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IMF Country Report No. 13/55

GABON
March 2013

2012 ARTICLE IV CONSULTATION
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with
members, usually every year. In the context of the 2012 Article IV consultation with Gabon,
the following documents have been released and are included in this package:



Staff Report for the 2012 Article IV consultation, prepared by a staff team of the IMF,
following discussions that ended on December 11, 2012 with the officials of Gabon on
economic developments and policies. Based on information available at the time of these
discussions, the staff report was completed on January 30, 2013. The views expressed in the
staff report are those of the staff team and do not necessarily reflect the views of the
Executive Board of the IMF.





Informational Annex prepared by the IMF.
Public Information Notice (PIN) summarizing the views of the Executive Board as
expressed during its February 13, 2013 discussion of the staff report that concluded
the Article IV consultation.
Statement by the Executive Director for Gabon.

The policy of publication of staff reports and other documents allows for the deletion of
market-sensitive information.
Copies of this report are available to the public from
International Monetary Fund  Publication Services
700 19th Street, N.W.  Washington, D.C. 20431
Telephone: (202) 623-7430  Telefax: (202) 623-7201
E-mail: publications@imf.org Internet: http://www.imf.org

International Monetary Fund
Washington, D.C.

GABON

GABON
STAFF REPORT FOR THE 2012 ARTICLE IV CONSULTATION
January 30, 2013

KEY ISSUES
Context: The authorities have launched an ambitious public investment and reform
program to transform Gabon into a diversified emerging market economy by 2025.
Although current economic conditions remain supportive, a critical issue ahead is how
to use oil and mineral resources efficiently to support inclusive growth. While Gabon
has the fourth highest level of income per capita in Sub-Saharan Africa, poverty and
unemployment remain widespread, and the economy is heavily dependent on oil,
which makes it vulnerable to volatile oil prices.
Outlook and risks: Economic activity has been robust and is expected to remain
buoyed by the large public investment plan, while inflation remains moderate. Healthy
oil prices have improved the current account balance whereas the nonoil primary fiscal
deficit has widened considerably in recent years, driven by the increase in public
investment. The foremost risk to the economy is a drop in oil and manganese prices, as
these products represent about 90 percent of all merchandise exports and 45 percent
of nominal GDP.
Sustaining public finances: Although Gabon has produced oil for decades, fiscal
savings remain low making fiscal outcomes vulnerable to oil price volatility. In addition,
the medium-term fiscal framework aims at scaling up investment expenditure to reflect
Gabon’s ambitious plans for becoming an emerging economy. The plan is well thought
out but will be extremely vulnerable to exogenous price shocks in terms of meeting
financing needs. Its success is also conditioned on a significant improvement in
expenditure execution. A strong fiscal anchor and an astute choice and audit of
investment projects would help secure the authorities’ objectives of becoming an
emerging market country.
Fostering inclusive growth and developing the financial sector: Coordinated
policies are needed to make growth inclusive by reforming the business environment,
promoting good governance, and improving the quality of public investment and
spending on human development. Moreover, an effective employment policy will be
necessary for matching labor supply and demand, including by improving vocational
training. Improving access to finance and financial sector intermediation, while ensuring
the continued stability of the financial sector by addressing issues of two small banks in
financial difficulty, will also contribute to achieving high and more inclusive growth.

GABON

Approved By

Anne-Marie GuldeWolf and
Dhaneshwar Ghura

Discussions were held in Libreville during
November 28-December 11, 2012. The mission team comprised
Messrs. Toujas-Bernaté (head), Maino, Thomas, and Ms. Tartari (all
AFR). Messrs. Tsouk Ibounde (World Bank) and Nguema-Affane
(Executive Director Office) participated in the meetings. The mission
had constructive meetings with Mr. Luc Oyoubi, Minister of Economy,
Employment, and Sustainable Development; Mrs. Christiane Rose
Ossouka Raponda, Minister of Budget, Public Accounts, and Civil
Service; Mr. Régis Immongault, Minister of Industry and Mines; and
Members of the Finance Committee of the National Assembly. The
mission also met with representatives of the private sector, civil
society, and donors.

CONTENTS
GABON AT A CROSSROADS _____________________________________________________________________ 4
RECENT DEVELOPMENTS AND CHALLENGES __________________________________________________ 5
A. A solid growth performance buoyed by expansionary fiscal policy… __________________________5
B. …but substantial social development challenges remain ________________________________________7
OUTLOOK AND RISKS __________________________________________________________________________ 12
POLICY DISCUSSIONS __________________________________________________________________________ 13
A. Ensuring Fiscal Sustainability and External Competitiveness _________________________________ 13
B. Achieving higher and more inclusive growth _________________________________________________ 17
C. Developing a deeper financial sector ________________________________________________________ 19
D. Other Issues __________________________________________________________________________________ 20
STAFF APPRAISAL ______________________________________________________________________________ 23
BOXES
1. External Stability and Competitiveness _________________________________________________________8
2. Structure and Recent Performance of the Financial Sector ___________________________________ 21
FIGURES
1. Selected Economic Indicators ________________________________________________________________ 10
2. Fiscal Indicators ______________________________________________________________________________ 11
3. Non-Resource Fiscal Revenues _______________________________________________________________ 15
4. Financial Indicators ___________________________________________________________________________ 22

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TABLES
1. Selected Economic Indicators, 2008–17 ______________________________________________________ 26
2a. Central Government Accounts, 2008–17 _____________________________________________________ 27
2b. Statement of the Central Government Operations, 2007–17 _________________________________ 28
3. Central Government Accounts, 2008–17 _____________________________________________________ 29
4. Monetary Survey, 2008–13 ___________________________________________________________________ 30
5. Financial Soundness Indicators for the Banking Sector, 2006–11_____________________________ 31
6. Balance of Payments, 2008–17 _______________________________________________________________ 32
7. External Debt, 2008–17 _______________________________________________________________________ 33
8. Millennium Development Goals, 1990–2009 _________________________________________________ 34
APPENDIXES
I. Strategic Plan for "Emerging Gabon" _________________________________________________________ 35
II. Anchoring Fiscal Policy in Gabon ____________________________________________________________ 37
III. Oil Subsidies in Gabon _______________________________________________________________________ 41
IV. Public Finance Management Reform ________________________________________________________ 43
V. Employment and Inclusiveness ______________________________________________________________ 45
VI. Assessing Debt Sustainability ________________________________________________________________ 49
VII. Alternative Scenario Analysis ________________________________________________________________ 54

INTERNATIONAL MONETARY FUND

GABON

GABON AT A CROSSROADS
1.
Gabon’s recent economic performance has been strong. Partly driven by a scaling-up of
public investment, the non-oil economy has performed well, in particular mining, wood processing,
and construction, helping to boost real GDP growth to 7 percent in 2010-11. Higher oil prices have
also improved the current account balance and helped to maintain overall fiscal surpluses despite a
70 percent increase in total spending from 2009 to 2011. With expenditures driven by a tripling in
capital expenditure, the non-oil fiscal primary deficit widened from 12 to 22 percent of non-oil GDP
over the period.
2.
While Gabon is in the upper-middle income countries category, its economic growth
has not been inclusive, leaving one third of its population in poverty. Despite non-oil annual
growth averaging about 5 percent during 2005–11 and an income per capita of more than
$10,000 in 2011, not enough jobs were created for a young and rapidly growing population, leading
to an increase in unemployment to 20 percent overall, and an estimated 36 percent for the youth.
The economy remains heavily dependent on oil─45 percent of GDP and 55 percent of budgetary
resources in 2011─and weak institutions and governance have largely prevented transforming the
oil wealth into better living conditions for all.
3.
Gabon still faces many challenges to improve the climate for supporting higher nonoil growth and diversifying its economy. In addition to substantial gaps in infrastructures, one of
the major impediments for sustaining higher non-oil growth is the weak business climate
characterized by high levels of labor regulation, high wages, demand and supply labor skills
mismatch, protracted delays in setting up new businesses, and a shallow financial sector.
4.
Gabon looks to consolidate recent growth gains and transform its economy into an
emerging market by 2025. Against the backdrop of high oil prices over the last decade which
generated fiscal and current account surpluses and facilitated a sharp reduction in public external
debt, President Ali Bongo announced the launching of an ambitious investment and reform plan
after he was elected in 2009. The reform strategy (“Gabon Émergent”) is to transform Gabon into an
emerging economy by 2025 (Appendix I), with the strategy underpinned by a US$ 12 billion public
investment program over 7 years (equivalent to more than 150 percent of 2011 non-oil GDP). The
strategy is focused on improving the level and standard of infrastructure in the country by building
roads and ports and raising energy supply substantially, as well as addressing some of the
weaknesses in the business climate (quality of the labor force and financial sector development).
5.
Discussions covered similar ground to the 2010 Article IV consultations, but with some
shift in emphasis. Since the last consultations, the authorities further developed and effectively
launched their long-term development plan. The magnitude of the envisaged scaled-up investment
plan is much larger than projected two years ago, with a longer period of implementation, making
an improvement in investment execution capacity, as being sought by the authorities, even more
important. At the same time, current budget spending could not be reined in as advised by staff,
and contributed to a deteriorating fiscal position. Efforts to improve PFM have continued, with Fund

INTERNATIONAL MONETARY FUND

GABON

technical assistance, and preparation for reforms of the business environment and labor market
regulation advanced, but with not much concrete progress yet.

RECENT DEVELOPMENTS AND CHALLENGES
A. A solid growth performance buoyed by expansionary fiscal policy…
6.
Buoyed by a scaled-up investment plan, non-oil growth has been robust. The launch of
the investment plan for infrastructure, preparations for the African Soccer Cup and the construction
of special economic zones contributed to a sustained growth of real GDP in 2011 (7 percent),
notwithstanding a fall in oil production. Real GDP is projected to rise by about 6 percent in 2012,
with non-oil GDP growth making the major contribution at almost 9 percent based on construction
and public works, transportation, and other services related to the high level of public investment.
Economic activity in the oil sector rebounded slightly in 2012 but is projected to decline over the
medium term owing to maturing oil fields, until new fields can be exploited in the longer term.
Inflation remains under control (3.7 percent y-o-y through October 2012, and 3 percent annual
average), notwithstanding a sharp increase in food prices (8.3 percent y-o-y through October), with
the moderate aggregate figure partly reflecting the stability of administered prices and the recent
decision to eliminate indirect taxes on certain basic products.
7.
Based on high oil prices, the external current account surplus remains strong despite
rapid import growth associated with the large public investment projects and the African
Soccer Cup. Oil and manganese export revenues increased considerably during 2010–11, resulting
in a current account surplus of over 14 percent of GDP in 2011, the highest since 2008. Exports of
hydrocarbons and manganese are expected to falter slightly in 2012 owing to lower prices and
logistical difficulties in getting manganese production to export markets. However, the current
account surplus would remain strong at over 12 percent of GDP. Since 2009, imports have been
rising by more than 20 percent per year on average but are expected to grow at a more subdued
level in 2012 as the rapid public investment expansion reaches a plateau. Official reserves are
projected to increase by slightly over US$100 million during 2012, helping to raise the coverage of
imports at the CEMAC level to nearly 5.7 months. The large disparity between the size of the current
account surplus and the change in net foreign assets largely reflects the repatriation of oil funds by
foreign companies.
8.
The external stability analysis does not suggest an overvaluation of the real effective
exchange rate. While the exchange rate assessment is conducted at the regional monetary union
level, the analysis of external stability for Gabon compares the permanent annuity from oil wealth
with the level of the medium term non-oil current account deficit. These two ratios are broadly
similar to each other and therefore there is no fundamental pressure for domestic prices to adjust.
However, if oil prices were to decline from current high levels, an adjustment would then be
necessary (Box 1). Moreover, available indicators point to ample room to improve external
competitiveness.
9.
Since 2009, the fiscal stance has been expansionary on the back of higher capital
spending, and Gabon would register a fiscal deficit in 2012 for the first time since 2000. With

