasury and Debt Units, and close monitoring of payment deadlines to ensure timely transfers of funds for payment to the Central Bank are important steps to avoid the accumulation of external arrears.

34. Staff recommends the completion of the first and second reviews under the extended arrangement, waivers of nonobservance of performance criteria, establishment of quantitative performance criteria for the next 12 months, and the financing assurances review. This is based on the implementation, albeit with delay, of the end-December 2021 regional policy assurance and regional policy assurances established in the June 2022 union-wide paper. Staff’s support is also based on the temporary nature of the non-observance of the fiscal primary balance PC and on the implementation of corrective actions for the missed PC on central bank net claims and the missed continuous PC on external arrears, and important progress in structural benchmarks, including major steps to improve governance as well as the strength of the authorities’ economic policies for the rest of 2022. Staff also supports the second and third purchases in the total amount of SDR 116.1 million. Staff proposes completion of the third review under the extended arrangement be conditional on the implementation of critical policy assurances at the union level, as will be established in the next union-wide background paper, expected in June 2022.

Table 1.

Gabon: Selected Economic Indicators, 2019–27

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Sources: Gabonese authorities and IMF staff estimates and projections.

Staff report for the Request for a Three-Year Extended Arrangement under the Extended Fund Facility (August 26, 2021; Country Report No. 2021/189).

Excludes foreign financed capital expenditures.

Starting in 2016, data series include the stock of domestic arrears.

Current account excluding net trade changes related to large direct investment in the agri-industry sector.

Table 2.

Gabon: Balance of Payments, 2019–27

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Sources: Gabonese authorities and IMF staff estimates and projections.

Staff report for the Request for a Three-Year Extended Arrangement under the Extended Fund Facility (August 26, 2021; Country Report No. 2021/189).

Excluding pogram support (excl. IMF).

Excluding proposed IMF financing.

Current account excluding net trade changes due to a large direct investment in the agri-industry sector.

Overall balance line here reflects incorporation of budget support financing from Bilateral and Multilateral in their respective above the line items.

Table 3a.

Gabon: Central Government Accounts, 2019–27

(Billions of CFA francs)

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Sources: Gabonese authorities and IMF staff estimates and projections.

Staff report for the Request for a Three-Year Extended Arrangement under the Extended Fund Facility (August 26, 2021; Country Report No. 2021/189).

Includes net trasfers to special funds financed by earmarked revenues.

Records cash expenditure on payment orders issued the previous year minus payment orders settled the next year.

Includes bonds held by the non-bank sector, repayment of VAT reimbursement arrears, and securitization of previous extra-budgetary spending.

The clearance of the exceptional float and interest arrears are classified as part of the adjustment to cash basis above the line, while all other clearance of arrears are recorded below the line.

After 2017, exceptional float becomes zero and regular float cannot exceed 10 percent of the sum of current spending (excluding wages and interest) plus domestically-financed investment.

Table 3b.

Gabon: Central Government Accounts, 2019–27

(Percent of GDP; Billions of CFA francs)

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Sources: Gabonese authorities and IMF staff estimates and projections.

Staff report for the Request for a Three-Year Extended Arrangement under the Extended Fund Facility (August 26, 2021; Country Report No. 2021/189).

Includes net trasfers to special funds financed by earmarked revenues.

Records cash expenditure on payment orders issued the previous year minus payment orders settled the next year.

Includes bonds held by the non-bank sector, repayment of VAT reimbursement arrears, and securitization of previous extra-budgetary spending.

The clearance of the exceptional float and interest arrears are classified as part of the adjustment to cash basis above the line, while all other clearance of arrears are recorded below the line.

After 2017, exceptional float becomes zero and regular float cannot exceed 10 percent of the sum of current spending (excluding wages and interest) plus domestically-financed investment.

Table 3c.

Gabon: Central Government Accounts, 2019–27

(Percent of non-oil GDP; Billions of CFA francs)

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Sources: Gabonese authorities and IMF staff estimates and projections.

Staff report for the Request for a Three-Year Extended Arrangement under the Extended Fund Facility (August 26, 2021; Country Report No. 2021/189).

Includes net trasfers to special funds financed by earmarked revenues.

Records cash expenditure on payment orders issued the previous year minus payment orders settled the next year.

Includes bonds held by the non-bank sector, repayment of VAT reimbursement arrears, and securitization of previous extra-budgetary spending.

The clearance of the exceptional float and interest arrears are classified as part of the adjustment to cash basis above the line, while all other clearance of arrears are recorded below the line.

After 2017, exceptional float becomes zero and regular float cannot exceed 10 percent of the sum of current spending (excluding wages and interest) plus domestically-financed investment.

Table 4a.

Gabon: Financing of the Fiscal Deficit, 2019–24

(Billions of CFA francs)

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Sources: Gabonese authorities; and Fund staff estimates and projections.

Staff report for the Request for a Three-Year Extended Arrangement under the Extended Fund Facility (August 26, 2021; Country Report No. 2021/189).

Table 4b.

Gabon: Financing of the Fiscal Deficit, 2019–24

(Percent of GDP)

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Sources: Sources: Gabonese authorities; and Fund staff estimates and projections.

Staff report for the Request for a Three-Year Extended Arrangement under the Extended Fund Facility (August 26, 2021; Country Report No. 2021/189).

Table 5.

Gabon: Monetary Survey, 2019–23

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Sources: BEAC; and IMF staff estimates and projections.

Staff report for the Request for a Three-Year Extended Arrangement under the Extended Fund Facility (August 26, 2021; Country Report No. 2021/189).

Table 6.

Gabon: Financial Soundness Indicators for the Banking System, 2015–21

(Percent)

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Sources: Gabonese authorities; and Banque des Etats de l'Afrique Centrale (BEAC) 1/ The values are provisional. 2/ Tier 1 capital is used as opposed to previously used total capital. This brings us closer to Basel III's leverage ratios. 3/ Difference with historical data due to updates in total regulatory capital. 4/ Numerator updated to use annualized net profit after tax as opposed to previously used net profit before tax. 5/ Numerator updated to use annualized net profit before tax as opposed to previously used net profit after tax. 6/ Numerator updated to include extraordinatry losses (if any) denominator updated to include extraordinary profits (if any).
Table 7.

Gabon: Indicators of Capacity to Repay the Fund, 2022–31

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Source: IMF staff estimates and projections.

Total debt service includes IMF repayments.

Table 8.

Gabon: Schedule of Purchase and Timing of Reviews Under the Extended Arrangement, 2021–24

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Source: IMF staff projections.

Gabon's quota is SDR 216.0 million

The PCs for end-December 2021 will be controlling as the first review was not completed after end-December 2021

Table 9.

Gabon: Decomposition of Public Debt and Debt Service by Creditor, 2020–231

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As reported by Country authorities according to their classification of creditors, including by official and commercial. Debt coverage is the same as the DSA.

Multilateral creditors are are simply institutions with more than one official shareholder and may not necessarily align with creditor classification under other IMF policies (e.g. Lending into arrears).

Debt is collateralized when the creditor has rights over an asset or revenue stream that would allow it, if the borrower defaults on its payment obligations, to rely on the asset or revenue stream to secure repayment of the debt. Collateralization entails a borrower granting liens over specific existing assets or future receivables to a lender as security against repayment of the loan. Collateral is “unrelated” when it has no relationship to a project financed by the loan. An example would be borrowing to finance the budget deficit, collateralized by oil revenue receipts. See the joint IMF-World Bank note for the G20 “Collateralized Transactions: Key Considerations for Public Lenders and Borrowers” for a discussion of issues raised by collateral.

Includes other-one off guarantees not included in publicly guaranteed debt (e.g. credit lines) and other explicit contingent liabilities not elsewhere classified (e.g. potential legal claims, payments resulting from PPP arrangements).

Annex I. Estimating the Impact of the War in Ukraine

The fiscal and external position will benefit from the surge in oil prices, but the cost of fuel subsidies will weigh on the budget and higher food prices will add to inflationary pressures.

1. The war in Ukraine will affect the Gabonese economy, mainly through higher oil and food prices. Oil prices increased sharply by 18.1 percent in 2022 Q1 compared to the January 2022 WEO forecast (Figure 1a). The increase in food prices was 5.7 percent in 2022 Q1 compared to the January 2022 WEO forecast (Figure 1b). Soaring oil and food prices will affect fiscal and external position and intensify inflation pressures.

Figure 1.
Figure 1.

Gabon: International Oil and Food Prices, 2020–22

Citation: IMF Staff Country Reports 2022, 216; 10.5089/9798400213113.002.A001

Sources: WEO projections.

Fiscal Position

2. The fiscal position is expected to improve. The positive impact of the spike in oil prices on oil revenues should outweigh higher fuel and food subsidies.

Figure 2.
Figure 2.

Gabon: Oil Revenue, 2018–22

Citation: IMF Staff Country Reports 2022, 216; 10.5089/9798400213113.002.A001

Sources: Gabonese authorities and IMF staff estimates.

  • Revenue. Royalty (RMP and profit oil) which represents about 17 percent of oil production, is expected to increase by 0.1 percent of GDP in 2022 compared to the initial budget law. The Corporate taxes (CIT), another important component of oil revenues, equivalent to 35 percent of the previous year’s profit, will impact oil revenue in 2023.

  • Higher oil prices will also increase the cost of fuel subsidies and spending. The authorities froze their automatic price adjustment mechanism in the second half of 2021 to contain social tensions amidst increasing international oil prices. In January 2022, the authorities adjusted the prices of gasoline and diesel purchased by businesses by 16 percent but maintained the prices of all other petroleum-related products consumed by households unchanged. With no policy response, the increase in international oil prices will push up fuel subsidies to CFAF 130.7 billion (1 percent of GDP) in 2022.

  • Higher food prices are also expected to increase wheat subsidies. The authorities estimate additional wheat subsidies at CFAF 5.7 billion ([0.04] percent of GDP).

  • The authorities decided to delay the planned increase in import taxes (5 percent) on selected food items, implying a non-oil tax revenue shortfall of CFAF 12 billion (0.1 percent of GDP).

  • Higher oil revenues are expected to improve the overall balance and the debt profile in the near term (Figure 3). The overall balance (on cash basis) will improve by 1.1 percent of GDP. The improvement in the fiscal balance will reduce financing needs and enhance debt sustainability. Financial needs are projected to decline to 5 percent of GDP per year over the period 2022–25 and the debt-to-GDP ratio is expected to fall from 78 percent in 2020 to 52.6 percent in 2022, also supported by higher GDP.

Figure 3.
Figure 3.

Gabon: Fiscal Balance, Debt, and Interest, 2022–25

Citation: IMF Staff Country Reports 2022, 216; 10.5089/9798400213113.002.A001

Sources: Gabonese authorities and IMF staff estimates.

External Position

3. Gabon’s external position is expected to strengthen in 2022, as the positive impact of increasing international commodity prices should outweigh a higher import bill. The current account is projected to reach a surplus of 0.7 percent of GDP in 2022, mainly due to higher oil and manganese prices, improving from a deficit of 5.2 percent of GDP in 2021. This represents an improvement of 1 percentage point of GDP relative to the WEO January 2022 projection, and primarily reflects gains in the trade balance, partially offset by higher net income outflows on international assets. Since the beginning of the war in Ukraine the projection for foreign direct investment (FDI) in 2022 has increased by about CFA francs 150 billion, compared with the January WEO, mainly reflecting an increase in FDI to the oil sector.

4. Booming exports will improve the trade balance. This results in a large increase relative to the projected surplus of 12 percent from the January 2022 WEO (Figure 4). Preliminary data for 2022 Q1 confirm that export volumes have recovered well from 2021, owing to higher exports of oil, manganese, timber, and palm oil. Nominal oil exports (more than 75 percent of total exports) have increased by about 73 percent (y/y) in 2022 Q1, reflecting the surge in international oil prices.

