IMF staff completes mission for combined first and second reviews

F.P. Report

WASHINGTON, DC: A team of IMF staff led by Mr. Boileau Loko visited Gabon from May 12­ to 20, 2022, to hold discussions on the combined first and second reviews of the arrangement under the EFF, approved in July 2021.
At the end of the mission, Mr. Loko made the following statement:
The mission held productive discussions with the authorities on the measures needed to improve program implementation and complete the first and second reviews as well as on the economic policies and structural reforms which could form the basis of the program for the rest of 2022. These discussions will continue in the coming weeks.
The economy is gradually recovering from the 2020 recession owing to the efforts undertaken to limit the impact of the pandemic and the rise in oil prices. Economic growth should accelerate in 2022, reaching 2.8 percent compared to 1.5 percent in 2021 and -1.9 percent in 2020. However, the intensification of the war in Ukraine and its effects on global growth, the resurgence of the pandemic, and a reversal in oil price present risks for economic recovery.
Under the difficult circumstances resulting from the pandemic, performance against quantitative program targets was mixed. Public finances in 2021 were marked by underperformance in non-oil revenues and some overspending on subsidies given the price freeze on petroleum products at the pump. The execution of public investment was overall below forecasts despite an overrun in domestically financed capital spending. A significant fall in externally financed capital spending has helped contain the deficit at 7.1 percent of non-oil GDP, as originally planned.
The mission and the authorities agreed on the need to accelerate public finance, governance, and structural reforms to strengthen domestic revenues and public financial management. These efforts will support a return to strong, inclusive growth and improve debt sustainability. In this context, faced with the effects of the war in Ukraine and the surge in oil prices, the draft revised 2022 budget must prioritize increasing fiscal space and protecting the most vulnerable.
In the extractive sector, governance efforts should continue to ensure that all of the government’s oil resources are transferred to the Treasury Single Account at the BEAC. Greater transparency in the oil sector is needed for assessing the costs of oil production and cross debt between the government, public enterprises, and oil companies, including offsetting of VAT credits. The improvement of governance in the oil sector, including the avoidance of pre-financing operations linked to future government revenues, would greatly facilitate liquidity and public financial management.
The mission was pleased to note the authorities’ determination to continue to mobilize non-oil revenue and improve public financial management. The authorities and the mission agreed on the urgency of reducing tax exemptions and expenditures. The mission welcomed the authorities’ decision to publish the report on the audit of spending related to the COVID-19 pandemic and finalize the decree on the publication of the names and nationalities of beneficial owners of entities awarded public procurement contracts. It encourages the authorities to step up efforts to avoid the accumulation of domestic and external arrears.
The authorities and the mission agreed on the need to protect the most vulnerable from the increase in oil and food prices caused, in particular, by the war in Ukraine. In this regard, IMF staff encourages the authorities to continue subsidizing only the pump prices of kerosene and butane, the two products most widely consumed by the most disadvantaged segments of the population. In this context, strengthened social protection for the most vulnerable is necessary.
IMF staff encourage the authorities to accelerate reforms to strengthen the banking sector and improve the business environment to promote private sector development.
The IMF team met with Ms. Nicole Jeanine Lydie Roboty Mbou, Minister of Economy and Recovery; Ms. Édith Ekiri Mounombi Oyouomi, Minister of the Budget and Public Accounts; Mr. Francis Nkea Ndzigue, Minister for the Promotion of Good Governance and the Fight against Corruption; Guy Patrick Obiang Ndong, Minister of Health and Social Affairs; and Mr. Vincent de Paul Massassa, Minister of Oil and Gas. The team also met with their partners as well as private sector leaders and the diplomatic community. The mission would like to thank the Gabonese authorities for the constructive discussions and for their warm hospitality.

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