INTERNATIONAL MONETARY FUND

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oil revenues expanding by 80 percent between 2009–12, public expenditure increased by 70 percent
over the same period. This increase reflects a combination of capital and current expenditures in the
ratio of 2:1. The surge in capital expenditures reflects the substantial scaling up of public investment
associated with the “Gabon Émergent” strategy and supplemented with the infrastructure
requirements for hosting the Africa Soccer Cup. Indeed, capital spending has tripled since 2009,
reaching 11.1 percent of GDP in 2012. Current expenditures have been boosted by an increase in the
public wage bill of about 39 percent, mainly reflecting new security personnel, education and health
workers and by transfers and subsidies ratcheting up to reach 2.3 percent of GDP in 2012, due to
higher subsidies for petroleum products. At the same time, the ratio of non-oil revenue over non-oil
GDP declined in 2012, partly reflecting increasing tax exemptions. As a result, the non-oil budget
deficit is projected to peak at 26 percent of non-oil GDP in 2012, far above the estimate of a
sustainable non-oil deficit position at about 12 percent of non-oil GDP. 1
10.
Bank deposits and private credit grew rapidly in 2011-12. Deposits and credit were
fuelled by rapid increases in the public wage bill, public investments and high expenditures
associated with the African Soccer Cup. Broad money grew by 39 percent y-o-y through September
2012 while private sector credit grew by 45 percent over the same time period. Nevertheless,
Gabonese banks remain highly liquid as they have been cautious in the past in offering credit
leaving the level of private credit well below the average for SSA’s oil-exporters (private credit still is
only 19 percent of non-oil GDP in 2012).
11.
Except for two small public banks, the financial sector is sound. Compliance with
regional prudential ratios is generally good, and non-performing loans remain low, except for two
small public development banks where non-performing loans are very high (Table 4). These two
banks were reorganized, with changes in their management as part of a restructuring plan which
was developped in cooperation with the regional supervisory banking commission.

This deficit level assumes that all of the oil wealth is used up. If the authorities wish to conserve oil wealth over time,
a more ambitious deficit target is needed (see Annex II on the DSF).

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B. …but substantial social development challenges remain
12.
There is an urgent need to improve human development outcomes. Despite having one
of the highest per capita incomes in Sub-Saharan Africa, Gabon ranks below the average of uppermiddle-income countries on human development indicators (Appendix V). This lackluster
performance is explained by insufficient and inefficient government spending on health and
education. Historically, health and education programs have not been sufficiently integrated into the
budget and were generally underfunded at the same time as costs have been far higher than
comparator countries.2 For instance, building a classroom in Gabon costs almost five times the
average cost among SSA countries in general.
13.
Growth has been jobless with widespread unemployment affecting especially women
and the youth in urban areas (Appendix V). Job creation has not been commensurate with
economic growth. The national unemployment rate stands at 20 percent according to the ILO
(28 percent when including discouraged workers). Employment has been largely sustained by the
public sector, with a surge in public employment in recent years bringing its share in formal
employment to 62 percent in 2010. Private sector formal employment is highest in forestry and
services, but the informality of the labor market remains very high, with informal employment
representing 47 percent of total employment.
14.
The high level of unemployment reflects both a skills mismatch and a poor business
environment. Less than 8 percent of students receive technical education, leading to a severe
shortage of these types of workers in the labor market. Moreover, Gabon’s business environment
ranks poorly among upper middle-income countries according to the World Bank's 2012 Doing
Business Indicators (47th out of 49 countries). Although ranking better than most CEMAC countries,
it has fallen well behind the average SSA country. Areas where Gabon fared worst include starting a
business, paying taxes, enforcing contracts, and resolving insolvency.

Gabon, Public Expenditure Review─Better management of public finance to achieve Millennium Development

Goals─Report No. 62548-GA, March 2012.

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Box 1. External Stability and Competitiveness
While the exchange rate assessment is done at the regional monetary union level, the external stability
analysis for Gabon based on methodologies for resource rich countries does not suggest an
overvaluation of the real effective exchange rate (REER). This assessment assumes that fiscal buffers are
built up to insulate the economy from downside oil price risks. However, there is ample room to improve
competitiveness, which is hindered by lack of basic infrastructure (e.g. electricity), complex regional trade
regime, high wages, and challenging business climate.
External Stability Assessment. Over the past decade, Gabon’s real effective exchange rate has
remained very stable compared to other oil
External Stability Assesment, 2017
exporters. The analysis of the non-oil
current account indicates that the
Bems/Cavalho External Sustainability
underlying non-oil current account
Constant real
(projection in 2017) is comparable to the
consumption
return on wealth assuming that the real
Current Account Norm (in
value of wealth is maintained in perpetuity.
8.9
0.6
percent of GDP)
Application of the Bems and Carvalho-Filho Underlying Current Account
0.2
0.2
(in percent of GDP)
(BC) approach provides different
Current account elasticity
0.5
0.5
assessments depending on the allocation
Overevaluation (percent)
17.5
1.0
rule. According to their model based on
the permanent income principle, the current account norm would be a substantially larger surplus.
Since the BC model includes the value of oil receipts in its assessment, it is very sensitive to the shortrun profile of oil production and prices. The BC benchmark is also not the most appropriate in a
situation of transitory scaled-up
investment.
Minimum Wage

(PPP US$, latest estimate)

Competitiveness: Although few resource
exporters have performed better, Gabon’s
non oil competitiveness has not been
particularly strong over the past decade.
Non-oil exports have grown by only ½
percent of non-oil GDP per annum. Lack of
basic infrastructure, labor skills mismatch
resulting from a very low quality of
education system and rigid labor regulation
have led to high wages and low
Africa non-resource
productivity. This is illustrated by the
MICs
Sources: ILO
minimum wage in Gabon in PPP terms
being double that of other countries in the region although lower than in middle income countries
with limited resources.
350

300

250

200

150

100

Gabon

CEMAC

SSA

In terms of doing business, Gabon’s position has deteriorated relative to other countries in CEMAC
and other SSA resource producers in the 2013 indicators which were mainly the result of a severe
deterioration in registering property due to a transitory phase in the reform of the regulating
authority. The deteriorating trend has continued since 2008 and Gabon is now ranked worse than the
average oil-exporting country for most doing business indicators.

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Box 1 (Continued). Gabon: Business Environment and Governance

Easier for doing business

100

Doing Business Indicators 2012

Ease of Doing Business
(Percentile rank; 100= better)

Starting a
business

200

Enforcing
contracts

100
50

Trading
across
borders

Dealing with
construction
permits

150

Getting
electricity

Registering
property

Paying taxes

0
GAB SSA

LIC LMIC UMIC HIC

2008

OIL

2012

Ibrahim Sustainable Economic Opportunity Indicators,
2010 (score/100)
Overall Ibrahim
structural index

60.0
40.0

Rural
Sector

Getting
GAB
credit
Avg.UMIC
High Income

RRC

WGI and GDP per capita (log PPP)
5.5
5

Sustainable economic
opportunity

20.0
0.0

4.5
4
3.5
SSA

Infra
structure

Avg.SSA
Avg.OIL

2.5
Public management

GABON

Oil-Exp.

LIC

UMIC
LMIC
RRC

1.5
1
GABON

Avg.SSA

OIL

50
40
30
20
10

Avg.OIL

Avg.UMIC

Avg.LMIC

Avg.LIC

Avg.SSA

GAB

2010

Log GDP PPP per capita

Political and Democracy Stability Score

Changes in Governance indicators
(Percentile Rank)

2000

RRC

55
50
45
40
35
30
25
20
15
10
5
0

6.0
5.0
4.0
3.0
2.0
1.0
0.0

EIU Democracy Index 2011, score (0 lowest, 10 highest)
WBI Political Stability 2011, rank

Sources: Doing Business, 2012; Ibrahim Index of African Governance, Mo Ibrahim Foundation 2011; World Bank ,
Governance Indicators, 2010, (average of control of corruption, government effectiveness, rule of law, regulatory quality,
political stability and voice and accountability); Economist Intelligence Unit (EIU) ; and IMS staff calculations.
SSA = Sub-Saharan Africa; LIC=Low-income country; HIC= High-income countries; UMIC= Upper-middle income country;
LMIC= Low-middle-income country; OIL=Oil producers; RR= Resource-rich countries; = ; WBI= World Bank Indicators.

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Figure 1. Gabon: Selected Economic Indicators
Contribution to GDP Growth 2005-2012
(In percent)

Current Account and International Reserves,
2005-2012
25

1,200

1,000

10
5
0

600
10

2012M9

2012M8

2012M7

2012M1

2011M7

2011M1

2010M7

2009M7

2009M1

2008M7

2008M1

2007M7

2010M1

Non-Food

2008Q1
2008Q2
2008Q3
2008Q4
2009Q1
2009Q2
2009Q3
2009Q4
2010Q1
2010Q2
2010Q3
2010Q4
2011Q1
2011Q2
2011Q3
2011Q4
2012Q1
2012Q2
2012Q3

Exchange Rates, 2008Q1- 2012Q3
(2005=100)
108
106
104
102
100
98
96
94
92
90

2007M1

2012

International Reserves (Billions of CFAF)

12
10
8
6
4
2
0
-2
-4

Real Effective Exchange Rate

Overall

Nominal Effective Exchange Rate

Credit to the Private Sector, 2004-2012
(In percent of broad money)

Monetary Aggregates and Credit , 2009-12
(Y-o-Y Growth, 3 month MA)
75
70
65
60
55

2009M3
2009M5
2009M7
2009M9
2009M11
2010M1
2010M3
2010M5
2010M7
2010M9
2010M11
2011M1
2011M3
2011M5
2011M7
2011M9
2011M11
2012M1
2012M3
2012M5
2012M7
2012M9

Monetary Base

Credit to the Economy

Source: IMF and Gabonese Authorities

2011

Current Account (Percent of GDP)

Inflation in CPI , 2007-12
(Y-o-Y Growth, in percent)

Food

2010

non government consumption
Government consumption
Investment
Net Exports
Real GDP Growth

2009

2008

2007

200

2006

2012

2011

2010

2009

2008

2007

2006

2005

-10

400

2005

-5

60
50
40
30
20
10
0
-10
-20
-30

800

INTERNATIONAL MONETARY FUND

45
40
2004 2005 2006 2007 2008 2009 2010 2011 2012
SSA Oil Exporting Countries

Gabon

GABON

Figure 2. Gabon: Fiscal Indicators

Budget Balances, 2005-2012

Government and External Debt, 2005-12
(percent of GDP)

15
10
5
0
-5
-10
-15
-20
-25
-30

45
40
35
30
25
20
15
5

External Public Debt

Non oil Balance (% of Non Oil GDP)

Capital and Current Expenditures ,2005-12
(percent of non oil GDP)

2012

2011

2010

2009

2008

2007

Overal Balance (% of GDP)

2006

2005

2012

2011

2010

2009

2008

2007

2006

2005

General Govt Debt

Oil Revenues and Non Oil Balance, 2005-12
(percent of non oil GDP)

Non Oil Balance

Capital Expenditure in percent of Non Oil GDP

Fiscal Savings

16%
10%
18%

2,000
1,500
1,000

56%

500
Net Budget Surplus

2012

2011

2010

Oil Revenues

Wages and Salaries Expenditure
(percent of non oil GDP)

3,000
2,500

2009

2008

2007

2005

2012

2011

2010

2009

2008

2007

2005

2006

Current Expenditure in percent of Non Oil GDP

Uses of Net Budget Surplus, 2005-09
(In Million of 2010 CFAF)