Figure 4.
Figure 4.

Gabon: Balance of Payments 2022

(Projected)

Citation: IMF Staff Country Reports 2022, 216; 10.5089/9798400213113.002.A001

Sources: Gabonese authorities and staff calculation

5. The direct impact of the war on imports should be limited. In 2022, imports should decrease moderately from 28.8 (in 2021) to 27.1 percent of GDP, mostly due to slow growth in private sector non-oil imports relative to GDP growth. Cereals account for nearly 5 percent of total imports of goods, while goods imports from Russia and Ukraine account for ½ percent and 0.2 percent of total imports of goods, respectively. Nevertheless, the war in Ukraine could continue to push up the price of imported food products and thereby weigh on the import bill.

6. External financing conditions have been favorable. Gabon’s international bond spread stood at 698 basis points on May 20, 2022. Nevertheless, a prolonged war and the global tightening of monetary policy in response to the inflationary pressures could negatively impact financial market conditions.

Inflation

7. The war in Ukraine has contributed to global inflationary pressures, pushing up commodity prices. Staff estimates based on historical data suggest that international commodity prices take up to a year to be reflected in domestic inflation due to contained domestic demand, price controls and other distortions that limit the passthrough of imported inflation.

8. In this context, 12-month average inflation in Gabon increased to 2.9 percent in March 2022. CPI inflation was already trending upwards, before the war in Ukraine. CPI inflation increased from 0.6 percent in September 2021 to 1.7 percent in December 2021 (y/y). While food price increases led the change, an increase in core inflation was also noticeable, suggesting a broad-based increase across the CPI basket. The war in Ukraine added to the inflationary pressure in 2022, mainly through higher prices for food, which makes up more than 40 percent of the CPI basket. This can be seen from CPI food inflation, which reached 3.5 percent in March 2022 (Figure 5). Under staff calculations, the direct impact of the higher food prices on inflation is 0.8 percent. The contribution of fuel price increases, both directly to consumers and through costs to businesses, has been limited by the government’s fuel subsidies. Core inflation, which strips out the effect of food and energy prices, also increased to 2.9 percent in March 2022, from 1.4 percent in December 2021, driven by higher prices for furniture and household goods, health services, hotels and restaurants, and other goods and services.

Figure 5.
Figure 5.

Gabon: CPI Inflation

Citation: IMF Staff Country Reports 2022, 216; 10.5089/9798400213113.002.A001

Source: Gabonese authorities

9. Further disruption of global supply chains would contribute to higher global inflation, and higher imported inflation in Gabon. Additionally, as the subsidy policy normalizes, allowing full passthrough of international oil prices (except for butane and kerosene), the contribution of fuel prices should be expected to increase. On the other hand, continued fiscal consolidation (moving the non-oil primary deficit from 7.1 percent of NOGDP in 2021 to [6.2] percent of NOGDP in 2022) and the monetary policy response of the BEAC should have a moderating effect on aggregate demand. The BEAC monetary policy committee has already raised the policy rate from 3.5 percent to 4 percent, and BEAC has reduced its liquidity injections.

10. This global inflationary episode also presents the risk of spillovers from monetary policy tightening in larger economies. Major central banks, such as the Federal Reserve and the Bank of England, have already begun increasing their policy rates to address high domestic inflation rates; several emerging economy central banks have responded with similar moves. These decisions, while curbing global inflationary pressures, could also result in a global slowdown of economic activity and reduce capital flows into the region.

Annex II. External Sector Assessment

Gabon’s external position in 2021 is weaker than implied by medium-term fundamentals and desirable policies. The current account deficit narrowed in 2021, supported by stronger oil and manganese exports as well as ongoing fiscal consolidation under the program. Going forward, the strengthening of the external position is predicated on continued fiscal reforms and improvements in structural competitiveness.

1. In 2021, the real effective exchange rate (REER) depreciated slightly despite a significant improvement in the terms of trade. The terms of trade increased by about 36 percent, reflecting higher oil prices (Figure 1). However, due to the depreciation of the Euro (to which the CFA franc is pegged) vis-à-vis the U.S. dollar and stable domestic prices, the REER depreciated by 1.3 percent.

Figure 1.
Figure 1.

Gabon: External Sector Developments, 2016–21

Citation: IMF Staff Country Reports 2022, 216; 10.5089/9798400213113.002.A001

Sources: Gabonese authorities; International Financial Statistics; and IMF staff estimates.

2. The current account (CA) deficit narrowed in 2021 driven mostly by the significant increase in oil and non-oil exports. The CA improved to an estimated -5.2 percent of GDP in 2021, from -6.9 percent of GDP in 2020. Exports increased by 42 percent (y-o-y) in 2021, with oil and non-oil exports increasing by 52 and 22 percent, respectively, while imports increased only by 3.6 percent. From the saving and investment perspective, the public sector saving-investment gap improved, contributing to the narrowing of the CA deficit. In 2022, the current account is expected to register a small surplus on the back of higher oil and commodity prices. The current account is projected to deteriorate slightly after 2022, hovering around a deficit of 1–2 percent of GDP over the medium term, supported by increasing non-oil exports, particularly in the mining (manganese) and agri-business sectors.

3. Foreign direct investment continued to drive external financing inflows in 2021. FDI was estimated at 7.5 percent of GDP in 2021, the majority of which continued to be in the non-oil sector. Disbursements of external debt for projects and external financing (excluding the IMF disbursement) decreased to 5.2 percent of GDP in 2021, compared with 10.5 percent in 2020 owing to non-disbursement of external budget support and significant under-execution of foreign-financed public investment projects. Gabon’s imputed net foreign assets at the BEAC improved slightly in 2021. Gabon’s foreign exchange reserve adequacy is in line with that of oil-exporting economies in the CEMAC region according to reserve adequacy metrics.1

4. This analysis relies heavily on staff estimations and judgement given actual data limitations. Provision of official balance of payments statistics is subject to delays, with the latest official, though still preliminary, data from 2018. The analysis also suffers from gaps in these data, including the exclusion of activities in the Special Economic Zone. The lack of data for the net international investment position and related series also precludes the use of the External Sustainability approach in the exchange rate assessment. The authorities are working to address these issues with the support of IMF technical assistance.

5. Estimates using the revised EBA-Lite2 methodology’s regression-based approaches suggest the 2021 exchange rate is overvalued by 1.4 to 13.2 percent (Table 1). These estimates suggest a CA gap of -1.8 percent and -0.2 percent, based on the EBA-lite CA and REER models respectively, and a 13.2 percent and 1.4 percent REER gap in 2021. The approach estimates CA and REER norms using cross-country regressions and desirable policy settings. The “gaps” or deviations of cyclically-adjusted actual values from these norms are used to inform the exchange rate assessment. The CA approach estimates a cyclically-adjusted CA norm of 2.7 percent of GDP, compared with the actual cyclically-adjusted CA at -4.6 percent of GDP. This produces a CA-gap of 1.9 percent of GDP, including a 2.9 percent policy gap between actual 2021 levels and desirable policy settings, particularly fiscal policy and public health expenditure.3 The REER approach estimates a REER norm of 4.64 based on fundamentals and desirable policy settings, compared with its actual level of 4.66 (expressed in logs). In comparison to the EBA-Lite estimates for the 2021 assessment, CA-Actual and CA-Norm changed by 2.7 percent and 0.4 percent.4

Table 1.

Gabon: 2018 Revised EBA-Lite CA and REER Regression Results

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Source: IMF staff estimates.

Based on the EBA-lite 3.0 methodology

There is no additional cyclical adjustment to account for the temporary impact of tourism and remittances, which account for a negligible share of GDP.

Cyclically adjusted, including multilateral consistency adjustments.

6. The investment-based model indicates a generally lower CA norm. An important parameter for this model is the efficiency of public and private investment, with larger inefficiencies reducing the optimal level of investment, leading to higher current account norms. Based on PIMA (2019) and follow up PIMA (2022) findings, the analysis considers an efficiency value of 0.5 (i.e., only half the amount of investment turns into productive capital), which projects a medium-term CA norm of -4.7 percent of GDP, below baseline projections (Figure 3).

Figure 3.
Figure 3.

Gabon: Investment Based-Model Estimated CA and Projected CA

(Percent of GDP)

Citation: IMF Staff Country Reports 2022, 216; 10.5089/9798400213113.002.A001

Source: IMF staff calculations.

7. The bottom-line assessment is that the external position is weaker than implied by medium-term fundamentals and the exchange rate is overvalued. This is drawn from the consideration of the range of regression-based CA and REER approaches, which exhibit relatively low residuals and account for desirable policies not only to support external stability but also to meet regional commitments that support the CFA currency peg. The investment model-based approach provide a useful illustration of how Gabon’s declining resource base calls for continued strengthening of external position, which may be offset by productive investment in the non-oil sector to diversify the export base.5, 6 The overall assessment estimates an overvaluation of 1.4 to 13.2 percent based on the range of REER and CA results, respectively, compared with an overall assessment of a 0.9 to 2.5 percent overvaluation in 2020. This assessment is based on the CA gap estimate being 1.4 percent of GDP. Preliminary data suggest that this assessment could further improve in 2022 given the anticipated strengthening of the current account. Further, stronger returns from recent FDI, including through higher than anticipated oil production, represent an important medium-term upside risk which could also improve the external position.

8. Continued policy adjustment and measures to strengthen structural competitiveness would sustain the strengthening of the external position. Measures under the new IMF-supported program including fiscal consolidation and efforts to improve the efficiency of public investment, as well as measures to improve governance and the business environment are critical. Gabon continues to rank low across several trade-related structural indicators, including the World Economic Forum’s Enabling Trade Index and the World Bank’s Logistics Performance Index (Figure 4).

Figure 4.
Figure 4.

Gabon: Structural Competitiveness Indicators

Citation: IMF Staff Country Reports 2022, 216; 10.5089/9798400213113.002.A001

Source: World Bank; and World Economic Forum.

Annex III. Risk Assessment Matrix1

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Annex IV. Debt Sustainability Analysis

The debt sustainability analysis (DSA) shows that Gabon’s public debt is sustainable without high probability, and risks have moderated. Gabon’s public debt is assessed to be sustainable and has decreased from the previous DSA.1 The framework is more benign than in the previous DSA largely due to the inflating away of the debt and debt service burden via high oil prices but such process is liable to be reversed. Public debt is expected to reach 52.6 percent of GDP in 2022, down from 65.8 percent of GDP in 2021. The downward revision of the public debt-to-GDP level in 2022 relative to the previous DSA is mainly due to higher nominal GDP growth as oil prices increased. Debt is expected to decline to 43.4 percent of GDP in 2027, but gross financing needs are projected to average 4.9 percent of GDP over the medium term, down from 8.8 percent over the period 2011-21. Liquidity pressures have eased, with debt service accounting for 48.9 percent of revenues in 2022, compared to 80 percent in 2021. Debt remains vulnerable to macroeconomic shocks, particularly a real GDP growth shock and a real exchange rate shock. Sustainability should be buttressed by stronger assurances to cover remaining short-term financing gaps, resolving outstanding domestic arrears, and building a track record of remaining current on external debt service payments, and a credible medium-term debt management strategy along with prudent fiscal policies.

1. The public debt-to-GDP ratio at end-2021 decreased, compared to the previous DSA. The debt level decreased from 78.3 percent of GDP in 2020 to 65.8 percent of GDP in 2021, reflecting mainly higher GDP.