2006

50
40
30
20
10
0
-10
-20
-30

50
45
40
35
30
25
20
15
10
5
0

20
18
16
14
12
10
8
6
4
2
0

Use of Surplus

Cumulated budget surpluses
Net Repayment of external debt
Net Repayment of domestic arrears
Net Repayment to non-banks
Net savings with Banks

2007

2011

Source: IMF and Gabonese Authorities

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OUTLOOK AND RISKS
15.
Economic activity is expected to remain robust in 2013, supported by mining, timber,
and public investment. The agricultural sector, however, may continue to suffer from a lack of
manual workers with available labor preferring to rely on large family support networks. Projected
sustained non-oil growth over the medium term hinges on swift action to improve the business
environment to generate new and sustainable sources of growth and less regulation in the labor
market, as well as contribution from new Special Economic Zones (SEZ). On the other hand, oil
production is projected to decline slightly each year as mature wells expire. Inflation is forecast to
continue to be fairly stable , mainly owing to moderate import prices and stable administered prices
which represent a large element of the CPI.
16.
The current account surplus is projected to deteriorate over the medium term, ending
in broad balance by 2017. This profile is dominated by the trajectory of the oil balance which is
assumed to weaken by 11 percentage points over the next five years on account of lower oil
production and export prices. The non-oil deficit is projected to remain fairly stable at about
18-20 percent of GDP. Foreign exchange reserves are assumed to rise gradually from current levels
with the large Euro bond payment in 2017 assumed to be rolled over. Although external debt rises
in coming years to partly finance the projected fiscal deficits, the debt to GDP ratio would remain
within prudent benchmarks.
17.
The budget is projected to register continuous small deficits over the next five years as
the government ramps up its investment program. The deficits are projected to hover around 3
to 3½ percent of GDP and financed by domestic and external sources. Part of the reason why the
overall deficit remains elevated despite a relative restraint in spending is that fiscal oil receipts are
projected to decline by 13 percent of non-oil GDP over the medium term. As a corollary, the non-oil
primary deficit improves by a corresponding magnitude over this period to a more sustainable level
of 15 percent of non-oil GDP by the end of the forecast period, with the ratios of both current and
capital expenditure to non-oil GDP declining from their peak in 2012-13.
18.
Gabon is not immune to the prospect of a global stagnant economy and volatile
commodity prices. The foremost risk to the economic outlook is a possible global slowdown
stemming from the euro area crisis, which could lead to a prolonged decline in oil and manganese
prices. As these commodities account for about 90 percent of total exports of goods and 45 percent
of nominal GDP, this could have large negative effects on the fiscal and external balances as
illustrated in an illustartive downside scenario (Appendix VII). While a comfortable level of external
reserves at the regional monetary union level would help to absorb such a shock on the external
side, the authorities may choose to borrow more from regional banks and on international capital
markets before being forced to reduce spending and postpone investment plans.
19.
Other significant risks relate to the efficiency and prospective rate of return on public
investment and the implementation of reforms. The success of the authorities’ strategy to
transform Gabon into an emerging economy heavily depends on a positive rate of return on public
12

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investment and effective reforms to unlock the potential for private sector development and
economic diversification. However, all of these may fall short of expectations and fail to raise the
medium-term non-oil growth rate, as projected under the baseline, and thereby stunting job
creation and keeping the poverty level high.

POLICY DISCUSSIONS
20.
Against the background of the government’s plan to transform Gabon into an
emerging economy by 2025, policy discussions focused on two main themes: (i) ensuring fiscal
sustainability and external competitiveness over the next five years against the backdrop of
declining oil production, and (ii) achieving high and more inclusive growth, including through
deepening the financial sector while preserving financial stability.

A. Ensuring Fiscal Sustainability and External Competitiveness
Background and staff’s views
21.
Fiscal policy over the next five years is one of the main vehicles for setting out and
realizing the objectives of the government’s plan for making Gabon an emerging economy by
2025. For it to be successful, it should be set in a medium-term sustainable framework that takes
explicit account of the volatility of oil receipts. In this context, one of the first priorities is to ensure
that the government’s investment plans are well executed and succeed in plugging Gabon’s
significant infrastructure deficit in terms of transportation, energy, and housing. However, the
authorities’ intention to execute the investment plan swiftly risks generating a procyclical fiscal
stance in the event that oil prices decline from their current high levels, especially given very low
fiscal buffers at present.
22.
The high level of public investment planned by the authorities must be consistent with
the nation’s absorptive capacity and generate a positive rate of return. Infrastructure services
are clearly inadequate in Gabon and efforts to scale-up investment are necessary. However, the
massive increase in public investment that the authorities have implemented over the past three
years risks leading to some waste and loss of effectiveness. To their credit, the authorities have put
in place measures to strengthen the preparation and execution of investment projects, including a
public procurement code, a mandate to finalize technical studies underpinning specific investment
projects before budgetary outlays are made, and ensuring that budgetary payments are made only
after proof that the associated task has been
Public Investment Management Index 2010
(Index ranges from 0 (worst) to 4 (best))
completed.
2
Project Appraisal

23.
Staff supported the authorites’ efforts
to address weaknesses in investment
execution capacity. Administrative capacity in
public investment in Gabon has been extremely
weak in comparison with the SSA average,
especially at the appraisal stage (Figure). To

Aggregate Index

1.5

0.5

0
Gabon

CEMAC

SSA

Middle Income

Sources: Gabonese authorities, Dabla-Norris et al.

INTERNATIONAL MONETARY FUND

GABON

overcome these weaknesses, the authorities have set up a national agency for major public works
(ANGT in French) with the technical support of Bechtel, an American engineering corporation with a
long established track record in administering large investment projects. However, the speed at
which new public investments are being rolled out may compromise efficient and transparent work
practices. It will also be vital that the ANGT supports the various sectoral Ministries in executing their
investments so that some know-how and technology transfer can take place between the ANGT and
the various Ministries. Without this knowledge transfer, the authorities may revert to their earlier less
efficient public investment methods once the Bechtel contract is up.
24.
The authorities have built up very limited fiscal buffers to address downside risks
stemming from possible lower oil prices. The government deposits with the BEAC (excluding cash
holdings), which represent fiscal savings from oil wealth were at 250 billion CFA (or 15 percent of
annual oil revenue) at end-October 2012. The fund for future generations, which encompasses these
fiscal savings, has recently been renamed as Fonds Souverain de la République Gabonaise (FSRG) and
an agency named Fonds Gabonais d’Investissement Stratégique (FGIS) has been set up with the task
of identifying long term investments for these funds, subject to the requirements of CEMAC. The
authorities intend to place about 10 percent of oil revenues annually into this fund but the
likelihood of this happening is low given staff projection of low but continuous fiscal deficits over
the next few years. Moreover, with a 15 percent decline in oil prices relative to the baseline, these
deposits could be wiped out within a year when assuming unchanged fiscal expenditures and
borrowing.
25.
As an alternative to the authorities’ preference for spending all of its oil resources as
they arise, staff recommended to start building up a reasonable fiscal buffer immediately to
withstand future possible negative oil price shocks. To that effect, the government could
consider introducing new budgetary rules that set a budgetary oil reference price and cap
accordingly annual expenditures. This reference price could be set as the moving average of a
period of historical and future oil prices. Under an alternative price setting mechanism, a value-atrisk analysis suggests that a buffer of about 700-800 billion FCFA would be sufficient to maintain
projected budgetary envelopes without exhausting the fund in the event of a large negative shock
to oil prices (Appendix II).
26.
Current expenditures, especially the wage bill and fuel price subsidies, have risen
sharply in recent years and need to be better restrained. Staff was of the view that public
employment should not be the main source of employment and that high fuel subsidies benefit
higher income people and the industrial sector rather than the more vulnerable segments of the
population. The authorities aim at containing the wage bill and transfers and subsidies in the 2013
budget by limiting public sector hiring and increasing, if necessary, some oil products prices. These
expenditures can indeed be restrained in various ways:


Controlling the wage bill. The government’s objective of reducing the number of public sector

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GABON

employees must be followed with vigor and determination.3 The authorities are implementing a
multi-pronged approach that includes a reevaluation of the public sector roster, staff reductions
through scheduled and voluntary early retirement, and the establishment of decentralized
management centers. If successful, these measures would allow an expansion of employment in
priority education and health sectors. Measures to reduce the public sector workforce should
also be accompanied by a reform of public sector wage entitlements. Public sector pay in Gabon
is high by international standards and is a strong benchmark for wage agreements in the rest of
the economy given the large size of the public sector.
Reducing oil subsidies. Domestic prices of gasoline and diesel are almost 30 percent below
international prices with most of the subsidy going to consumers of diesel for whom 75 percent
are businesses (Appendix III). The authorities are considering various options for reform,
including selective price adjustments for different categories of consumers (households and
businesses in various sectors). Staff sees merit in a uniform increase in oil products prices,
introduced gradually if necessary, while the current social transfers system is strengthened with
savings from the withdrawal of the subsidy. Irrespective of the reform method chosen, a clear
public communication strategy is needed to garner the necessary public support.



27.
On the revenue side, the recent proliferation of tax incentives and exemptions need to
be reversed. The authorities recently eliminated import taxes on a wide range of items in response
to inflationary pressure on these products and have also established generous tax incentives for
companies setting themselves up in the new SEZs. These companies stand to benefit from zero tax
payments for 10 years and reduced tax payments for five subsequent years. In this context, staff
encouraged the authorities to initiate a detailed review of the extent of tax expenditures based on
data recently collected by the World Bank and to look for ways to expand the tax base. This action is
all the more urgent in light of the recent decline in the ratio of oil budgetary revenues to oil output
as oil companies increased their capital expenditures to extract oil from ageing wells.
Figure 3. Gabon. Non-Resource Fiscal Revenues
Non-Resource Revenue

Non Resource Revenue Per Capita, 2011

(Percent of non-resource GDP)

800

CEMAC (average)

720

700
600
CFAF per capita

Chad
Republic of Congo
Gabon
CAR

2012 (Proj.)

Equatorial Guinea

500

472

400
288

300
200
100

144
74
30

2004

Cameroon
Cameroon

…

Chad

Republic
of Congo

Gabon

Equatorial CEMAC
Guinea (average)

The ratio of public employment to the working age population in Gabon is 10.8 percent compared to a median of
8.6 percent for middle-income countries.

INTERNATIONAL MONETARY FUND

GABON

28.
Efforts to improve the management and transparency of public finance must be
carried out vigorously. The authorities initiated an ambitious reform of public finances with the
objective of introducing program budgeting by 2015 (Appendix IV). With the support of AFRITAC,
preparations are well advanced, although the timetable remains ambitious and the success of the
project will require serious enhancements in training and equipment in the various Ministries. When
completed, the reform should help improve budgetary execution considerably and address some of
the concerns recently noted in the World Bank’s public expenditure review. Staff also recommended
improving the transparency of public sector finances by publishing reports ex-post of budgetary
execution and by providing much more details on public finances to the general public. Given the
size of the public investment plans going forward, the execution of all large public investment
projects should be audited by an internationally recognized company and made public. Similar
efforts should be made to reconcile differences between company and government accounts
regarding the transfer of oil revenues as highlighted in the most recent EITI report on Gabon.
Authorities’ views
29.
The authorities see merit in spending oil revenues on productive investment
expenditures rather than depositing large funds in the BEAC earning little interest. They
expect infrastructure investments to help stimulate the private sector and lead to an increase in nonoil GDP growth over the medium term. Moreover, in the event of a sharp decline in oil prices, the
authorities were convinced that they could slow down the rate of investment without disrupting
ongoing investment activities. They also recognized that they would not be able to maintain such
high levels of investment expenditures indefinitely and that over time the public investment ratio
should decline to below 10 percent of GDP, consistent with the permanent level of oil revenues
based on current prices.
30.
The authorities are convinced that medium term fiscal sustainability can be achieved
through its proposed wage and employment reforms, and rationalizing expenditures on
goods and services as well as transfers and subsidies. They are determined to follow through
with the rationalization of the public sector and are seriously considering various options to reduce
the subsidy associated with the oil price mechanism. Moreover, they are courting foreign interest to
help develop their oil refining industry and reduce budget transfers to this industry.
31.
The authorities will continue to abide by the CEMAC fiscal convergence criteria and
argued that the large public investment program can be financed from their own funds.4
Based on the WEO oil price outlook discussed during the mission, the authorities were comfortable
that they would be able to finance their budgetary expenditures with own revenues. Moreover, if oil
prices were to fall from their current high levels, the authorities believed that they would be able to
tap into international markets and borrow to finance the shortfall, while maintaining public debt
below the implicit ceiling of 35 percent of GDP that the government has set for itself based on

The CEMAC fiscal convergence criteria include a zero floor on the basic fiscal balance, calculated as the difference between total
revenue and total expenditure excluding foreign financed capital spending, and a ceiling on public debt of 70 percent of GDP.

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cross-country studies.5 The authorities also expressed a preference for continuing to use the WEO
forecast price for the preparation of the budget for the time being, but were open to explore other
options in the future.
32.
The authorities recognize that tax incentives would lead to a loss of revenue but
argued that these measures were essential to attract foreign companies. Given the lack of
skilled labor in Gabon and the current poor quality of infrastructure, they argued that the SEZs are a
sine qua non condition for getting foreign companies to set up in the country. Moreover,
exemptions related to the SEZ and to the exploitation of natural resources would be phased out
over time, and the authorities were convinced that the SEZ would boost growth and eventually nonresource fiscal revenue. They also confirmed that a fundamental review of tax incentives would be
undertaken with a view to broadening the tax base.
33.
The authorities are confident that their program of public finance reform will enhance
the quality and efficiency of public spending. In particular, in line with the new organic finance
law, the budget to be formulated in the form of program objectives and results-based oriented is
expected to be better aligned with national priorities specified by the strategic development plan.

B. Achieving higher and more inclusive growth
Background and staff's views
34.
The development of the private sector is essential in order to support a diversified
economic growth that is rich in employment opportunities. Public expenditures cannot
substitute for the private sector and support a sustainable high level of economic growth over the
medium term. Indeed, the role of the private sector is all the more important given the prospective
decline in oil production and the inability of this sector to generate many jobs given its capital
intensity. In this context, it is essential that the authorities take steps to improve the business
climate, strengthen the quality of the labor force through intensified and more focused training, and
develop the financial sector. These measures would help foster the development of the non-oil
export sector which is currently very small, and contribute to sustaining Gabon’s reserve coverage in
the face of dwindling oil receipts.
35.
The diversification of the economy
remains very low with limited profitable
opportunities owing to high wage levels and
poor infrastructure. Wage levels are very high in
Gabon. A cross-country comparison of minimum
wages shows that Gabon has one of the highest
minimum wages among 29 sub-Saharan African

CEMAC

SSA

Other
Developing
Countries

Power tariffs
(US$ per kilowatt-hour)

0.20

0.23

0.08

Port container handling charges

210

115

(US$ per TEU)
Road freight tariffs

0.13

0.09

0.03

15.1

11.8

9.9

(US$ per ton-kilometer)
Mobile telephony
(US$ per basket per month)

Note: Figures represent mid-point of range across regions.
Source: World Bank.

The authorities have run simulations using the IMF debt sustainability template and finds that even under a scenario in which
output declines for two successive years, the buildup of debt required to finance sustained high imports does not breach the
threshold of 35 percent of GDP.

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GABON

countries.6 Infrastructure costs are also very high in Gabon and infrastructure capital is low,
prompting the government to embark on an ambitious investment program. To support the
development of the private sector, the authorities are considering the option of public-private
partnerships (PPP), with a new law under preparation.
36.
The authorities must take immediate action to strengthen the business climate. The
private sector in Gabon remains relatively narrow and fragmented, especially at the level of small
and medium sized businesses. Many constraints still weigh on the business climate, some of which
are highlighted in the World Bank’s Doing Business Survey. While the government’s large
investment program is addressing the major infrastructure constraints in transportation and
domestic energy provision, cumbersome procedures for establishing a business and getting land
titles remain. Business surveys also underline the poor quality of the labor force, the unwillingness to
take manual labor opportunities, and access to bank credit as severe constraints to the healthy
development of the private sector. Without improvements in these areas, the objectives inscribed in
the plans to make Gabon a diversified emerging economy will not be achieved. In addition, the
authorities should enhance the AML/CFT framework by implementing the recommendations set out
in the AML/CFT assessment conducted in May 2012 by the World Bank and the GABAC (Groupe
d’Action contre le Blanchiment en Afrique Centrale), in order to support the fight against corruption
and improve the investment climate.
37.
Staff encouraged the authorities to build on recent efforts to facilitate private
investment. They have set up a one-stop shop for obtaining land permits and have reduced the
length of time that it takes to set up a business from 56 days to 8 days. The authorities also
identified, with the assistance of IFC staff, a number of action plans to improve the business
environment, including for business creation, improved procedures for construction permits and
access to property, and improved management of import and export activities.
38.
A diversified economy combined with an effective employment policy should help
Gabon address the challenge of lowering the high unemployment rate. A policy needs to be
put in place that matches the supply of Gabonese labor with the demands of the labor market. The
supply of labor needs to be competitive in terms of its cost, both regarding the base wage and its
social insurance premiums. Given the high level of the base wage in Gabon, the authorities may wish
to consider finding alternative ways of financing its social protection system less costly for
businesses. The education system also needs reforming to better match the demands of the labor
market and restrictive labor laws could be eased to facilitate hiring. These measures implemented in
combination will help the numerous young Gabonese entering the labor market over the next
decade to access durable employment opportunities. Until these measures are put in place,
however, the immediate demands in certain sectors (agriculture, forestry, retail trade) for large
amounts of manual labor to fulfill the government’s ambitious plans risk being constrained. To

Based on data from ILO, UNDP, and national government documents. Gabon’s minimum wage of US$182 per month in PPP terms
is exceeded only by South Africa, DRC, Lesotho and Kenya in the sample.

INTERNATIONAL MONETARY FUND

GABON

relieve this potential obstacle, staff suggested providing companies greater flexibility to employ
foreign workers.
Authorities' views
39.
The authorities recognize the deficiencies that have led to a fairly undeveloped private
sector and are making changes to address this situation. They plan to build on recent measures
to improve the business environment, including by enacting a few action plans identified with IFC
staff.
40.
The authorities recognize the large mismatch that exists between skills needed by
businesses and those that the labor force possesses. To address this issue, they have recently set
up specialized schools to train technocrats in mining and in oil exploration and analysis. To reduce
likely shortages of manual labor, they have signed agreements with a number of companies
intending to set up in the new SEZs that allow the hiring of foreign workers beyond the current rule
limiting foreign workers to less than 10 percent of the workforce.
41.
The authorities aim at creating room for increased hiring in priority sectors. They
recognize that improvements in health and education are essential to alleviating poverty and to
improving labor productivity and, in this context, the 2013 budget envisages hiring new staff for
these sectors and building new classrooms and several clinics.

C. Developing a deeper financial sector
Background and staff's views
42.
Financial intermediation and market depth are limited in Gabon and need to be
expanded to allow the sector to play its role in the financing of Gabon’s development. Banks,
even though highly liquid, are extremely prudent in providing credit. Although credit growth has
been very strong over the past year, financial intermediation remains weak (Box 2). Very few small
and medium sized enterprises have access to bank financing for investment. Banks cite the absence
of credit bureaus and lack of company information as reasons for not providing credit, and argue
that they can only offer high interest rates to SMEs because of the difficulties in evaluating risk. To
remedy this situation, the authorities must develop, in coordination with the regional supervisory
authority, a strategy for the financial sector that addresses risks and vulnerabilities. Staff welcomed
recent efforts to enhance the institutional environment, including by: (i) improving the operations of
land and commercial registries and strengthening creditor rights enforcement; (ii) improving the
process of getting credit by broadening the range of assets that can be used as collateral and are
introducing out-of-court enforcement; and (iii) streamlining procedures for the realization of
guarantees to obtain loans and creating a centralization system that provides commercial banks
access to companies' balance sheets.
43.
The authorities must continue to implement restructuring plans for the two small
public banks in financial difficulty. The two development banks have high levels of nonperforming loans and have been registering losses. Based on recommendations by the regional
supervisory banking commission, the authorities developed restructuring plans to modernize banks’
operations, enhance credit control, reduce operating costs, improve the governance structure, and
recapitalize the banks. Changes in the management of the banks and of the governance structure,
INTERNATIONAL MONETARY FUND

GABON

as well as measures to reduce operating costs were implemented in 2012 as part of the restructuring
plans. Additional budget resources needed to cover past losses and recapitalize these two banks
were estimated at about CFAF 10 billion (0.1 percent of GDP). Staff emphasized the need to take
appropriate actions to ensure future viability of these banks, including through enhanced
governance and reduced operating costs, before providing additional financial support.
Authorities' views
44.
The authorities will continue to pursue a number of measures to develop the financial
sector. In addition to recent efforts to improve the institutional environment, efforts are also
underway to facilitate SME access to financial services. The authorities intend to subscribe to the
capital of the African Guarantee and Economic Cooperation Fund, which guarantees bank loans to
SMEs. Work is ongoing to finalize the microfinance development strategy to expand access to credit
(while limiting operational and security risks) and financing instruments are being streamlined
through restructuring several public agencies involved in SME and housing financing. The
authorities confirmed their commitment to strengthen the two small public banks and ensure their
viability in the future.

D. Other Issues
45.
Data quality. Statistical Information needs to be improved considerably to provide a
stronger basis for making macroeconomic policy judgments. Data provision has some shortcomings,
with published balance of payments and output statistics dating back to 2006; the timeliness of
fiscal, monetary, and financial sector data could be improved; and high-frequency indicators for
economic activity are lacking (Informational Annex, Supplement II). The authorities are encouraged
to develop a statistical action plan and the IMF and other donors stand ready to provide technical
assistance in this area. This will help the authorities to better monitor progress under their medium
term development plan.
46.
Trade policy. Consistent with its free market trade policy, the government plans to
streamline the work of several government agencies involved in export and investment promotion.
A competition authority is shortly to become operational that will ensure that competition is not
hampered by illicit price fixing arrangements, especially in the retail market.
47.
Noncompliance with Article VIII. In 2008, the authorities introduced a tax on wire
transfers, which is not consistent with the requirements under Article VIII, Section 2(a). They have
not indicated any intention to reverse this tax arguing that it is consistent with proposals currently
being discussed in the international arena on taxing capital flows. Moreover, since the funds
contribute to financing the health insurance fund, reforming this tax is politically sensitive.