2. Debt levels and gross financing needs are expected to decline in 2022 due to higher oil prices and an improvement in the primary balance. Public debt in the baseline scenario is projected to reach 52.6 percent of GDP in 2022, due to an improvement of primary fiscal balance to 3.7 (from 0.9 percent of GDP in 2021), driven by the spike in oil prices. As a result, gross financing needs are projected to decline to 4.3 percent of GDP in 2022, compared with 8.2 percent of GDP in the previous DSA.

3. While the debt level and the gross financing needs are on a downward trajectory in the medium term, a high debt service is still challenging. As the fiscal and growth impact of the pandemic subsides, debt levels are expected to further decline in 2022 and over the medium term, reaching 43.4 percent of GDP in 2027. Gross financing needs are projected to average 4.9 percent of GDP per year over 2022–27, which is lower than in the previous DSA, and below the historical average of roughly 8.8 percent of GDP over 2011–21. Debt service-to-revenue ratio is projected at 48.9 percent in 2022 and would average 53 percent over the medium term, with a large Eurobond repayment scheduled in 2025, posing some liquidity and rollover risks.

4. Despite continuing uncertainties surrounding the macroeconomic outlook due to COVID-19, risks to Gabon’s debt sustainability have receded. While Gabon’s debt levels no longer breach benchmark levels of 70 percent of GDP in the baseline, they would worsen in all standard shock scenarios, particularly with an adverse GDP growth shock and a real exchange rate shock, pushing the public debt-to-GDP ratios to around 54 percent. A combined macro-fiscal shock (GDP, primary balance, inflation, exchange rate, and interest rate) would raise debt levels and gross financing needs to almost 68 percent and 12 percent of GDP, respectively. These risks are particularly relevant given the relatively strong GDP growth recovery that underlies the debt and GFN baseline. Debt levels may also be exposed to contingent liability risks given the relatively narrow definition of debt coverage (central government and guaranteed debt). Oil price volatility (and the small banking sector) are additional sources of risks.

5. Gabon faces liquidity pressures as well as problems of arrears. Domestic and external arrears accumulated in 2021. In 2022, liquidity pressures persist with debt service accounting for 48.9 percent of revenues. The public debt service-to-revenues ratio and the interest cost-to-revenue ratio are expected to average about 53 percent (from 80 percent in 2021) and to 18 percent (from 19 percent in 2021), respectively, over the medium term. Despite this downward trajectory, the scheduled payment of a Eurobond in 2025 and the normalization of monetary policy in advanced and emerging economies still constitute significant risks.

6. The heat map reveals an improvement in the vulnerabilities of Gabon’s debt sustainability, as some of the indicators have improved since the previous DSA. Results from the heat map analysis show that high risks related to external financing requirements and the significant share of public debt held by non-residents, estimated at 16 percent and 64 percent, respectively, exceed the upper threshold of early warning vis-à-vis assessment benchmarks. The heat map points to moderate to high risks to debt sustainability.

7. A credible medium-term debt management strategy, along with prudent fiscal policies, will be critical to ensuring debt sustainability going forward. Stronger assurances to cover remaining financing gaps in 2022 and 2023 will be critical to mitigating immediate debt sustainability risks going forward. A credible debt management strategy, along with prudent fiscal policies, will be important for managing financing needs, building sufficient fiscal buffers (including by saving a large part of oil windfall), and creating sufficient fiscal space for priority spending over the medium term.

Figure 1.
Figure 1.

Gabon: Public DSA Risk Assessment

Citation: IMF Staff Country Reports 2022, 216; 10.5089/9798400213113.002.A001

Source: IMF staff.1/ The cell is highlighted in green if debt burden benchmark of 70% is not exceeded under the specific shock or baseline, yellow if exceeded under specific shock but not baseline, red if benchmark is exceeded under baseline, white if stress test is not relevant.2/ The cell is highlighted in green if gross financing needs benchmark of 15% is not exceeded under the specific shock or baseline, yellow if exceeded under specific shock but not baseline, red if benchmark is exceeded under baseline, white if stress test is not relevant.3/ The cell is highlighted in green if country value is less than the lower risk-assessment benchmark, red if country value exceeds the upper risk-assessment benchmark, yellow if country value is between the lower and upper risk-assessment benchmarks. If data are unavailable or indicator is not relevant, cell is white. Lower and upper risk-assessment benchmarks are:200 and 600 basis points for bond spreads; 5 and 15 percent of GDP for external financing requirement; 0.5 and 1 percent for change in the share of short-term debt; 15 and 45 percent for the public debt held by non-residents; and 20 and 60 percent for the share of foreign-currency denominated debt.4/ Spread defined as an average over the last 3 months.5/ External financing requirement is defined as the sum of current account deficit, amortization of medium and long-term total external debt, and short-term total external debt at the end of previous period.
Figure 2.
Figure 2.

Gabon: Public DSA—Realism of Baseline Assumptions

Citation: IMF Staff Country Reports 2022, 216; 10.5089/9798400213113.002.A001

Figure 3.
Figure 3.

Gabon: Public Sector DSA — Baseline Scenario

(Percent of GDP, unless otherwise indicated)

Citation: IMF Staff Country Reports 2022, 216; 10.5089/9798400213113.002.A001

Source: IMF staff.1/ Public sector is defined as central government and includes public guarantees.2/ Based on available data.3/ EMBIG.4/ Defined as interest payments divided by debt stock (excluding guarantees) at the end of previous year.5/ Derived as [(r - π(1+g) - g + ae(1+r)]/(1+g+π+gπ)) times previous period debt ratio, with r = interest rate; π = growth rate of GDP deflator; g = real GDP growth rate; a = share of foreign-currency denominated debt; and e = nominal exchange rate depreciation (measured by increase in local currency value of U.S. dollar).6/ The real interest rate contribution is derived from the numerator in footnote 5 as r - π (1+g) and the real growth contribution as -g.7/ The exchange rate contribution is derived from the numerator in footnote 5 as ae(1+r).8/ Includes changes in the stock of guarantees, asset changes, and recognition of arrears. For projections, includes exchange rate changes during the projection period. 9/ Assumes that key variables (real GDP growth, real interest rate, and other identified debt-creating flows) remain at the level of the last projection year.
Figure 4.
Figure 4.

Gabon: Public DSA — Composition of Public Debt and Alternative Scenarios

Citation: IMF Staff Country Reports 2022, 216; 10.5089/9798400213113.002.A001

Source: IMF staff.
Figure 5.
Figure 5.

Gabon: Public DSA — Stress Tests

Citation: IMF Staff Country Reports 2022, 216; 10.5089/9798400213113.002.A001

Source: IMF staff.

Annex V. Carbon Credits and the Gabonese Economy

In June 2021, Gabon was the first African country to receive financing for its reduction in carbon emissions since

2016.1 Gabon achieved this reduction by protecting its forests and maintaining high levels of renewable energy consumption from sources such as hydroelectric production. The country aims at reducing its emissions by half in the next four years.

Gabon is a net absorber of carbon emissions and the authorities are aiming to promote trade in carbon credits. Gabon’s rainforest absorbs a total of 140 million tons of CO2 every year and its commitment to protect the Congo Basin Rainforest is a global public service. At 91.4 percent of total land area, Gabon has maintained the largest rainforest in sub-Sahara Africa by cutting deforestation levels to less than 1 percent.2 This, combined with efforts to reduce its own emissions, distinguishes the country as a global leader in the net zero carbon emissions initiatives. This is despite Gabon’s very small contribution to global emissions and its position in the COP26 climate summit’s forest protection agreement. Gabon has also been promoting eco-tourism and issuing bonds to preserve its forest. In September 2021, the Gabonese authorities passed legislation to promote trade in carbon credits. The authorities are hoping that net carbon emitters can support global efforts to reduce greenhouse gas emissions by compensating Gabon for absorbing emissions—possibly offsetting their own emissions.

uA001afig01

Gabon: Climate Risks, Emissions and Value Added

Citation: IMF Staff Country Reports 2022, 216; 10.5089/9798400213113.002.A001

Sources: Gabonese Authorities, INFORM Risk, World Development Indicators; and IMF Staff Calculations.1/ Higher INFORM Risk scores indicates higher vulnerability to climate change and lower coping capacity.

Despite Gabon’s significant contributions to reducing net global carbon emissions, it is quite vulnerable to climate change and has large adaptation needs. Gabon’s climate change fund is related to the financing received from absorbing emissions as it aims to promote climate change adaptation and mitigation measures, as well as economic diversification. The climate change fund is expected to finance increased environmental protection, develop human capacity, and build climate resilient industries—especially in the agricultural, forestry and fishing sectors whose value added is consistently growing and could form the foundation for higher and more diversified economic growth.

1/ Under the United Nation’s Central African Forest Initiative, Gabon will receive US$150 million over ten years as reward for US$5 per ton. 2/ World Bank data.

Appendix I. Letter of Intent

June 14, 2022

Ms. Kristalina Georgieva

Managing Director

International Monetary Fund

Washington, D.C.

USA

Subject: Letter of Intent

Dear Madam Managing Director,

The attached Memorandum of Economic and Financial Policies (MEFP) describes the progress made toward the objectives set forth in the program supported by the three-year extended arrangement under the Extended Fund Facility (EFF) since its approval. It also updates the original MEFP and outlines upcoming measures to be implemented in the near term.

We have made significant progress in the implementation of the abovementioned program despite a difficult context due to the pandemic which has hampered the efficient management of our public administration. Our efforts have brought the pandemic under control, as evidenced by the significant drop in new cases. This allowed the lifting of anti-COVID-19 measures throughout the territory, thus promoting the recovery of economic activity. We remain committed to the fight against the pandemic with the continuation of the vaccination program.

We have implemented seven out of the 14 structural benchmarks (SBs) through May 2022. Four were subsequently implemented, and two are set as prior actions. The last SB on review of tax exemptions will be fully implemented with the introduction of the pending tax exemptions measure in the 2022 revised budget which we plan to submit to Parliament before end-June 2022. However, we met only two of the four quantitative performance criteria and one of the three indicative targets at end-December 2021. The incurrence of new external arrears also resulted in the non-observance of the continuous performance criteria on the accumulation of new external payment arrears. In this context, we have taken corrective actions to improve program implementation, namely (i) continue to apply the expenditure regulation mechanism to closely monitor spending and avoid fiscal slippages, (ii) the clearance of most external arrears as of June 14, 2022 and the implementation of additional measures to avoid the accumulation of new arrears, and (iii) the rebuilding of government deposits at the central bank since the beginning of 2022 resulting in only a temporary non-observance of the performance criteria. We are committed to clear the outstanding stock of external arears (CFAF 11.09 billion as of June 14, 2022) prior the Board meeting. On this basis, we request completion of the first and second reviews, and waivers of non-observance of the two end-December 2021 performance criteria, and the continuous performance criteria on the accumulation of new external payment arrears. We are also requesting the establishment of performance criteria for end-June 2022, end-December 2022, and end-June 2023.

The outlook remains positive despite several uncertainties, including those stemming from the fallout from the war in Ukraine. The surge in oil prices would benefit our economy, including economic growth expected to reach 2.8 percent in 2022 and government revenues. This gain will be offset by inflationary pressures due to the rise in oil and food prices, which could worsen the living standard of the most vulnerable populations.

In this context, our objective in 2022 is to leverage the rise in our main commodities prices to rebuild buffers while protecting the most vulnerable populations. In this regard, and to minimize the cost of subsidies in the 2022 revised budget, we are committed to gradually increasing the pump prices of petroleum products. The objective is to reinstate by end-2022 the automatic pump price adjustment mechanism for all products except kerosene and butane gas, the two products most consumed by the most vulnerable households. Ultimately, the subsidies on the latter two products should be eliminated by implementing a well-targeted social transfer system toward Economically Weak Gabonese (GEF).