INTERNATIONAL MONETARY FUND

GABON

Box 2. Structure and Recent Performance of the Financial Sector
The financial sector in Gabon is among the least developed in the SSA region. The financial sector is dominated by
universal banks (10 banks in 2012), many of which are foreign or privately owned subsidiaries of foreign institutions.
Microfinance institutions (10 percent of credit to SMEs), pension funds and insurance companies play a limited role in
providing financial services. Banking sector assets account for 21 percent of GDP, and loans are highly concentrated in a few
productive sectors such as oil, telecoms and real estate. Financial depth (ratio of private credit to GDP) remains very low at
about 11 percent of the GDP (19 percent of non-oil GDP).
Financial access remains constrained by several factors. The main barriers limiting credit supply include insufficient
investor protection, weak contract enforcement; low project bankability (e.g., limited managerial capacity to create financial
statements), lack of property ownership and bottlenecks in land registration. Moreover, the payment system is
underdeveloped, with high registration fees for businesses. Nevertheless, the share of population having a bank account
increased from 16 percent in 2010 to 21 percent in 2011. The recent establishment of the postal bank, opening of new
banks, introduction of Mobile Money, improved infrastructures, and measures to facilitate the use of collateral are expected
to further enhance access to financial services.
Against this background, growth in credit to the private sector accelerated strongly in 2012. The robust credit growth
at about 44 percent y-o-y as through October 2012 mainly mirrored increasing demand in the construction, transportation,
telecoms and oil sectors, in the context of scaled-up public investment. Ample liquidity, improved confidence in the
strength of the economy and increased competition among banks boosted the credit supply, including for consumer
lending. Despite the recent rapid growth in credit, the loan-to-deposit ratio remains below 65 percent and banks are still
very liquid. Banks would welcome larger issuance of T-bills to diversify their portfolio and deepen the financial market.
The banking system appears to be sound, and exposure to Euro area distress is limited. Banks are overall in good
financial health, adequately capitalized, liquid and profitable. The ratio of nonperforming loans to total loans is low at about
4.4 percent. However, two development banks (representing less than 10 percent of total loans and less than 3 percent of
total deposits) have high levels of non-performing loans and are registering losses. Based on recommendations by the
regional supervisory banking commission (COBAC), the authorities have introduced changes in the structure and the
governance of those banks in the context of restructuring plans.
Compliance by Gabonese banks with the CEMAC prudential ratios is broadly satisfactory, although the limit on
lending to shareholders is routinely violated. Mitigating risks associated with potentially fast expanding banking activity
would require strengthening of staffing and oversight capability of the COBAC.

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Figure 4. Financial Indicators
Private Credit
(In percent of GDP)

0.7

0.6

0.5
0.4

SSA

CEMAC

Bank Nonperforming Loans to Total Loans

2012M7

2012M4

2012M1

2011M7

2011M10

Bank Return on Equity

0
Gabon

100

SSA

CEMAC

Bank Provisions to Nonperforming Loans

0
Gabon

SSA

CEMAC

Gabon

Source: IFS; and Financial Access Survey, 2010. Gabonese Authorities and IMF Staff estimations.
Note: Frontier Markets include Botswana, Ghana,Nigeria, Kenya, Mozambique, Tanzania, Uganda
and Zambia.

2011M4

Loan to Deposit ratio

Bank Regulatory Capital to Risk-Weighted
Assets

Gabon

2011M1

CEMAC

2010M7

SSA

Frontier Market

2010M10

Gabon

2010M4

2004 2005 2006 2007 2008 2009 2010 2011 2012

2010M1

2009M7

0.1

2009M10

2009M4

0.2

2009M1

0.3

Loan to Deposit ratio
(2009-2012)

0.8

INTERNATIONAL MONETARY FUND

SSA

CEMAC

GABON

STAFF APPRAISAL
48.
Economic growth has been robust under favorable conditions, but has not been
inclusive enough. Against the backdrop of high oil prices, non-oil growth has been buoyed by a
substantial increase in public investment in recent years, and the external balance has improved.
However, while having become a middle-income country thanks to decades of oil production, a
third of Gabon’s population still lives in poverty and unemployment is high, in particular for the
youth. A critical issue ahead is how to use oil and mineral resources as efficiently as possible to
support inclusive growth and address social and economic development challenges.
49.
The medium-term outlook is favorable, but hinges on reforms and is not immune to
significant downside risks. The strategic development plan launched by the authorities to
transform Gabon into a diversified emerging economy is broadly appropriate, but the key lies in
implementation. Provided that public investment will have a high return and measures to improve
the business climate are successfully implemented, the great potential for private sector
development and job creation could be fully exploited. However, with an economy still highly
dependent on oil and very small policy buffers, the economic outlook is subject to significant
downside risks stemming from a large and prolonged decline in oil and manganese prices.
50.
Building larger fiscal buffers, backed by a more prudent fiscal stance, will be critical to
withstand possible negative oil price shocks. The substantial expansion in recent years of both
current and capital expenditures has prevented the build-up of sufficient buffers during a period of
high oil prices. A fiscal stance grounded in a simple fiscal oil price rule to help anchor spending and
saving objectives against volatile oil prices would be more prudent. It would need to be supported
by policies and reforms to restrain the wage bill growth and reduce subsidies for oil products, as
well as expanding the tax base for non-oil revenues, in order to make enough room for productive
spending, including for priority sectors of education and health. Over the longer term, after proper
infrastructure is in place, further fiscal consolidation should take place to ensure fiscal sustainability
over the oil production horizon.
51.
Achieving a high return on public investment will be key to reach the development
plan’s objectives. A scaling-up of public investment is necessary to improve currently weak
infrastructure services. However, it should be consistent with the nation’s absorptive capacity and
achieve a positive rate of return. The recent massive and rapid increase in public investment, which
might be excessive, risks leading to some waste and loss of effectiveness. Staff urges the authorities
to pursue their efforts to address weaknesses in investment execution capacity and ensure good
quality of spending, including by strengthening the selection, preparation and execution of
investment projects with the assistance of international experts. Knowledge transfer in this area from
the experts to the administration will be important for progress not to be reversed in the future.
52.
Efforts under way to improve the management and transparency of public finance
must be carried out vigorously. Good governance and accountability are critical for ensuring
the efficient use of oil resources. The ambition of PFM reforms to comply with regional guidelines
INTERNATIONAL MONETARY FUND

GABON

before the set deadline is rightly placed, but their success will require serious enhancements in
training and tools. More details on public finances should be provided to the general public,
including on budget execution. Additional efforts should also be made to ensure transparency
and accountability in the management of oil wealth, as highlighted in the most recent EITI
report on Gabon.
53.
The external stability analysis does not suggest an overvaluation of the real effective
exchange rate. However, external stability would be reinforced by a more prudent medium-term
fiscal stance. Moreover, the relatively weak external performance of the non-oil sector points to
evidence that structural factors are a significant constraint on external competitiveness.
Comprehensive policies are needed to support a diversified and more inclusive
54.
economic growth that is rich in employment opportunities. Immediate actions should be
taken to strengthen the business climate. Without improvement in this area, current constraints to
private sector development will prevent sustaining high growth in the medium term. Employment
policy measures will also be necessary for better matching labor supply and demand and spurring
job creation, including by improving vocational training.
55.
Financial intermediation and market depth need to be expanded, while
continuing to preserve financial sector stability, to allow the sector to play its role in the
financing of development. To that effect, a strategy should be developed to further improve the
institutional environment for credit and enhance access to mortgage credit and microfinance. To
preserve the stability of the sector, implementation of the restructuring plans for the two small
public banks in financial difficulty should be completed as soon as possible with a view to ensure
the future viability of these banks after appropriate financial support from the state is provided.
56.
The data provided to the Fund are broadly adequate for surveillance. However,
improvements are needed in balance of payments statistics and timeliness of fiscal and financial
sector data.
57.
Gabon maintains a tax on wire transfers, which is inconsistent with its obligations
under Article VIII. Staff does not recommend approval.
58.
cycle.

It is expected that the next Article IV consultation will be held on the standard 12-month

INTERNATIONAL MONETARY FUND

GABON

Gabon: Risk Assessment Matrix
Nature/Source of
Main Threats

Likelihood of Realization in the Next
Three Years

Expected Impact on Economy if Risk is
Realized




Staff assessment: High



Although, international reserves at
BEAC provide buffers, the low level
of fiscal savings and still limited
capacity to borrow on capital
markets would likely force a
contraction in public spending, in
particular investment, with negative
impact on non-oil growth. There is
also a risk of significant oil-related
FDI reductions if lower oil prices
materialized, with potential longterm negative effect on oil
production.




Staff assessment: Medium to High

A substantial
decline in
hydrocarbon prices
stemming from a
sustained global
slowdown.

Overly
expansionary fiscal
policy.

Widening
inequalities in
income and job
opportunities.

Staff assessment: Medium
Intensification of euro area crisis
and spillovers from Europe and/or
unresolved U.S. fiscal issues could
lead to a marked and, perhaps,
sustained softening of global
growth, which in turn would lead
to sustained lower hydrocarbon
prices.

Gabon remains very dependent on
oil exports and revenues (oil
accounts for 87 percent of total
exports and 55-60 percent of total
revenue).



Staff assessment: Medium to
High



Capital spending has historically
been volatile, undisciplined, and
pro-cyclical.



Since 2009, the government has
failed to increase fiscal buffers
despite their vast hydrocarbon
revenues.



Further scaling-up of capital
spending could further strain the
absorptive and implementation
capacity, with impact on project
selection and scope for corruption.




Staff assessment: Medium




Staff assessment: Medium



Non-hydrocarbon sectors remain
rudimentary and offer few job
opportunities.



Larger resources need to be
allocated to health and education.

Investment and growth are
hampered by a poor business
environment.

A loose and inefficient fiscal policy
would raise inflation and undermine
competitiveness, thereby inhibiting
non-oil growth and negatively
impacting the poor.

Continued social inequalities could
fuel social tensions. There is an
urgent need to improve human
development outcomes and enhance
job opportunities.

INTERNATIONAL MONETARY FUND

GABON

Table 1. Gabon: Selected Economic Indicators, 2008–17
2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Projections

Est.

(Annual percent change, unless otherwise indicated)
Real sector
GDP at constant prices
Oil
Non-oil
GDP deflator
Oil

1.0

-2.9

6.7

7.0

6.1

5.9

6.8

6.9

7.1

7.5

-0.9

-3.7

5.9

-2.4

0.8

0.3

-0.6

-0.7

-0.6

2.1

-2.4

7.2

12.1

8.7

8.3

9.8

9.7

9.9

16.2

-16.6

18.3

15.1

1.2

2.4

-2.1

-1.7

-1.0

-0.6

15.4

-33.5

39.3

35.9

0.3

3.6

-4.4

-3.5

-2.8

-2.2

Consumer prices
Yearly average

5.3

1.9

1.4

1.3

3.0

End of period

5.6

0.9

0.7

2.3

3.1

3.0

Exports, f.o.b.

37.2

-39.1

26.0

40.2

-5.1

5.8

-4.0

-3.2

-1.0

0.4

Imports, f.o.b.

8.1

2.8

18.1

24.3

3.6

8.8

2.1

1.2

3.6

7.9

17.6

-26.8

16.7

24.9

-8.2

2.6

-2.3

-2.4

-1.8

-3.2

External sector

Terms of trade (deterioration= – )

Central government finance
Total revenue

27.0

-18.9

8.9

34.6

3.1

0.0

3.1

3.2

4.0

Oil revenue

42.0

-38.5

17.8

39.2

6.4

-3.5

-4.3

-3.7

-4.6

-2.6

13.7

-1.4

26.6

33.3

17.2

10.9

2.8

4.0

4.4

6.1

Total expenditure

(Percent of GDP, unless otherwise indicated)
Non-oil primary balance (in non-oil GDP)

-12.5

-11.7

-18.0

-22.1

-26.4

-25.2

-22.2

-19.8

-17.1

-15.4

10.5

5.9

1.8

2.3

-1.0

-2.9

-3.2

-3.3

-3.2

-3.6

7.4

-1.4

-2.4

-2.5

2.9

2.7

1.6

1.9

2.1

3.0

-23.8

-2.2

0.6

1.9

-0.6

2.2

3.3

3.1

2.4

2.0

External public debt (including to the Fund)

13.9

17.8

15.8

14.8

15.5

15.0

16.4

17.7

18.4

19.4

Total public debt (Percent of GDP)

16.0

23.9

20.4

18.2

18.8

20.6

22.7

24.8

25.9

28.4

Overall balance (commitment basis)
Net domestic financing
Net external financing

(Percent Change, unless otherwise indicated)
Money and credit
Credit to the economy

6.0

-7.9

1.9

42.0

24.4

26.0

…

Broad money

8.8

2.2

19.2

26.5

12.5

11.6

…

Velocity ratio of NOGDP over broad money

3.3

3.0

3.1

2.8

…

(Percent of GDP, unless otherwise indicated)
Gross national savings

47.7

38.4

38.9

45.0

44.1

42.7

40.1

38.0

36.4

34.4

Gross fixed investment

22.0

27.1

30.0

30.8

31.7

32.4

33.3

33.6

33.8

34.2

Current account balance

23.3

7.5

8.9

14.1

12.4

10.4

6.9

4.5

2.7

0.2

(CFA francs billion, unless otherwise indicated)
Memorandum items
Nominal GDP

7,045

5,702

7,201

8,867

9,527

10,327

10,805

11,350

12,036

12,856

Nominal non-oil GDP

3,731

3,475

4,238

4,936

5,553

6,200

6,882

7,592

8,406

9,328

448

471

531

534

536

104

106

105

101

National Currency per U.S. Dollar (Average)
Oil Prices (WEO, U.S. Dollar/BBL)

Sources: Gabonese authorities and IMF staff estimates and projections.

INTERNATIONAL MONETARY FUND

GABON

Table 2a. Gabon: Central Government Accounts, 2008–17
(Billion of CFA francs)
2008

2009 2010

2011

2012

2013

2014

2015

2016

2017

Est. Projections
Total revenue and grants
Revenue
Oil revenue
Non-oil revenue
Tax revenue
Taxes on income, profits, and capital gains
Domestic taxes on goods and services
Value-added tax
Other
Taxes on international trade and transactions
Import tariffs
Export taxes

2,078
2,078

2,469
2,469

2,546
2,546

2,547
2,547

2,625
2,625

2,708
2,708

2,815
2,815

2,927
2,927

1,362
716
679

837
848
798

986
848
803

1,372
1,097
1,046

1,460
1,086
1,068

1,408
1,139
1,073

1,347
1,278
1,207

1,297
1,411
1,331

1,238
1,577
1,484

1,205
1,722
1,622

234
131

325
142

235
163

422
198

372
253

353
261

389
278

427
306

464
339

490
376

85
45
276

82
60
277

93
70
361

144
54
375

185
68
390

200
61
398

222
56
471

245
61
520

271
68
584

301
75
648

248
28

250
27

356
6

364
11

377
13

383
15

425
46

469
51

519
65

576
72

38
37

54
50

44
46

51
51

53
18

61
66

70
71

78
79

97
93

107
100

1,348 1,707
914 983

2,269
1,172

2,641
1,466

2,847
1,530

2,967
1,617

3,083
1,712

3,196
1,815

3,391
1,979

Other non-oil taxes
Non-tax revenue
Grants
Total expenditure and net lending
Current expenditure

1,685 1,834
1,685 1,834

1,336
907

Wages and salaries
Goods and services

324
209

380
216

412
239

450
299

529
333

551
360

552
410

580
469

597
536

615
611

Interest payments
Domestic

114
32

82
19

97
23

79
13

88
20

147
33

160
31

169
29

179
29

228
29

Foreign
Transfers and subsidies

82
260

64
237

73
235

66
344

68
517

114
472

129
493

139
495

150
503

199
525

Capital expenditure
Domestically financed

299
244

309
210

601
377

1,000
500

1,044
796

1,217
848

1,250
761

1,270
759

1,300
765

1,330
868

Foreign financed
Net lending

54
21

100
51

224
65

250
19

248
74

369
40

489
40

511
40

535
20

462
20

Road Fund (FER) and special funds
Capital grants

71
0

63
1

58
0

78
0

57
0

60
0

61
0

38
742

10
338

0
127

0
200

0
-95

0
-300

0
-342

0
-375

0
-381

0
-463

Capital transfers
Overall balance
Total financing

-742

-338 -127

-200

300

342

375

381

463

Change in arrears
Domestic arrears payments

-131
-131

-212
-212

-68
-68

-117
-117

0
0

External arrears (interest only)
Foreign borrowing (net)

0
-887

0
-75

0
27

0
94

0
-31

0
136

0
230

0
233

0
203

0
182

54
-1,075

100 224
-176 -197

250
-139

248
-279

369
-233

489
-259

511
-278

535
-332

912
-729

Exceptional financing
Domestic borrowing (net)

133
276

1
0
-50 -102

0
-125

0
160

0
164

0
112

0
141

0
178

0
281

Banking system
Monetary authorities

276
-192

18
39

260
110

19
-26

207
91

4
-80

33
3

42
12

53
53

131
31

Deposit money banks
Non-bank sector
Financing gap

468
0

-21
-68

149
-60

44
-117

116
-46

84
160

30
78

30
99

0
125

100
150

Drawings
Amortization

Memorandum item:
Non-oil primary balance excluding capital transfers (NOPD)
as percent of non-oil GDP

-467
-12.5

-407 -761
-11.7 -18.0

-1,092
-22.1

-1,467
-26.4

-1,562
-25.2

Non-oil GDP at market prices

3,731

3,475 4,238

4,936

5,553

6,200

-1,528 -1,503 -1,439 -1,441
-22.2 -19.8 -17.1 -15.4
6,882

7,592

8,406

9,328

Source: Gabonese authorities and IMF staff estimates and projections.

INTERNATIONAL MONETARY FUND

GABON

Table 2b. Gabon: Statement of the Budgetary Central Government Operations (GFSM 2001), 2007–17
(Billions of CFA francs, unless otherwise indicated)
2007

2008

2009

2010

2011

2012

2013

2014

2016

2017

2,547
1,280

Projections
2,625
2,708
1,404
1,519

2015

2,815
1,665

2,927
1,797

Revenue
Taxes
Taxes on income, profits, and capital gains
Of which:
Payable by individuals
Payable by corporations and other enterprises
Taxes on goods & services
Taxes on international trade and transactions
Taxes not elsewhere classified
Grants
Other revenue
Of which: Non-oil tax revenue
other non-oil revenue

1,636
885

2,078
1,029

1,685
1,071

1,834
968

2,469
1,309

Est.
2,546
1,033

77
363
130
282
32
0
752
712
40

86
498
131
276
38
0
1,049
1,012
37

103
495
142
277
54
1
614
564
50

100
300
163
361
44
0
866
821
46

200
486
198
375
51
0
1,133
1,082
51

72
372
253
390
53
0
1,312
1,230
18

71
489
261
398
61
0
1,267
1,201
66

63
521
278
471
70
0
1,221
1,151
71

56
559
306
520
78
0
1,189
1,110
79

50
596
339
584
97
0
1,150
1,057
93

44
621
376
648
107
0
1,130
1,030
100

Expenditure
Expense
Compensation of employees
Use of goods & services
Interest
Other expense
Net acquisition of nonfinancial assets
Domestically financed
Foreign financed

1,156
838
302
190
119
71
247
199
48

1,315
907
324
209
114
109
299
244
54

1,297
914
380
216
82
73
309
210
100

1,642
983
412
239
97
58
601
377
224

2,190
1,172
450
299
79
78
1,000
500
250

2,567
1,466
529
333
88
57
1,044
796
248

2,847
1,530
551
360
147
60
1,217
848
369

2,927
1,617
552
410
160
60
1,250
761
489

3,043
1,712
580
469
169
60
1,270
759
511

3,176
1,815
597
536
179
61
1,300
765
535

3,371
1,979
615
611
228
61
1,330
868
462

-361
-361
-451
30
-482
91

311
311
276
-192
468
36

-31
-31
18
39
-21
-50

271
271
260
110
149
11

267
267
19
-26
44
248

411
411
207
91
116
204

276
276
4
-80
84
271

203
203
33
3
30
169

189
189
42
12
30
146

173
173
53
53
0
119

243
243
131
31
100
112

416
456
59
30
28
-40
0

401
532
-227
-192
-34
-131
0

294
506
61
60
0
-212
0

621
689
226
110
116
-68
0

846
963
43
-26
68
-117
0

939
939
91
91
0
0
0

1,058
1,058
20
20
0
0
0

1,180
1,180
3
3
0
0
0

1,308
1,308
12
12
0
0
0

1,407
1,407
53
53
0
0
0

1,563
1,563
144
144
0
0
0

6,002
3,084
959
678
551

7,045
3,731
1,362
716
907

5,702
3,475
837
848
908

7,201
4,238
986
848
857

8,867
4,936
1,372
1,097
1,104

9,527
5,553
1,460
1,086
1,162

10,327
6,200
1,408
1,139
1,271

10,805
6,882
1,347
1,278
1,402

11,350
7,592
1,297
1,411
1,486

12,036
8,406
1,238
1,577
1,476

12,856
9,328
1,205
1,722
1,333

Net lending/borrowing
Net acquisition of financial assets ("+": increase in assets)
Domestic
Currency and deposits
BEAC
Commercial banks
Loans
Net incurrence of liabilities ("+": increase in liabilities)
Domestic
Loans
BEAC
Commercial banks
Other accounts payable
o/w arrears
Statistical discrepancy
Memorandum items:
GDP at market prices
Non-oil GDP at market prices
Oil revenue
Non-oil revenue
Deposits in BEAC
Source: Gabonese authorities and IMF staff estimates and projections

INTERNATIONAL MONETARY FUND

GABON

Table 3. Gabon: Central Government Accounts, 2008–17
2008

2009

2010

2011
Est.

2012

2013

2014 2015
Projections

2016

2017

(Percent of non-oil GDP)
Total revenue and grants

55.7
55.7

48.5
48.5

43.3
43.3

50.0
50.0

45.8
45.8

41.1
41.1

38.1
38.1

35.7
35.7

33.5
33.5

31.4
31.4

36.5
19.2
18.2
6.3
3.5
7.4
1.0
1.0

24.1
24.4
23.0
9.4
4.1
8.0
1.6
1.4

23.3
20.0
18.9
5.5
3.9
8.5
1.0
1.1

27.8
22.2
21.2
8.6
4.0
7.6
1.0
1.0

26.3
19.6
19.2
6.7
4.6
7.0
1.0
0.3

22.7
18.4
17.3
5.7
4.2
6.4
1.0
1.1

19.6
18.6
17.5
5.6
4.0
6.9
1.0
1.0

17.1
18.6
17.5
5.6
4.0
6.9
1.0
1.0

14.7
18.8
17.7
5.5
4.0
6.9
1.2
1.1

12.9
18.5
17.4
5.3
4.0
6.9
1.2
1.1

35.8

38.8

40.3

46.0

47.6

45.9

43.1

40.6

38.0

36.3

24.3

26.3

23.2

23.7

26.4

24.7

23.5

22.6

21.6

21.2

Wages and salaries
Goods and services
Interest payments
Transfers and subsidies

8.7
5.6
3.1
7.0

10.9
6.2
2.4
6.8

9.7
5.6
2.3
5.6

9.1
6.1
1.6
7.0

9.5
6.0
1.6
9.3

8.9
5.8
2.4
7.6

8.0
6.0
2.3
7.2

7.6
6.2
2.2
6.5

7.1
6.4
2.1
6.0

6.6
6.6
2.4
5.6

Capital expenditure
Domestically financed

8.0
6.5

8.9
6.0

14.2
8.9

20.3
10.1

18.8
14.3

19.6
13.7

18.2
11.1

16.7
10.0

15.5
9.1

14.3
9.3

19.9

9.7

3.0

4.1

-1.7

-4.8

-5.0

-4.9

-4.5

-5.0

-19.9
-3.5
-23.8
1.5
-28.8
3.6
7.4
7.4
0.0

-9.7
-6.1
-2.2
2.9
-5.1
0.0
-1.4
0.5
-2.0

-3.0
-1.6
0.6
5.3
-4.6
0.0
-2.4
6.1
-1.4

-4.1
-2.4
1.9
5.1
-2.8
0.0
-2.5
0.4
-2.4

1.7
0.0
-0.6
4.5
-5.0
0.0
2.9
3.7
-0.8

4.8
0.0
2.2
5.9
-3.8
0.0
2.7
0.1
2.6

5.0
0.0
3.3
7.1
-3.8
0.0
1.6
0.5
1.1

4.9
0.0
3.1
6.7
-3.7
0.0
1.9
0.6
1.3

4.5
0.0
2.4
6.4
-4.0
0.0
2.1
0.6
1.5

5.0
0.0
2.0
9.8
-7.8
0.0
3.0
1.4
1.6

2,547 2,625 2,708 2,815
2,847 2,967 3,083 3,196
-300 -342 -375 -381

2,927
3,391
-463

Revenue
Oil revenue
Non-oil revenue
Tax revenue
Taxes on income, profits, and capital gains
Domestic taxes on goods and services
Taxes on international trade and transaction
Other non-oil taxes
Non-tax revenue
Total expenditure and net lending
Current expenditure