We will bolster our revenue mobilization efforts through improved governance in the oil and mining sectors and further streamlining of exemptions. Our efforts will include an audit of the oil sector by an independent firm and the transfer of all oil revenues to the Treasury Single Account. In addition, we will protect the purchasing power of households, including the most vulnerable populations, by maintaining subsidies on petroleum products and wheat, while gradually eliminating the subsidy on petroleum products for businesses.

Furthermore, we will pursue our efforts to improve the management of public finances in three major areas. First, we will continue to strengthen the control, effectiveness and efficiency of public spending by implementing adequate reforms. Second, we will ensure the implementation of the measures included in the original program and new measures to improve cash management. Third, the forthcoming publication of the names and nationalities of the beneficial owners of the holders of public contracts as well as the publication of the audit report for all COVID-19-related expenditures would reinforce transparency in the management of public finances.

Under the corrective actions taken to avoid the accumulation of new external arrears, we have reinstated the measures that served under the previous program, namely: (i) the holding of a weekly meeting of an ad hoc committee created for this purpose and involving the General Directorate of the Treasury and the General Directorate of Debt; (ii) the systematic inclusion of the debt management item on the agenda of the Technical Committee and the Treasury Coordination Committee meetings, stressing the regularity of the meetings; (iii) the verification that transfer orders are sent to the Central Bank (BEAC) on time.

We remain committed to supporting the CEMAC in rebuilding its reserves. Against this background, we are committed to saving part of the additional oil revenues linked to the increase in oil prices as well as part of the SDRs allocated to Gabon in 2021 under the fourth IMF general SDR allocation.

We remain fully committed to improving program implementation and intend to complete all the structural reforms described in this MEFP for stronger and more inclusive growth. We remain convinced that these measures will help achieve the objectives of the program. We are ready to take additional measures, if necessary, and we will consult the IMF beforehand if it proves necessary to review the policies mentioned in this letter and in the attached memorandum, in accordance with the relevant IMF policies. We will provide IMF staff with all data and information necessary to assess our policies, in particular those mentioned in the technical memorandum of understanding.

The government authorizes the IMF to publish this letter of intent, the Memorandum of Economic and Financial Policies, the Technical Memorandum of Understanding, and the forthcoming IMF staff report for the first and second reviews under the program supported by the three-year extended arrangement under the EFF, after approval by the IMF Executive Board.

Sincerely yours,

/s/

Mme. Nicole Jeanine Lydie ROBOTY spouse MBOU

Minister of Economy and Recovery

Attachments (2)

1. Memorandum of economic and financial policy (MEFP)

2. Technical Memorandum of Understanding (TMU)

Attachment I. Additional Memorandum of Economic and Financial Policies

June 14, 2022

This Memorandum of Economic and Financial Policies (MEFP) updates the EFF-supported program's MEFP approved by the IMF's Executive Board on July 28, 2021, covering modifications, additions or follow-ups. Accordingly, we provide an update on the latest developments and the execution of the EFF-supported program, assess the economic outlook and risks, and outline our macroeconomic policies for the remainder of 2022 and beyond.

I. Introduction

1. In 2021, we worked to deploy the economic and social measures and policies needed to limit the impact of the pandemic on the economy and on the most vulnerable groups in our country. These efforts benefited from the technical and financial support of our development partners, including the IMF in the context of the EFF-supported program.

2. We will continue the necessary efforts to end the health crisis and to accelerate economic growth despite the fallout from the war in Ukraine. These efforts have helped to stop the spread of the pandemic as evidenced by the significant drop in new cases which allowed the lifting of all anti-COVID-19 measures on March 15, 2022. The vaccination campaign continues. We are determined to strengthen the implementation of the EFF-supported program despite the difficult global context marked in particular by the war in Ukraine. We will continue to improve transparency and governance, and combat corruption in line with our commitment in the original MEFP attached to Country Report No. 2021/189.

II. Recent Macro-Economic Developments and Outlook

3. Gabon returned to growth in 2021 (1.5 percent) after a contraction of 1.8 percent in 2020. On the supply side, this economic recovery was driven by the manganese, wood, construction, and transportation sectors. This recovery was hindered by the drop in oil production (-6.7 percent), services and trade as the last two sectors were constrained by anti-COVID-19 measures. On the demand side, growth reflected the expansion of non-oil exports (agricultural products, manganese, and wood) and the rebound in private investment (oil and non-oil), which offset the decline in public investment.

4. Budget execution outcomes show that the non-oil primary fiscal balance deficit was contained at 7.1 percent of non-oil GDP (NOGDP) in fiscal year 2021, broadly in line with the original program target, despite a shortfall in non-oil revenues.

  • (i) Non-oil revenues increased by about 10 percent in 2021 compared to 2020 through the streamlining of tax benefits without legal bases as well as VAT exemptions. Oil revenues increased by 23 percent compared to the 2021 budget on the back of higher oil prices.

  • (ii) Current primary expenditure was overall kept 0.5 percentage point of non-oil GDP below budget forecasts. However, there was an overrun in "goods and services" and transfers due to, among other things, the continuation of the social policy of free transportation, the payment of the leases of the Cuban medical brigade under the cooperation agreements between the two countries, and the assistance to families for the payment of school fees. Capital spending was lower than forecast due to the under-execution of externally financed capital spending. The latter suffered from difficulties in paying external debt in the first half of 2021. The existence of arrears impaired the implementation of new projects as well as the regular disbursement of ongoing projects. However, domestically financed expenditure exceeded the budget allocation due to the execution in 2021 of critical projects which could not be executed in 2020 due to the COVID-19 pandemic.

  • (iii) The increase in oil revenues and the under-execution of externally financed capital spending helped reduce the overall deficit (cash basis) to 1.8 percent of GDP (compared to 3.5 percent in 2020).

  • (iv) We mainly relied on the regional market and on the drawing of deposits from the central bank to finance the deficit, due to the non-disbursement of budget support by the AfDB (CFAF 32.8 billion) and the larger repayment of debt and domestic arrears. Furthermore, we have accumulated new arrears on external debt (CFAF 50.8 billion).

5. The money supply increased by 5.5 percent compared to 2020 with a rise in domestic credit (+18.1 percent) driven by the joint increase in claims on the government (+20.3 percent) and credit to the economy (+15.8 percent). The tertiary sector (business services, administrative services, services to individuals, and retail trade) received 65.9 percent of these loans, the secondary sector (construction, wood industry and food product manufacturing) 24.4 percent and the primary sector (agriculture and related activities) 9.7 percent.

6. First-quarter 2022 information confirms the recovery of economic activity in a context of rising prices:

  • (i) Oil production increased by 2.8 percent, owing to the increase in production quotas and the sharp rise in the average price of crude oil.

  • (ii) Manganese production increased by 9.6 percent owing to higher yields from the fields of the two main operators. The recovery also took place in the rubber business, rail transportation (+9.8 percent in volume of goods), telecommunications, trade in petroleum products and industrial vehicles and the hotel industry.

  • (iii) Foreign trade performance is clearly improving. As of end-March 2022, nominal exports increased by 113.7 percent y-o-y and imports by 20.4 percent. Trade balance remained in surplus and increased by 207.1 percent.

  • (iv) Inflationary pressures, which began in the last quarter of 2021, increased with the crisis in Ukraine posting a rate of 2.4 percent in the first quarter compared to the same period of 2021, in particular due to imported goods.

  • (v) In March 2022, revenue increased slightly by 1.9 percent compared to March 2021 due to an increase in non-oil revenue (+5 percent). At the same time, expenditure fell by 4 percent due to the under-execution of all expenses, reflecting particularly the late implementation of the 2022 budget. In this context, the non-oil primary balance showed a surplus of CFAF 102.9 billion and an overall fiscal balance (cash basis) of CFAF 88.6 billion.

  • (vi) At the end of March 2022, the money supply increased by 0.9 percent compared to 2021, in line with an increase in net domestic credit (+16.7 percent), driven by a rise in claims on the government (+19.3 percent) and claims on the economy (+13.9 percent). Net Foreign Assets deteriorated (-130.5 percent).

7. The medium-term economic outlook is still positive, but remains subject to significant risks, including sharper slowdown in demand from partner countries such as China and a downturn in oil prices. Growth is projected at 2.8 percent in 2022 driven by the recovery in oil activity (+7.1 percent) and an acceleration in non-oil GDP (+2.3 percent). GDP growth should return to its pre-pandemic trend from 2023, following the dynamism of agriculture, manganese, timber, and construction, combined with the recovery of services and trade. Demand should be driven by exports (+6.1 percent) and domestic factors, especially private (+9.6 percent) and public (+1.7 percent) investment.

8. We will contribute more to regional reserves considering the good performance of economic activity and the dynamism of exports in a context of improved terms of trade, following the rise in prices of our main commodities (oil, manganese, cash-crop farming, and wood) and fiscal consolidation. Public debt, estimated at about 66 percent of GDP in 2021, is expected to fall below 50 percent by 2026, supported by our prudent fiscal policy and good economic prospects.

III. Program Performance

9. Program performance is mixed due in particular to the challenges posed by the pandemic (Table 2):

  • (i) At end-July 2021, all quantitative performance criteria PCs), except the continuous PC on the accumulation of external arrears and net domestic financing of the central government, were met. No indicative target was met at end-July 2021.

  • (ii) At end-December 2021, the controlling PCs for the first and second reviews of the EFF-supported program, two out of five PCs and one of three indicative targets were met. The PCs on net domestic financing and the disbursement and guarantee of external debt were met. The criterion on the non-oil primary balance was not met due to non-disbursement of AfDB budget support. The PC on the central bank net claims on the government was missed, due to a large withdrawal of deposits. The continuous PC on external arrears was not met. The indicative target on social spending was met, but the indicative targets on non-oil tax revenue and domestic arrears were missed.

10. Significant progress has been made on structural reforms, despite some delays compared to the program schedule. The assessment indicates that seven out of the 14 structural benchmarks (SBs) through May 2022 were not met. Four were subsequently implemented, and two are set as prior actions to be implemented before the next Board meeting, i.e., the publication of the COVID-19 spending audit report and the signing of the ministerial decree requiring that legal persons bidding on public procurement contracts declare the names and nationalities of their beneficial owners, and that those names and nationalities be published online for all legal persons awarded such contracts.

  • Concerning the COVID-19 spending audit report, the delay is due to several causes including the late start of the audit work by the independent firm hired under an international tender and the need to involve all the stakeholders.

  • The ministerial decree on beneficial owners has been delayed because it was important to ensure its compliance with the regulatory framework in force, especially Gabon's commitments in terms of protection of personal data. The collection and publication of the information covered by this decree are intended to: (a) provide information on the identity of the beneficial owners of companies bidding on and holding public contracts; (b) build a database; (c) enhance transparency in the awarding of public contracts; (d) combat money laundering and the financing of terrorism.

  • The last SB relates to the introduction in the budget law of measures to eliminate exemptions. Some measures were introduced in the initial 2022 budget law and the remaining measure that was not included, concerning the increase in the VAT rate (products with a 0 percent VAT rate would see an increase to 5 percent, those at 5 percent to 10 percent, and those at 10 percent to the common law rate of 18 percent), will be introduced in the revised 2022 budget law.

IV. Discussion on Program Policies for 2022

A. Fiscal Policy

11. The initial budget law adopted by the parliament in December 2021 reflects our commitment to pursue fiscal consolidation, with a non-oil primary deficit of 5.4 percent of NOGDP (compared to 7.1 percent in 2021), slightly above the initial program target (4.9 percent) to account for additional COVID-19-related spending of CFAF 40 billion (about 0.5 percent of NOGDP).

12. We are preparing to submit a revised budget law to the parliament by June 2022 to account for recent developments in the national and international environment. The revised budget projects a widening of the deficit by CFAF 58.4 billion to reach CFAF 463.8 billion (6.2 percent of NOGDP). It considers, in particular, the effects of the war in Ukraine highlighted as follows:

  • First, an increase in oil revenues, which we estimate at CFAF 318.6 billion based on a conservative assumption of oil price per barrel at US$ 80.

  • Second, increased subsidies due to soaring energy and food prices to protect the most vulnerable populations. The level of subsidies for oil and wheat is re-evaluated at CFAF 92.7 billion against CFAF 14.2 billion in the initial 2022 budget law. To minimize the cost of oil subsidies, we decided to rely on two main factors: (i) the analysis of the components of the price structure, and (ii) the adjustment of the pump prices of petroleum products. We have decided to keep pump prices unchanged, for kerosene and butane gas, the two products most consumed by the most vulnerable households. Meanwhile, we will gradually increase the prices of other petroleum products, starting with those used by businesses to limit the cost of subsidies on the budget. The first objective is to reinstate the automatic price indexation mechanism. Ultimately, subsidies on the price of kerosene and butane gas could be eliminated through a well-targeted social transfer system towards Economically Weak Gabonese (GEF). Regarding wheat, we decided to maintain a permanent dialogue with businesses to contain potential upward pressure on the price of bread. In addition, tax expenditures relating to the "Vie chère" program will reach about CFAF 50 billion.

  • Third, the use of the entire 2009 SDR allocation (SDR 114.4 million equivalent to CFAF 93.8 billion) and part of the 2021 allocation (SDR 31.9 million equivalent to CFAF 26.2 billion) to accelerate the repayment of domestic debt and improve the debt profile, the rest being used to support the region’s reserves.

13. The war in Ukraine and the uncertainty over the price of raw materials (oil, manganese) and food products pose significant risks to our budget. These uncertainties could translate into non-oil revenue below the program target, primary spending above the program target, or external support below expectations. To ensure compliance with the non-oil primary fiscal balance criterion, any revenue or financing shortfalls relative to program targets will be offset by reductions in non-critical expenditures, in consultation with IMF staff. We recognize that the risk of a subsidy slippage in 2022 is high and depends in particular on the evolution of oil prices. We will remain vigilant and continue to use the existing reserve mechanism to preserve the level of the budget deficit as planned. The reserve is estimated in 2022 at CFAF 80.9 billion (4.1 percent of total expenditure).

B. Fiscal Structural Reforms

Revenues

14. Significant progress has been made to improve transparency in the oil sector. In June, September and December 2021, we published notes on the oil sector. Gabon also joined the EITI initiative in October 2021. We are committed to continuing our reforms to strengthen transparency in the management of oil resources by:

  • a. Repatriating regularly revenue from Gabon Oil Company (GOC) due to the government; revisiting the trading activities of the GOC concerning profit-oil to ensure regular and timely transfers of oil revenues to the Treasury;

  • b. Committing ourselves not to resort to any form of pre-financing backed on future oil revenues;

  • c. Recruiting an independent company (End-October 2022 Structural Benchmark) to carry out an audit of the oil sector, in particular, to (a) assess the cost oil, (b) evaluate the agreements between the oil companies, the government and public companies, (c) establish the level of cross-debt between the government, public companies and private oil companies. The audit will cover the five major companies in the sector (End-March 2023 structural benchmark). Moreover, we are committed to reviewing the agreements related to debt repayment and their consistency with public financial management rules and ensure that they are taken into account in government accounts;

  • d. Conducting a financial audit of the national refinery (SOGARA) to assess its viability (Structural benchmark for June 2023);

  • e. Centralizing oil revenues in the Treasury Single Account (TSA).

15. We have taken steps to streamline tax and customs exemptions in the revised 2021 budget and the initial 2022 budget. Table I provides a summary of the tax reforms that were undertaken.

  • a. At the customs, the revised 2021 budget included a provision transforming the incentives based on total exemptions into partial exemptions at the reduced rate of 5 percent for the following sectors: social housing, tourism/ hospitality, wood processing, cement and agriculture. Similarly, the period of exemptions has been reduced to three (03) years against five (05) previously. These measures have been effective since January 1, 2022, for the social housing, tourism/hotel and wood processing sectors. For cement, since the only company operating in this industry has a tax stability clause in its arrangement with the government, this new provision will not be applied until 2024. Regarding the agricultural sector, the process of revising the lists has been longer and implementation should be effective from July 1, 2022.

  • b. In the initial 2022 budget, we have introduced a reform subjecting to the reduced rate of 5 percent, the products exempted from taxation in the context of the fight against the high cost of living at the customs. This new provision allows the twenty-three tariff lines that are fully exempt from customs to be subject to a reduced rate of 5 percent. However, given the general context of rising prices, the implementation of this new provision requires a broad consultation with all stakeholders to better control prices in accordance with the objective of combating the high cost of living, hence the provision is on hold.

  • c. We have reformed the land titling and management system and introduced the Single Property Tax (SPT) in the initial 2022 budget, which aims to simplify liquidation and make property taxes more cost-effective/ efficient. Although introduced in the initial 2022 budget, the SPT will not be effective until 2023. Changes to the text, made by Parliament, lowered expected revenue and will require further consideration. In addition, the reform requires revisiting the property titling and management system.

16. Further work is required on (i) the introduction of a specific tax for the banking sector, (ii) the financing of social programs, and (iii) the taxation of the tourism sector. In particular, regarding the reform relating to the rate and scope of the social solidarity contribution (CSS) to finance social programs, only operators in the oil and mining sectors protected by fiscal stability clauses are not taxed, and it was agreed that the Mining and Hydrocarbon administrations should lead a consultation with these operators. In fact, the revised 2022 budget proposal will introduce, in the general provisions of the General Tax Code, a new article 3 paragraph 3 which stipulates that "natural or legal persons who have signed contracts or agreements with the government which enshrine a tax stability clause cannot invoke it with the Administration on matters of taxes for which they are only collectors. Fiscal stability clauses must be reviewed every five years”. Regarding the tax reform in the tourism sector, the Government considers that it is necessary to support this sector in the short term due to the adverse effects of the coronavirus.

17. We are committed to the establishment of an environmentally friendly tax system. A joint study with the UNDP (United Nations Development Program) has been conducted and the conclusions are in the process of being published.

18. As agreed in the original MEFP (¶25), we are continuing our efforts to modernize and deploy revenue information systems. The SYDONIA World migration process continued in 2021 to cover the customs regions of Port-Gentil and Franceville and will continue in 2022 in the region of Oyem. In addition, we are committed to developing a new system for the dematerialized management of the tax administration's business processes, which will enable, in a single environment, the management of front office (e-T@ax) and back office (LIIR) operations relating to the taxes collected by the DGI. Finally, the tax and customs administrations undertake to draw up a master plan for the continued deployment of their information systems, and the support of an IMF TA mission has been requested.

19. We are committed to strengthening our institutional capacity in tax revenue. We confirm our intention to operationalize a tax policy unit in order to strengthen the analytical capacity of the Ministry of Economy and ensure analysis on major tax issues. Similarly, the special commission for the examination of any new request for tax exemption will begin its operations.

Public Finance Management

20. To ensure the sound management of available public resources, notable progress has been made in expenditure budgeting. We will continue to strengthen expenditure control, and improve the efficiency and effectiveness of public spending through reforms in:

  • a. Payroll: the cleaning of the payroll file will continue with the update of the number of civil servants. In addition, a legal text establishing the procedure for recruiting public servants, with a view to ensuring control of the number of budgetary functions, is currently under review;

  • b. Strategic management and financial monitoring of public enterprises: the creation of public agencies will be conditional on prior studies and an institutional mechanism will be created to ensure their financial monitoring;

  • c. Investment: the implementation of a budget, accounting, financial and physical monitoring tool for projects, the strengthening of the legal and methodological framework for the management of public investments and the use of a Commitment Authorization/Payment Credit (AE/CP) approach to manage public investment projects are measures which, during the program, would further improve the quality of public expenditure;

  • d. Improvement of the institutional framework and management of public finances in accordance with the commitments made under the original MEFP (¶40).

21. We transposed the Statement of Government Operations data and the financial balance sheet into the format of the provisions of the public finance statistics manual (GFSM 2014) and CEMAC directives. The use of accrual data and the extension of the scope to the public sector require, among other things, the adoption of OHADA accounting standards and the modernization of SIGFIP. These efforts will be undertaken for the transition to the GFSM 2014.

22. To improve cash management, we plan the following actions:

  • a. The completion of the full implementation of the TSA (End-January 2023 Structural benchmark) notably through the finalization of the repatriation of funds and the closure of accounts in commercial banks;

  • b. The rationalization of compensation mechanisms that reduce revenues collected by the central administration for both the oil and non-oil sectors. The signing of any new compensation agreement will be the subject of particular attention, and we will henceforth inform the members of the mission;

  • c. The full implementation of their commitment plans in line with the monthly cash flow plan attached to the finance law;

  • d. The integration of commitment plans in VECTIS. As part of the cooperation with AFRITAC Centre, a mission will take place this year to support the administration in the realization of this commitment.

23. Other measures include

  • a. the reform of the VAT escrow account: there has been a delay because of lack of capacity. In this context, a technical assistance mission led by an expert from the French Treasury took place from June 8 to June 19, 2022 (End-June 2022 structural benchmark);

  • b. the significant reduction in the share of public contracts awarded without a call for tenders (over the counter, direct agreement, etc.): significant efforts were made in 2020 and 2021 and the percentage of contracts awarded without calls for tenders was limited, on average, to 35 percent. These efforts will continue in 2022;

  • c. systematic publication of tenders and awards in the public procurement journal (online), with indication on the beneficiaries. Box 2 summarizes actions taken to publish the data online.

24. We have made progress in assessing, monitoring and addressing vulnerabilities related to SOEs, in line with the phased approach agreed in the program. The four (04) main public enterprises carried out the management audit required under the program and implemented reforms to respond to auditors’ observations. It is now their responsibility to strengthen their governance framework and the government to clarify its strategy for each of them. CDC (Caisse de Dépôts et Consignation) and FGIS (Fonds Gabonais d’Investissements Stratégiques) have certified and published online their 2021 financial statements, and we remain committed to ensure that the two others certify and publish their annual reports in line with corporate best practices.

25. We continue to work to strengthen our public investment management framework to improve its execution and its quality and address critical infrastructure gaps.

  • To this end, both legal and methodological activities have been initiated. They relate to:

    • a. the organization of budget conferences focusing on investments (since 2020);

    • b. the harmonization, with technical and financial partners and other CEMAC countries, of the drafting of a guide for setting up common projects;

    • c. the drafting of a decree relating to public investment management;

    • d. the establishment of a national directory for public investments (RNIP) updated annually (fiscal years 2021 and 2022); and

    • e. the preparation of Public Investment Programs (PIP) attached to budget laws (2021–23 and 2022–24 programming).

  • While progress has been made over the past two years, the existing public investment management system still needs to be improved, including through:

    • a. the adoption of a decree on Public Investment Management;

    • b. the progressive elimination of derogatory processes for the execution of public investment. Accordingly, we will develop a strategy aimed at gradually reducing the share of derogatory processes in public investment by category of spending and by type of processes, with timebound deadline for such a reduction by end-October 2022 (Structural benchmark); and

    • c. the implementation of the AE/CP methodology to manage public investment projects (¶20 above).