Overall balance (commitment basis)
Total financing
Change in arrears
Foreign borrowing (net)
Drawings
Amortization
Exceptional financing
Domestic borrowing (net)
Banking system
Non-bank sector

(Billion of CFA francs, unless otherwise indicated)
Total revenue and grants
Total expenditure and net lending
Overall balance
Memorandum items:
Overall balance (percent of GDP)
Non-oil primary balance excluding capital transfers
As percent of non-oil GDP
Oil revenues (percent of oil GDP)
Basic balance (percent of GDP)
Public debt (percent of GDP)
Domestic debt (percent of GDP)
External debt (percent of GDP)
Non-oil GDP at market prices

2,078
1,336
742

1,685
1,348
338

1,834
1,707
127

2,469
2,269
200

2,546
2,641
-95

10.5

5.9

1.8

2.3

-1.0

-2.9

-3.2

-3.3

-3.2

-3.6

-467
-12.5
43.4
11.3
16.0
2.1
13.9
3,731

-407
-11.7
41.6
7.7
23.9
6.1
17.8
3,475

-761
-18.0
33.3
4.9
20.4
4.6
15.8
4,238

-1,092
-22.1
34.9
5.1
18.2
3.4
14.8
4,936

-1,467
-26.4
36.7
1.6
18.8
3.3
15.5
5,553

-1,562
-25.2
34.1
0.7
20.6
5.6
15.0
6,200

-1,528
-22.2
34.3
1.4
22.7
6.3
16.4
6,882

-1,503
-19.8
34.5
1.2
24.8
7.1
17.7
7,592

-1,439
-17.1
34.1
1.3
25.9
7.6
18.4
8,406

-1,441

-15.4
34.2
0.0
28.4
9.0
19.4
9,328

Sources: Gabonese authorities and IMF staff estimates and projections.

INTERNATIONAL MONETARY FUND

GABON

Table 4. Gabon: Monetary Survey, 2008–13
2008

2009

2010

2011
Est.

2012
2013
Projections

(Billion of CFA francs, unless otherwise indicated)
Net foreign assets
(US$ millions)
Net domestic assets
Domestic credit
Claims on central government (net)
Claims on public agencies (net)
Claims on nongovernment
Other items (net)
Broad money (M2)
Currency
Deposits

984
2,198
155
394

1,082
2,291
83
390

894
1,805
495
663

1,045
2,217
712
930

1,263
2,438
714
1,341

1,426
2,693
781
1,716

-215
-21
629
-238

-176
-14
579
-307

84
-24
590
-168

102
-21
839
-218

308
-21
1,053
-627

412
-21
1,325
-935

1,140
229
911

1,165
249
916

1,389
222
1,168

1,757
293
1,464

1,977
324
1,653

2,207
346
1,861

(Change as percent of beginning of M2)
Net foreign assets
Net domestic assets
Domestic credit
Claims on general government (net)
Claims on nongovernment
Other items (net)

-12.7

8.4

-16.2

10.9

12.4

8.2

21.4
30.7
26.3
3.4
1.0

-6.2
-0.3
3.4
-4.3
0.6

29.7
19.6
18.7
0.8
-0.7

12.3
15.2
1.1
14.1
0.2

0.1
20.8
10.4
10.9
0.0

3.0
17.0
4.7
12.3
0.0

12.5
52.6
24.4
18.8
20.7

11.6
-9.9
26.0
21.2
21.4

(Annual percent change)

Memorandum items:
Broad money (M2)
Reserve money (RM)
Credit to the economy
Credit to the private sector (in percent of non-oil GDP)
Broad money (in percent of overall GDP)

8.8
37.2
6.0
16.9
16.2

2.2
-4.3
-7.9
16.7
20.4

Sources: Gabonese authorities and IMF staff estimates and projections.

INTERNATIONAL MONETARY FUND

19.2
7.9
1.9
13.9
19.3

26.5
30.6
42.0
17.0
19.8

GABON

Table 5. Gabon: Financial Soundness Indicators for the Banking Sector, 2006–11
2006

2007

2008

2009

2010

2011 1

Regulatory Capital to risk-weighted assets

17.8

14.3

19.4

24.0

22.6

21.1

Capital to total assets

10.2

7.0

10.7

16.2

11.3

10.9

Bank nonperforming loans to total assets

10.7

7.6

8.5

7.2

9.9

4.4

Bank provisions to non performing loans

57.4

59.8

61.4

71.0

56.8

93.2

Earnings and profitability
Return on assets
Return on equity

2.5
23.5

2.7
32.3

1.8
20.8

2.8
17.2

0.5
5.8

0.6
5.1

210.0

197.0

243.0

197.0

158.0

137.9

Capital

Asset quality

Liquidity
Liquid Assets to short-term liabilities

Sources: BEAC, COBAC, and staff estimates using definitions from IMF's "Compilation Guide on Financial
Soundness Indicators."
1

The 2011 data are estimates at end-December 2011.

INTERNATIONAL MONETARY FUND

GABON

Table 6. Gabon: Balance of Payments, 2008-17
2008

2009

2010

2011
Est.

2012

2013

2014
Projections.

2015

2016

2017

(Million of US$)
Current account
Goods (net)
Export of goods (fob)
Hydrocarbons
Timber
Manganese
Import of goods (fob)
Petroleum sector
Other
Services (net)
Other private services
Income (net)
Current transfers (net)
Capital account
Financial account
Direct investment (net)
Portfolio investments (net)
Other investment assets and liabilities (net)
Medium- and long-term transactions
Short term transactions
Errors and Omissions
Overall balance
Financing
Change in net foreign assets
Use of IMF credit and loans (net)

3,664

907

1,289

2,655

2,285

2,029

1,414

964

598

7,480
9,719
7,546
581
1,413
-2,239
-504
-1,735
-1,705
-473
-1,849

3,621
5,922
4,909
473
378
-2,301
-400
-1,901
-1,516
-447
-1,010

4,747
7,464
6,512
231
556
-2,718
-556
-2,162
-1,535
-573
-1,686

7,084
10,463
9,382
141
848
-3,378
-802
-2,577
-1,913
-724
-2,203

6,425
9,927
8,760
325
749
-3,502
-752
-2,750
-1,854
-707
-1,985

6,691
10,501
8,879
397
1,124
-3,810
-765
-3,045
-2,089
-719
-2,268

6,193
10,082
8,397
414
1,154
-3,889
-726
-3,163
-2,234
-723
-2,240

5,827
9,764
7,992
453
1,183
-3,937
-692
-3,245
-2,391
-732
-2,166

5,587
9,666
7,665
541
1,296
-4,079
-664
-3,415
-2,534
-743
-2,146

5,300
9,701
7,427
650
1,425
-4,401
-643
-3,758
-2,744
-761
-2,201

-262

-189

-237

-313

-301

-306

-305

-306

-309

297

1,966

-600

-599

-1,133

-1,598

-1,823

-1,157

-803

-618

338

773
108
1,085
2,355
-1,270
-5,106

573
0
-1,380
469
-1,849
-311

499
0
-1,098
640
-1,738
-1,012

696
0
-1,829
553
-2,382
-1,011

696
0
-2,294
743
-3,037
-575

856
0
-2,537
836
-3,373
0

740
0
-1,913
1,136
-3,049
0

679
0
-1,482
1,223
-2,705
0

633
0
-1,250
1,366
-2,617
0

690
0
-352
2,811
-3,163
0

821

-1

-321

511

112

206

257

162

-20

384

-821
-821
-25

1
1
0

321
321
0

-511
-511
0

-112
-112
0

-206
-206
0

-257
-257
0

-162
-162
0

20
20
0

-384
-384
0

10.4
27.8
-17.4
-9.3
1.1

6.9
25.0
-18.1
-5.7
1.3

4.5
22.8
-18.3
-3.8
0.8

2.7
20.7
-18.0
-2.8
-0.1

0.2
18.7
-18.5
1.4
1.6

2.8
23.2
6.6
86.2

2.8
24.1
6.8
82.3

3.2
24.5
8.4
75.5

Memorandum items:
(Percent of GDP)
Current account
Oil
Non-oil
Capital and financial accounts
Overall balance

23.3
31.9
-8.6
14.4
5.2

7.5
27.6
-20.1
-4.9
0.0

8.9
26.7
-17.9
-4.1
-2.2

14.1
30.6
-16.5
-6.0
2.7

12.4
29.7
-17.3
-8.7
0.6

(Billion of US$, unless otherwise indicated)
Gross official reserves imputed to Gabon
CEMAC gross official reserves
(months of CEMAC imports of GNFS)
(percent of broad money)

2.0
15.7
7.2
128.0

Sources: Gabonese authorities and IMF staff estimates and projections.

INTERNATIONAL MONETARY FUND

1.9
14.4
5.8
116.1

1.5
13.7
4.5
94.3

2.1
15.7
5.0
87.6

2.2
18.3
5.7
95.4

2.4
20.6
6.3
96.2

2.6
22.2
6.3
93.1

GABON

Table 7. Gabon: External Debt, 2008–17
2008

2009

2010

2011
2012
Est.
(Million of US$, unless otherwise indicated)

2,181
353
947
995
946

2,150
280
924
869
901

2,291
246
1,154
871
879

2,784
472
1,544
923
875

2013
2014
2015
Projections

2016

2017

2,858
483
772
1,666
875

2,921
521
764
1,641
875

3,343
619
1,242
1,488
875

3,764
950
1,570
1,251
875

4,126
1,556
1,694
884
875

4,653
1,583
1,647
1,423
--

Debt stocks
Total external debt (including IMF)
Multilateral
Bilateral
Commercial debt
International Bond
Late Interest not paid (IDR)

Debt service
Principal
Total (Including IMF)
Multilateral
Bilateral
Commercial debt

2,400
83
2,115
201

374
63
174
137

397
59
132
206

329
57
241
31

538
47
79
412

440
78
63
299

488
101
96
292

521
62
70
389

620
62
165
393

1,360
160
317
883

Interest
Total (Including IMF)
Multilateral
Bilateral
Commercial debt

184
18
77
89

135
20
43
73

148
21
41
84

144
16
50
78

157
15
23
119

215
14
44
157

247
16
62
169

271
22
86
162

293
41
102
150

386
92
152
142

4.5
14.8
26.6

7.0
15.5
28.8

6.2
15.0
27.8

7.3
16.4
33.2

8.1
17.7
38.5

9.4
18.4
42.7

18.0
19.4
48.0

(In percent)
Memorandum items:
Debt service to exports ratio
External public debt to GDP ratio
External public debt to exports ratio

26.6
13.9
22.4

8.6
17.8
36.3

7.3
15.8
30.7

Sources: Gabonese authorities and IMF staff estimates and projections.