C. Public Debt and Fiscal Risk Management

26. To strengthen debt management, efforts are underway to improve debt reporting, lengthen maturities and avoid the bundling of repayments to mitigate refinancing risk. The refinement of cash arbitrage and better mobilization of resources made it possible to completely clear the stock of existing arrears on the external debt. In order to manage and prevent the accumulation of new arrears, we have taken the following measures: (i) the establishment of a weekly meeting of an ad hoc committee for this purpose between the Treasury and the General Directorate of Debt; (ii) the inclusion of this item on debt management on the agenda of each meeting of the Technical Committee and the Treasury Coordination Committee and ensure that these meetings are held regularly; (iii) and the verification of the timely sending of transfer orders to the BEAC.

27. We are committed to clear all existing arrears on external debt and avoid the accumulation of new ones. As of June 14, 2022, the stock of Gabon’s external arrears stood at CFAF11.09 billion (US$20.0 million), including CFAF 2.36 billion (US$4.25 million) vis-à-vis multilaterals and CFAF 8.07 billion (US$14.57 million) vis-à-vis official bilateral creditors insured and from China CFAF 0.55 billion (US$1.00 million). We have also accumulated CFAF 0.66 non-insured arrears of CFAF 0.66 billion (US$1.18 million). We are committed to clear the full amount of external arrears prior to the Board meeting for the completion of the first and second reviews under the EFF-supported program.

28. The total stock of domestic debt amounts to 28.03 percent of GDP at end-December 2021. This stock includes: the debt owed to regional financial market (CFAF 1540.6 billion), bank loans (CFAF 886.4 billion), the Moratorium (CFAF 394.4 billion) and domestic arrears (CFAF 321.5 billion). In December 2021, the government adopted a plan for clearing the audited and validated domestic arrears equivalent to 5 percent of GDP at end-2020. This plan extends over five years and is presented in Table II. The government will continue to identify and assess the arrears that are not considered in the debt stock of 2021, including salary arrears (original MEFP, ¶30) and arrears with certain public entities (original MEFP, ¶33).

29. The Government has produced a finalized version of the annex relating to budgetary risks attached to the budget law for 2022. This annex emphasizes the identification and prioritization of risk factors. Progress remains to be made on the quantification of budgetary risks.

30. We have started the monitoring of the portfolio of government equity in the Digital Infrastructure Heritage Company (SPIN), the GOC, the Equatorial Mining Company (SEM) and the FGIS. This follow-up is done through:

  • (i) Clear provisions on the responsibility and the nature of the monitoring and the obligations of companies in terms of reporting;

  • (ii) Measures for the transparency of the monitoring, particularly through regular publications and submissions to the institutions involved in the budgetary process (legislative power, court of auditors);

  • (iii) The elaboration of a public portfolio management strategy.

D. Strengthen Social Protection

31. We are committed to continue strengthening social protection. With the help of partners, including the World Bank, we have updated the existing database of Economically Weak Gabonese (GEF). The next steps consist of (i) defining new eligibility criteria for GEF; (ii) conducting a survey and establishing a new GEF database based on new poverty indicators (End-December 2022 structural benchmark).

E. Strengthen the Financial Sector and Access to Finance

32. The financial sector has grown and remains broadly stable and profitable with a total balance sheet up by 15.2 percent in 2021. The reported share of overdue loans went from 9.8 percent in 2020 to 8.5 percent in 2021. The quality of the banking portfolio may deteriorate with the lifting of the temporary measures of the COBAC.

33. We have continued the process of liquidating the three public banks (BHG, Postebank and BGD) and the preliminary estimate of the cost of the liquidation is around CFAF 135 billion (1.2 percent of GDP) based on an aggregation of the three banks’ outstanding liabilities. The COBAC should officially announce the end of the bank liquidation process in the coming months. However, the authorities will set up, by Prime Minister’s decree, a defeasance structure placed under the supervision of the Ministry of Economy and Recovery which would gather, the Ministries of the Budget, Housing and the Post Office. This structure will work in close collaboration with the Ministry of Justice to pursue the realization of assets and the settlement of residual liabilities, including judicial liquidation. This process, which would last until 2024, will help put an end to the overall liquidation process. In this regard, we remain committed to reinvigorate the liquidation monitoring committee and to produce and share with IMF staff a note by end-December 2022 a note on (i) the list of litigation cases, (ii) the expected proceeds from the sale of assets, and (iii) the plan to compensate creditors.

34. We have developed a financial inclusion strategy covering the period 2022–27 which will be adopted by the end of 2022. This strategy is based on two axes: (i) improving access to financial services for vulnerable and excluded populations, and (ii) promoting digital finance. A coordinating body (responsible for steering the strategy) and an implementation committee (responsible of the execution) will be put in place.

35. We are implementing a set of measures to strengthen the financial sector. Our strategy to reduce overdue loans is based in particular on our domestic debt clearance plan and the strengthening of the capacity of the Commercial Court. We are also working on the development of a strategy for the development of non-bank investment in government securities in cooperation with the BEAC, making it possible to strengthen the government's capacity to finance itself and to stimulate the development of a culture of savings and social welfare.

F. Improvement of Macroeconomic Statistics

36. We have made efforts to strengthen and modernize our national statistical system. We have been carrying out the General Business Census (RGE) since January 2022 and the first results should be available at the end of the third quarter of 2022 and the publication on the website of the General Directorate of Statistics will be completed before the end of the year 2022. We have launched the design of a multi-sectoral database management platform on key statistics that will be accessible to all users. This data portal will be online before the end of September 2022. We have also undertaken the rebasing of national accounts, the transition to the 2008 SNA, the production of the 2011–20 national accounts and the production of quarterly GDP with IMF technical assistance. However, weaknesses remain in various areas, especially balance of payments and monetary statistics. With assistance from the IMF and other development partners, the Central Bank and the authorities are stepping up efforts to improve the situation.

V. Program Monitoring

37. We request waivers for the nonobservance of two PCs, namely the fiscal deficit and central bank net claims on government, at end-December 2021 and the continuous PC on the non-accumulation of new external arrears. The waiver on the fiscal deficit is requested based on the temporary nature of the deviation, reflecting the non-disbursement of AfDB budget support. We are committed to closely monitoring spending and avoiding fiscal slippages. The PC on central bank net claims on government was missed by a large margin, reflecting a significant drawdown in deposits due to domestic debt repayments. We have begun to rebuild deposits since the beginning of the year, reflecting prudent fiscal policy and efforts to save oil revenues windfalls and improve cash management. We have cleared most of external arrears as of June 14, 2022. We will clear the outstanding amount of CFAF 11.09 billion prior to the Board meeting on June 27, 2022. We have also taken steps to avoid the accumulation of new external arrears (MEFP, ¶26).

38. We have agreed with the IMF to update the program conditionality as follows:

  • (i) PCs and ITs for end-June 2022 have been set. New PCs and ITs for end-December 2022 and end-June 2023, as well as new ITs for end-September 2022 and end-March 2023 have been proposed. These revisions and new proposals reflect the changing international and domestic environment, including the impact of the war in Ukraine.

  • (ii) The IT on non-oil tax revenue becomes a PC from end-December 2022, given the need for a strong-revenue based fiscal consolidation to create additional fiscal space for development outlays.

  • (iii) Seven new structural benchmarks are proposed, based notably on IMF technical assistance on tax expenditures, cash management and PIMA.

39. Program implementation will be monitored through prior actions, semi-annual reviews, quantitative performance criteria and indicative targets, a continuous performance criterion, and structural benchmarks. The third review is scheduled for December 2022, based on end-June 2022 PCs, the continuous PC, and relevant structural benchmarks, and the fourth review is scheduled for June 2023 based on end-December 2022 quantitative targets, the continuous PC, and relevant structural benchmarks. For all dates, PCs will include: a floor on the primary fiscal balance, excluding oil revenue (cash basis); a ceiling on the central government's net domestic financing (excluding the use of IMF financing), a ceiling on the central bank's net claims on the central government, excluding the use of IMF credit; a ceiling on borrowing or guaranteeing external debt (program and project); and a ceiling on the accumulation of new external arrears by the central government. We further propose that the indicative target on revenue becomes a performance criterion with a first date at end-December 2022.

Prior actions and structural benchmarks are presented in Tables 2, 3 and 4. Quantitative objectives for target dates through December 2022, as well as a continuous quantitative performance criterion, are presented in Table 1.

Table 1.

Gabon: Quantitative Program Targets, 2021-231,2

(Billions of CFA francs, unless otherwise indicated)

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Sources: Gabonese authorities; and IMF staff estimates.

Targets as defined in the attached Technical Memorandum of Understanding (TMU).

Cumulative amount from January 1, 2021. Targets are set for the end of the respective month, unless otherwise stated.

The ceiling on net domestic financing of the central government will be adjusted upward (downward) for any lower (higher) external program disbursements and/or oil revenue due to changes in oil prices as set in the TMU.

The ceiling in central bank net claims on the central government will be adjusted upward (downward) for any lower (higher) external program disbursements and/or oil revenue due to changes in oil prices as set in the TMU.

The performance criterion will be adjusted upward (downward) in case where early (late) disbursements of specifically agreed and identified financing flows take place as set in the TMU.

The indicative target on the floor on government tax revenue, excluding oil revenue will be converted to a performance criterion beginning with the end-December 2022 quantitative program target.

Reports the current stock of new arrears that have been accumulated since December 2020 for the first review and since the latest review for future reviews.

The ceiling will be adjusted upward if Brent oil price projections as reported by IMF-WEO rise relative to the baseline program projection.

Includes spending on social protection and social services as defined in the TMU.

Table 2.

Gabon: Prior Actions and Structural Benchmarks for 2021

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Table 3.

Gabon: Proposed Structural Benchmarks for 2022

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Table 4.

Gabon: Proposed Structural Benchmarks for 2023

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Table 5.

Gabon: Tax Measures Implemented (in 2021 or Initial 2022 Budget Law)

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Table 6.

Gabon: Domestic Debt Clearance Plan (billion FCFA)

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Gabon: Actions Undertaken as Part of the GEF Project

The activities undertaken on the GEF resulted in the cleaning of the CNAMGS GEF file based on the current legislation. The following activities have been conducted:

  • Making the CNAMGS files more reliable regarding the following tranches/Tiers: Tier 1 (private and semipublic sector), Tier 2 (public officials) and Tier 3 (GEF). This involved, on the one hand, matching the CNAMGS files with each other, and on the other hand, the CNAGMS files with the files of sectoral administrations (CNSS, payroll, Tax administration, etc.);

  • Filling the Tier 4 (Self-Employed Mobile Workers) by transferring the GEFs that are currently included in Fund 3 (Economically Weak Gabonese) to Fund 4;

  • Deleting duplicates and unnecessary records included in the GEF database, change the status of GEFs and finally migrate agents from Fund 3 to Funds 1 and 2.

Gabon: Publication of Data Online

  • The free public access online journal —for which publications were already available— was presented to members of the government in December 2021;

  • The publication of information on contracts (planning, award, execution and control) for 2021 has been available on the website since January 2022;

  • The release of information on contracts for 2022 is ongoing along with the continued loading of information for the remainder of 2021 through 2020;

  • All the information on the attributions (provisional subject to appeal) of public contracts for 2022 will be available in time from the approval of the analysis report of the offers by the General Directorate of Public Contracts (DGMP) on its website.

Attachment II. Technical Memorandum of Understanding

June 14, 2022

1. This Technical Memorandum of Understanding (TMU) sets out the understandings between the Gabonese authorities and the International Monetary Fund (IMF) regarding the definition of quantitative performance criteria (PC) and indicative targets (IT). It also set out the PC and IT adjusters, and data reporting requirements for the duration of the extended arrangement under the Extended Financing Facility, as described in the authorities’ Letter of Intent (LOI) dated June 14, 2022, and the attached Memorandum of Economic and Financial Policies (MEFP). As is standard under all Fund arrangements, we will consult with the Fund before modifying measures contained in the LOI/MEFP, or adopting new measures that would deviate from the goals of the program, and provide the Fund with the necessary information for program monitoring.

2. The PCs and IT are shown in Table 1 of the MEFP. Prior actions and structural benchmarks are listed in Tables 2, 3 and 4 of the MEFP. For program monitoring purposes, quantitative performance criteria (PCs) and indicative targets (ITs) are set for June 30, 2022, and December 31, 2022; the same variables are indicative targets for September 30, 2022; March 31, 2023; and June 30, 2023.

3. For program purposes, all foreign currency-related assets, liabilities, and flows will be evaluated at “program accounting exchange rates” as defined below, except for items affecting government fiscal balances, which will be measured at current exchange rates. Unless otherwise indicated, U.S. dollar denominated components of the balance sheet of the Bank of Central African States (BEAC) will be valued at the official exchange rate of the CFAF to the U.S. dollar of 612.300 as of May 31, 2022. Amounts denominated in other currencies will be converted for program purposes into U.S. dollar amounts using the following cross-rates: the Euro valued at 1.0713 U.S. dollars, Pound Sterling valued at 1.2589 U.S. dollars, the Chinese Yuan valued at 6.6612 U.S. dollars, the Special Drawing Right (SDR) valued at 1.3497 U.S. dollars. Official gold holdings were valued at 1852.51 U.S. dollars per fine ounce.

I. Quantitative Performance Criteria: Definition of Variables

4. Definitions: The central government (CG), for the purposes of the program, consists of all institutions, government units, and special funds (including the Road Fund) currently covered under the state budget. It does not include any local government authorities, the Bank of Central African States (BEAC), or any government-owned entity with separate legal status. The authorities will inform the Fund staff of any new funds, or other special budgetary and extra-budgetary programs that may be created during the program period to carry out operations of a fiscal nature and will ensure that these will be incorporated within the definition of central government.

5. The fiscal year is the calendar year, starting on January 1 and ending on December 31.

A. Cumulative Floor on the Non-Oil Primary Fiscal Balance on a Payment Order Basis

6. Definition: The non-oil primary fiscal balance of the CG on a payment order basis is measured as the difference between:

  • i. total central government revenue on a cash basis (excluding oil revenue) and grants, and

  • ii. total central government expenditure on a payment order basis excluding interest payments.

7. The PC for the fiscal balance is calculated based on the projected exchange rate. Reporting and adjustment, as defined below, will be made using current exchange rates.

8. Definition: Total CG revenue (excluding oil revenue) is measured on a cash basis and includes offsetting revenue and expenditure operations, including private sector tax obligations offset against central government obligations to the private sector. Tax receipts are specified in the Table of central government financial operations (Tableau des opérations financières de l’Etat–TOFE), including all earmarked revenues (Road Fund and special funds). Oil revenue includes payments received in cash and in crude (Text Table 1). Revenue received by the treasury will be registered after encashment, which will be at most 7 days after the date of receipt; oil revenue received in kind will be recorded at transaction value on the day of sale.

Text Table 1.

Gabon: Oil Revenue

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Sources: Gabonese authorities; and IMF staff projections.

9. Definition: Total CG expenditure includes spending on a payment order basis (ordonnancements), and treasury advances (avances à régulariser), and outlays on special funds and from earmarked revenues. The TOFE presentation will also recognize the following government expenditures (in addition to existing expenditure categories): (i) capital transfers arising from assumption of obligations of public enterprises undergoing privatization or liquidation; (ii) capital transfers arising from assumption of obligations of private enterprises; (iii) capital grants arising from assumption of obligations of other general government units; and (iv) current transfers at the end of the fiscal year used for financing of the deficits on accounts at the Treasury, accounts of Treasury correspondents (Correspondant du Trésor) and local governments (Collectivités locales).

10. Definition: The financial operations specified in the TOFE relating to treasury correspondents (correspondants du Trésor), local governments (collectivités locales), and other treasury operations (autres opérations de trésorerie) correspond to the change from period to period in the balance of these accounts. In the case of financial operations on accounts at the Treasury of treasury correspondents (correspondants du Trésor) and local governments (collectivités locales), a debit (i.e., negative) entry for the whole fiscal year, representing a reduction in the balance of such accounts, cannot exceed the balance of the account at the start of the fiscal year. If for a given account, a debit entry for the whole fiscal year exceeds the balance on this account at the start of the fiscal year, the central government financing of the deficit ran by the treasury correspondent or local government will be recorded in the TOFE as non-bank financing (a credit (i.e., positive) entry under “Assumption of end-fiscal year deficits on accounts at the Treasury of Treasury correspondents and local governments”) and as a corresponding increase of the same magnitude of current transfers.

11. Reporting: Data will be provided to the Fund with a lag of no more than six weeks after the end of the month.

Text Table 2.

Gabon: External Program Disbursements (Baseline Projection)

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Sources: Gabonese authorities; and IMF staff estimates and projections.

B. Ceiling on the Net Domestic Financing of the Central Government

12. Definition: The sum of (i) net bank credit to the government; and (ii) net nonbank financing.

  • Net bank credit to the government is equal to the change in the balance between government’s liabilities and assets with the national banking system. These assets include (i) cash resources on hand with the treasury; and (ii) treasury deposits with the central bank. The government's outstanding balances include (i) financing from the central bank, and specifically statutory advances; net IMF financing (disbursements net of reimbursements), refinancing of guaranteed bonds, and treasury paper held by the central bank; and (ii) financing from commercial banks, and specifically direct advances and loans, securities, and bills and bonds of the treasury held by local banks. Net bank credit to the government is calculated based on the data provided by the BEAC. These data should be subject to monthly reconciliations between the treasury and the BEAC.

  • Net nonbank financing of the government includes (i) the change in the outstanding balance of government securities (treasury bills and bonds) issued in CFA francs on the regional financial market and not held by the local banking system; (ii) privatization receipts (proceeds from the sale of public assets, data to be provided by the authorities); (iii) the change in the balance of correspondent bank accounts and consignment accounts; and (iv) the change in the balance of outstanding claims on the government abandoned by the private sector. The government’s net nonbank financing is calculated by the Treasury.

C. Ceiling on Net Claims of the BEAC to the Central Government, Excluding the use of IMF Credit

13. Definition: The ceiling on net claims of the BEAC to the central government, excluding IMF credit is calculated as the gross change of claims of the BEAC on the central government, including BEAC statutory advances to the CG and other BEAC claims on the CG (excluding BEAC claims on the CG created by the on-lending of IMF credit), less the change in the gross liabilities of the BEAC to the CG, including treasury vault cash, deposits of the Future Generation Fund, deposits of the Sovereign Wealth Fund, and other central government deposits held at the central bank. The ceiling applied from end-June 2022.

14. Reporting: Data will be provided to the IMF with a lag of no more than six weeks from the end of the month.

D. Ceiling on Disbursing or Guaranteeing External Debt by the Central Government

15. Definition: For program purposes, the definition of debt is set out in paragraph 8(a) of the Guidelines on Public Debt Conditionality in Fund Arrangements attached to IMF Executive Board Decision No. 15688-(14/107), adopted on December 5, 2014, as amended.

  • i. For the purpose of these guidelines, the term “debt” will be understood to mean a current, i.e., not contingent, liability, created under a contractual arrangement through the provision of value in the form of assets (including currency) or services, and which requires the obligor to make one or more payments in the form of assets (including currency) or services, at some future point(s) in time; these payments will discharge the principal and/or interest liabilities incurred under the contract. Debts can take a number of forms; the primary ones being as follows:

    • (i) loans, i.e., advances of money to the obligor by the lender made on the basis of an undertaking that the obligor will repay the funds in the future (including deposits, bonds, debentures, commercial loans and buyers’ credits) and temporary exchanges of assets that are equivalent to fully collateralized loans under which the obligor is required to repay the funds, and usually pay interest, by repurchasing the collateral from the buyer in the future (such as repurchase agreements and official swap arrangements);

    • (ii) suppliers’ credits, i.e., contracts where the supplier permits the obligor to defer payments until sometime after the date on which the goods are delivered or services are provided; and

    • (iii) leases, i.e., arrangements under which property is provided which the lessee has the right to use for one or more specified period(s) of time that are usually shorter than the total expected service life of the property, while the lessor retains the title to the property. For the purpose of these guidelines, the debt is the present value (at the inception of the lease) of all lease payments expected to be made during the period of the agreement excluding those payments that cover the operation, repair, or maintenance of the property.

  • ii. Under the definition of debt set out in this paragraph, arrears, penalties, and judicially awarded damages arising from the failure to make payment under a contractual obligation that constitutes debt are debt. Failure to make payment on an obligation that is not considered debt under this definition (e.g., payment on delivery) will not give rise to debt.

16. Definition: For the purposes of the ceiling on disbursing or guaranteeing external debt by the CG, external debt is defined as debt contracted or serviced in a currency other than the franc of the Financial Community of Africa (CFAF). The ceiling applies to all external debt whether or not concessional. Guaranteeing external debt triggers the nonobservance of the performance criterion regardless of whether or not a disbursement has been made. The performance criterion will be assessed on a cumulative basis during the fiscal year. The performance criterion does not apply to:

  • i. Normal import-related commercial debt having a maturity of less than one year;

  • ii. Rescheduling agreements;

17. In the case of the issuance of Eurobond, the amount deemed disbursed is the amount subscribed/purchased at the end of the subscription/purchase period as specified in the final documentation.

18. Reporting: The authorities will inform IMF staff within 2 weeks of any planned contracting or guaranteeing of external debt and the related conditions before the debt is either contracted or guaranteed by the CG. Once the debt is either contracted or guaranteed by the CG, their disbursement will become part of the monitored disbursements of existing debts.

E. Ceiling on the Accumulation of New External Arrears by the Central Government

19. Definition: The accumulation of external payments arrears by the CG will be a continuous performance criterion with a zero limit throughout the program period. External payment arrears are defined as contractual external debt service obligations (interest and/or principal, including moratorium and later/penalty interest, where applicable) of the CG that have not been made after falling due. Arrears resulting from the nonpayment of the debt service for which a rescheduling agreement is sought are excluded from this definition.

20. Reporting: The Ministry of Economy will provide the final data on the stock of external arrears of the CG to the IMF, with a lag of not more than six weeks from the end of the month. This PC will be monitored on an ongoing basis, and the Ministry of Economy will provide to the IMF data concerning any external arrears of the CG immediately after such arrears are incurred.

F. Cumulative Floor on Central Government Tax Revenue, Excluding Oil Revenue

21. Definition: The program will have a performance criterion on the floor on CG non-oil tax revenue, defined as the sum of direct domestic taxes, indirect domestic taxes, and international trade taxes, as defined by the Government of Gabon’s revenue classification. The first test date for this performance criterion will be at end-December 2022.

22. Reporting: Data will be provided to the IMF with a lag of no more than six weeks from the end of the month.

II. Quantitative Indicative Targets: Definition of Variables

A. Cumulative Floor on the Net Reduction of the Stock of Domestic Arrears of the Central Government

23. Definition: The stock of domestic payment arrears of the CG is defined as the sum of all contractual obligations that remained unpaid 90 days after these obligations has been accrued, consistently with the provisions provided for by the regional directives (see article 14 of directive on TOFE). This stock includes, but is not limited to, payment obligations from procurement contracts for goods and services and other contracts providing for payment in domestic currency, as well as statutory obligations for payment (e.g., civil service wages, VAT reimbursements, and other entitlements). The cumulative floor on the net reduction of the stock of domestic arrears of the CG is measured as the stock of outstanding domestic arrears on the test date minus the stock of outstanding domestic arrears as of January 1, 2022.

24. Reporting: Data on repayment and new accumulation of domestic payment arrears and the remaining previous-year stock of domestic payment arrears will be provided to the IMF with a lag of no more than six weeks from the end of the month.

B. Cumulative Floor on Central Government Tax Revenue, Excluding Oil Revenue

25. Definition: The program will, through end-September 2022, have a floor on CG non-oil tax revenue, defined as the sum of direct domestic taxes, indirect domestic taxes, and international trade taxes, as defined by the Government of Gabon’s revenue classification.

26. Reporting: Data will be provided to the IMF with a lag of no more than six weeks from the end of the month.

C. Cumulative Floor on Central Government Social Spending

27. Definition: The program will have a floor on non-wage social spending as defined in the CG budget for a particular fiscal year. These programs are funded by government resources. The floor includes: (i) social services relating to social safety nets, free childbirth coverage, SAMU Social and seniors; (ii) legal assistance; (iii) the costs of the electrification program and hydraulic installations intended for rural areas without access to public water and electricity network; and (iv) the special solidarity contribution (CSS) allocated to economically weak Gabonese (GEF).

28. Reporting: Data will be provided to the IMF with a lag of no more than four weeks from the end of the month.

III. Adjustors to Performance Criteria and Indicative Targets

Net Domestic Financing of the Central Government:

Oil prices:

  • If Brent oil price projections as reported by IMF-WEO decline by up to 25 percent relative to the program baseline (US$111 per barrel), the ceiling will be adjusted upward to accommodate the shortfall in oil revenue in a given quarter.

  • If Brent oil price projections as reported by IMF-WEO decline by more than 25 percent relative to the baseline program projection, then a consultation between the government and the IMF is required.

  • If Brent oil price projections as reported by IMF-WEO rise relative to the baseline program projection for 2022, and one-half should be allocated to increase central government deposits at the BEAC, with a requisite downward adjustment of the cumulative ceiling on net claims of the banking sector on the CG.

Budget support:

  • The program will be adjusted downward (upward) by the amount by which budget support exceeds (falls short of) the projected amounts. Any upward adjustment will be capped to 10 percent of the amount set out in Table 1 of the MEFP.

Non-oil Fiscal Balance

  • The floor on the cumulative primary non-oil fiscal balance of the CG on a payment order basis will be adjusted downward (upward) to the extent that external financing is more (less) than external program disbursements given in Text Table 2.

Social Spending

  • Should primary expenditure compression be needed, social spending would nevertheless be maintained to the execution level estimated for 2022 regarding the various budget item included in the cumulative floor for CG social spending (1 percent of NOGDP).

Debt

  • The program ceiling on disbursing or guaranteeing of external debt by the central government will be adjusted as follows:

    • upward up to a maximum of 5 percent of the ceiling on new external debt in cases in which differences vis-à-vis the PC on new debt are caused by a variation in financing conditions (interest, maturity, grace period, payment schedule, front-end fees, management fees) of the debt or debts. The adjustor may not be applied when the differences are the result of an increase in the face value of the total debt contracted or guaranteed.

    • upward (downward) in cases where early (late) disbursements of specifically agreed and identified financing flows take place.

IV. Program Monitoring

A. Reporting Requirements

29. To facilitate monitoring of program implementation, the government of Gabon will prepare and send to the IMF by e-mail data and monthly reports within six weeks following the end of the preceding month. Such data will include (but are not limited to) the following:

  • the comprehensive monetary survey, the central bank balance sheet, and the consolidated balance sheet of the commercial banks (electronic file);

  • the central government financial operations (opérations financières de l’Etat) on a payment order basis (ordonnancements), identifying any discrepancy between the fiscal deficit and changes in domestic and external arrears and in the treasury float, on the one hand, and total net domestic bank/nonbank and net external financing, on the other (electronic file);

  • the detailed breakdown of oil revenue by type of revenue (royalties, profit tax, dividends, boni and other) and by company/type of contract, as well as the detailed breakdown of non-oil tax revenue (by type of tax) and nontax revenue (electronic file);

  • the detailed breakdown of total central government expenditure, on an adjusted commitment basis, adjusted payment order basis, and cash basis as presented in the Tableau Intégré (electronic file);

  • The Treasury cash balance (Excel file);

  • the details for domestic and external debt-service obligations, on a contractual and actual payments basis, respectively, with a breakdown into interest and principal and by creditor, as well as any possible accumulation of domestic or external arrears (electronic file);

  • the details on the stock of external and domestic debt at the end of each quarter prepared by the General Directorate of Debt. The external debt stock is to be evaluated at end-of-quarter exchange rates (electronic file);

  • the details for the outstanding stock of the treasury float (month to month) and the cumulative flows from January 1, 2022; the net accumulation of new float during 2022, defined in paragraph 6 as the difference between payment orders (ordonnancements) and payments made (cash basis), as well as the repayment of pre-2022 float, with both items to be broken down by wages and salaries, goods and services, transfers and subsidies, interest, capital expenditure, and net lending; any stock-flow adjustment not consistent with flows should be explained (electronic file);

  • information on the balance of the accounts relating to treasury correspondents (correspondants du Trésor), local governments (collectivités locales), and other treasury financial operations specified in the TOFE;

  • the amount of new external debt contracted or guaranteed by the central government, with the detailed information on the original terms and conditions (currency of denomination, interest rate, grace period, and maturity) and the envisaged path of disbursement;

  • actual disbursements on external debt, including on newly contracted loans, by creditors and by projects/programs and the amounts of debt relief, if any, granted to Gabon by external creditors (Excel file);

  • monthly information on the oil sector: export prices, effective exchange rate, production per oil field, volume of exports and volumes provided to SOGARA based on data from the Direction Générale des Hydrocarbures (electronic file);

  • quarterly report on numbers and value of procurement contracts treated by the Direction Générale des Marchés Publics (DMP) by type of contracting;

  • quarterly reports (table) presenting the stock of expenditure pending at the various execution, to be prepared jointly by the Direction Générale du Budget et des Finances Publiques (DGBFIP) and Direction Générale de la Comptabilité Publique et du Trésor (DGCPT);

  • indicators and other statistical data on recent economic developments, such as the household consumer price index (Excel file), merchandise imports and exports (in value and volume terms) by major categories on the basis of customs data, timber production and exports by categories (in value and volume terms), as well as the quarterly reports on economic activity prepared by the General Directorate of the Economy (DGE) and six-monthly report of the balance of payments by the BEAC; and

  • a status report on the implementation of the structural reforms specified in Tables 2, 3 and 4 attached to the letter of Intent of June 14, 2022.

The Technical Committee in charge of monitoring the Fund-supported program will provide the African Department of the IMF with any other information that the latter may deem necessary or that may be requested by the staff of the IMF for the effective monitoring of the program.
1

See ¶27.

2

COBAC stopped the reporting of the Financial Soundness Indicators to the statistical department of the IMF and the last reported data refer to August 2021.

3

Only 35 percent of external financing in 2021 has turned out compared to projections at program approval, as project execution stalled due to COVID restrictions and payments arrears, and a planned AfDB budget support did not materialize. With improving sanitary conditions and reform progress external financing is projected to recover to initial program levels over the medium term.

1

See IMF Policy Paper No. 19/026 for the revised EBA-Lite methodology.

2

These are calibrated to include: (i) a cyclically-adjusted fiscal balance (-4.0 percent of GDP) and an annual change in reserves (0.0 percent of GDP) consistent with the medium-term projections and meeting CEMAC convergence criteria; (ii) private credit growth set in line with the benchmark level based on regressions on the same country group (0.6 percent); (iii) a desired public health expenditure of 2 percent of GDP based on a benchmark level given Gabon’s capacity to spend; (iv) the capital control benchmark is based on the latest cross-country average level of the control index (0.47); and (v) the real interest rate set to the actual rate for 2021, which implies monetary policy is consistent with output and inflation objectives.

3

The COVID-19 crisis is significantly affecting external positions. Current account (CA) balances have in many cases changed substantially more in 2020 than in 2019, although the movements are generally expected to fade as the COVID-19 crisis subsides. Following the latest EBA-Lite guidelines (version April 2021), we made no special adjustments to the oil trade balance beyond the standard cyclical adjustments to strip out transitory factors. We also assume there were no temporary and major changes to tourism and remittances, thus related adjustors are set to be zero.

4

See Bems, R., and I. de Carvalho Filho, 2009, “Exchange Rate Assessments: Methodologies for Oil Exporting Countries,” IMF Working Paper 09/281.

5

Country Report No. 2021/189.

6

The consumption model was also applied but the estimates are not reported because they are subject to uncertainties given the reliance on long-run assumptions, including the potential for new oil discoveries or demographic changes that might slow population growth, which would reduce the CA norm and the degree of overvaluation.

1

The Risk Assessment Matrix (RAM) shows events that could materially alter the baseline path. The relative likelihood is the staff’s subjective assessment of the risks surrounding the baseline (“low” is meant to indicate a probability below 10 percent, “medium” a probability between 10 and 30 percent, and “high” a probability between 30 and 50 percent). The RAM reflects staff views on the source of risks and overall level of concern as of the time of discussions with the authorities. Non-mutually exclusive risks may interact and materialize jointly. The conjunctural shocks and scenario highlight risks that may materialize over a shorter horizon (between 12 to 18 months) given the current baseline. Structural risks are those that are likely to remain salient over a longer horizon.

1

The previous DSA refers to the DSA included in the Country Report No. 2021/189.

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Cover IMF Staff Country Reports
Gabon: First and Second Reviews of the Extended Arrangement under the Extended Fund Facility, Requests for Waivers for Nonobservance of Performance Criteria, Establishment of Performance Criteria, and Financing Assurances Review-Press Release; Staff Report; Staff Supplement; and Statement by the Executive Director
Author:
International Monetary Fund. African Dept.
Volume/Issue:
Volume 2022: Issue 216
Publisher:
International Monetary Fund
ISBN:
9798400213113
ISSN:
1934-7685
Pages:
101
DOI:
https://doi.org/10.5089/9798400213113.002
Text Figure 1.

Gabon: COVID-19 Developments and Vaccination
Text Figure 2.

Gabon: External Trade Developments

(Billion CFAF)
Text Figure 3.

Gabon: Trade Concentration1, 2
Text Figure 4.

Gabon: Oil prices and EMBIG Spreads, December 2019-May 2022
Figure 1.

Gabon: Real Sector Developments, 2020–22
Text Figure 5.

Gabon: Fiscal Developments in 2021
Text Figure 6.

Gabon: Fuel Consumption and Subsidies in 2021
Text Figure 7.

Gabon: Primary Deficit and Public Debt, 2021–26
Figure 1.

Gabon: International Oil and Food Prices, 2020–22
Figure 2.

Gabon: Oil Revenue, 2018–22
Figure 3.

Gabon: Fiscal Balance, Debt, and Interest, 2022–25
Figure 4.

Gabon: Balance of Payments 2022

(Projected)
Figure 5.

Gabon: CPI Inflation
Figure 1.

Gabon: External Sector Developments, 2016–21
Figure 3.

Gabon: Investment Based-Model Estimated CA and Projected CA

(Percent of GDP)
Figure 4.

Gabon: Structural Competitiveness Indicators
Figure 1.

Gabon: Public DSA Risk Assessment
Figure 2.

Gabon: Public DSA—Realism of Baseline Assumptions
Figure 3.

Gabon: Public Sector DSA — Baseline Scenario

(Percent of GDP, unless otherwise indicated)
Figure 4.

Gabon: Public DSA — Composition of Public Debt and Alternative Scenarios
Figure 5.

Gabon: Public DSA — Stress Tests

Gabon: Climate Risks, Emissions and Value Added