INTERNATIONAL MONETARY FUND

GABON

Table 8. Gabon: Millennium Development Goals (1990-2009)
Goal 1: Eradicate extreme poverty and hunger
Employment to population ratio, 15+, total (%)
Employment to population ratio, ages 15-24, total (%)
Malnutrition prevalence, weight for age (% of children under 5)
Goal 2: Achieve universal primary education
Primary completion rate, total (% of relevant age group)
Total enrollment, primary (% net)
Goal 3: Promote gender equality and empower women
Proportion of seats held by women in national parliaments (%)
Ratio of female to male primary enrollment (%)
Ratio of female to male secondary enrollment (%)
Ratio of female to male tertiary enrollment (%)
Share of women employed in the nonagricultural sector (% of total nonagricultural employment)
Goal 4: Reduce child mortality
Immunization, measles (% of children ages 12-23 months)
Mortality rate, infant (per 1,000 live births)
Mortality rate, under-5 (per 1,000)
Goal 5: Improve maternal health
Adolescent fertility rate (births per 1,000 women ages 15-19)
Births attended by skilled health staff (% of total)
Contraceptive prevalence (% of women ages 15-49)
Maternal mortality ratio (modeled estimate, per 100,000 live births)
Pregnant women receiving prenatal care (%)
Unmet need for contraception (% of married women ages 15-49)
Goal 6: Combat HIV/AIDS, malaria, and other diseases
Children with fever receiving antimalarial drugs (% of children under age 5 with fever)
Condom use, population ages 15-24, female (% of females ages 15-24)
Condom use, population ages 15-24, male (% of males ages 15-24)
Incidence of tuberculosis (per 100,000 people)
Prevalence of HIV, female (% ages 15-24)
Prevalence of HIV, male (% ages 15-24)
Prevalence of HIV, total (% of population ages 15-49)
Tuberculosis case detection rate (%, all forms)
Goal 7: Ensure environmental sustainability
CO2 emissions (kg per PPP $ of GDP)
CO2 emissions (metric tons per capita)
Forest area (% of land area)
Improved sanitation facilities (% of population with access)
Improved water source (% of population with access)
Marine protected areas (% of territorial waters)
Net ODA received per capita (current US$)
Goal 8: Develop a global partnership for development
Debt service (PPG and IMF only, % of exports, excluding workers' remittances)
Internet users (per 100 people)
Mobile cellular subscriptions (per 100 people)
Telephone lines (per 100 people)
Fertility rate, total (births per woman)
Source: World Development Indicators

INTERNATIONAL MONETARY FUND

1990

1995

2000

2005

2009

60
40
..

60
41
..

60
40
9

61
39
..

62
38
..

70
..

68
92

72
82

69
..

..
..

13
100
86
42
..

..
99
82
..
29.3

8
100
86
54
..

9
99
..
..
..

17
..
..
..
..

76
68
93

57
65
89

55
63
88

55
59
82

55
55
75

..
..
..
260
..
..

130
..
..
250
..
..

116
86
33
260
94
28

97
..
..
260
..
..

86
..
..
260
..
..

..
..
..
153
..
..
0.9
65

..
..
..
155
..
..
3.1
66

..
..
..
248
..
..
5.2
73

..
..
..
326
..
..
5.4
56

..
..
..
502
3.5
1.4
5.2
41

0
5
85.4
..
..
0
141

0
4
..
36
84
0
132

0
1
85.4
36
85
1
9

0
1
85.4
33
86
7
44

0
2
85.4
33
87
7
52

5
0.0
0
2
5

15
0.0
0
3
5

9
1.2
10
3
4

3
4.9
54
3
4

..
6.7
93
2
3

GABON

APPENDIX I. STRATEGIC PLAN FOR “EMERGING GABON”
1.
Gabon aims at becoming an emerging country by 2025. While being an upper-middle
income country with per capita income four times the sub-Saharan African average and having
Central Africa’s only tradable Eurobond, Gabon still faces a two-fold challenge to: (i) create a
diverse economic fabric that will associate the development of natural resources and higher
value-added industries and services, and (ii) provide full employment to the relatively young
population.
2.
To address the challenge of economic diversification, Gabon has developed a new
economic plan aimed at making the country an emerging country in less than fifteen years
under a policy vision known as the Strategic Plan Gabon Emergent (PSGE). Developing the
new objectives for economic diversification and growth will necessitate raising the capital budget
to above CFAF 1,200 billion until 2017—compared to an annual average of CFAF 300 billion
between 2005 and 2009.
3.
The Gabonese authorities launched an ambitious medium-term reform and
investment plan in the context of the PSGE. The substantially scaled-up investment plan for
the period 2010-16 includes projects at the national level for an estimated cost of US$11 billion,
in addition to projects for the capital city Libreville of US$1 billion. The national projects are
mainly for developing transport infrastructure (roads, trains, and ports), the energy sector, and
large iron ore mining, while the projects for Libreville focus on housing, transportation and
sanitation. Gabon’s strategy also encourages domestic and foreign private investment through
the special economic zones (SEZs). The political and economic reforms to transform Gabon into a
newly emerging country announced by President Bongo in 2009 aim at strengthening and
diversifying the economy around three pillars:


Gabon Vert (Green Gabon) to sustainably develop the country’s natural resources: 22 million
ha of forest, 1 million ha of arable land, 13 national parks, 800 km of coastline;



Gabon Industriel (Industry Gabon) to develop local processing of primary materials, export of
high value-added products; and



Gabon des Services (Services Gabon) to develop the Gabonese workforce to become a
regional leader in financial services, green growth, tertiary education and health.

4.
The “Emerging Gabon” development plan is broken down into several sectoral
plans, which make up the 2011 to 2016 five-year program. Among them,


Mines and Hydrocarbons Plan: aims at launching new deep-sea oil fields production,
developing gas production and realizing the potential of the mining sector, by 2016.The
development of a national Mines and Hydrocarbons industry is based, among other things,
on the creation of the Gabon Oil Company.

INTERNATIONAL MONETARY FUND

GABON



Wood and Forest Economy Plan: targeting the creation of industrial and logistical
infrastructures to help develop special economic zones devoted mainly to the woodprocessing industry (Nkok Special Economic Zone).



Agriculture and Farming Plan including projects to develop intensive food-production
industries, setting up agro-pastoral farms (LR Group project),development of integrated
poultry rearing and the palm oil industry (OLAM), in addition to development of the rubber
industry (SIAT) and the launch of the coffee/cocoa industry, etc.



Fishing Plan restructuring the sector by drafting laws for creating a national fishing industry
and developing outlets to valuable markets.



State Reform and Modernization Plan: establishing a Gabonese public administration on
which to build the foundations of Emerging Gabon.



Business and Private Sector Support Framework Plan: modernizing the playing field for
companies, the enhancement of which should improve competitiveness



Electricity Plan: covering all the energy requirements of Emerging Gabon with projects such
as the Grand Poubara hydroelectric dam in the east of the country (160 MW), the Impératrice
hydroelectric dam (84 MW), a construction project north of the Mitzic hydroelectric dam and
the Alénakiri natural gas thermal power plant in Libreville with a power capacity likely to
reach 70 MW. Over time the government expects to double its energy production capacity to
1000 MW.

INTERNATIONAL MONETARY FUND

GABON

APPENDIX II. ANCHORING FISCAL POLICY IN GABON
Anchoring fiscal policy is particularly challenging for Gabon because of the country’s heavy reliance
on highly volatile oil revenue and large development needs. In such a case, fiscal policy can be
anchored by implementing a simple oil revenue rule to pin down budgetary revenue and basing
capital expenditure on an assessment of an adequate capital spending envelope over the scaling up
period taking into account absorptive and implementation capacity. The revenue and expenditure
paths can then be calibrated to ensure consistency with a fiscal sustainability framework targeting
1
stabilization of total net wealth (financial and physical).

A. Reducing Expenditure Volatility
1.
The authorities’ strategy would need to strike the right balance between large
development needs and limited oil revenues while maintaining the fiscal sustainability. In
the past, the authorities have been focused on complying with CEMAC overall fiscal surplus
criterion and, more recently, their fiscal strategy has been inspired by a wide-ranging
development plan aimed at making Gabon a diversified emerging economy by 2025. Aware of
high non-oil primary deficit and of the importance of fiscal sustainability, the authorities are
aiming at putting in place a sustainable medium term framework encompassing their public
investment plan and improving public financial management (PFM).
2.
Putting in place a credible framework regulating the use of fiscal buffers would
enable the government to implement capital spending plans without requiring additional
financing and avoiding sharp absorption drops. Without such buffers, fiscal spending is
exposed to oil price volatility which not only amplifies the economic cycles but also usually
affects the medium-term efficiency of investment and hence potential growth.
3.
In the simplest case, an oil price-based rule can be used to smooth forecasted oil
revenues and budgetary expenditures. Under such a framework, budgetary revenues are
projected using a smoothed formula-based oil price, which could then be used to guide the
expenditure envelope. When actual oil prices are higher (lower) than the budget-oil price, actual
(realized) revenues are higher (lower) than budgetary revenues and the surplus (deficit) is
accumulated in (withdrawn from) a stabilization buffer.
4.
The application of a budget oil price to data for Gabon points to a significant
reduction in the potential volatility of budgetary oil revenues. 2

“Macroeconomic Policy Frameworks for Resource-Rich Developing Countries”, (IMF Policy Paper; August 24, 2012).

The size of the stabilization buffer depends on the authorities’ risk aversion to ensure the implementation of its spending
envelope. The larger the desired smoothing and the less responsive budgetary revenues become to price shocks, the larger the
needed stabilization buffer to effectively insure against shocks. Cross country experience indicates that using an 8-year moving
average (5 historical years and 3 years of forward projection) reduces volatility relative to actual prices while still allowing the
budgetary price to react to market shocks.

INTERNATIONAL MONETARY FUND

GABON

Figure II.1. Republic of Gabon: Distribution of Future Government Oil Revenues Without
and With a Stabilization Framework, 2012–16.
Budgeted oil revenues with formula-based budget prices

Estimated Oil Revenues with stochastic prices
2,000

Percentiles:
5th to 10th bottom, 90th to 95th top
10th to 20th bottom, 80th to 90th top
20th to 30th bottom, 70th to 80th top
30th to 40th bottom, 60th to 70th top
40th to 50th bottom, 50th to 60th top

1,800
1,600

1,400

Billion CFA

2,000

1,200

1,400
1,200

1,000

800

800
600

600

400

200

2012

2013

2014

2015

2016

2012

2013

2014

2015

2016

5.
Staff estimates based on a value-at-risk analysis suggests that resources deposited
with the BEAC are currently insufficient to provide sufficient liquidity to offset the impact
of fluctuations in oil prices. The initial stabilization buffer should be large enough to ensure
that, given an oil price-based budget rule, the buffer would not be fully depleted over a period of
three years with a high degree of confidence. This aims to avoid the high cost of adjustment in
the event that the buffer was fully depleted. The minimum required size of the stabilization
buffer is estimated by simulating stochastically the impact of oil prices on the fiscal accounts
using the Gabonese specified oil production profile and fiscal regime. The minimum buffer
required is CFAF 750 billion to ensure with a probability of 85 percent that the buffer is not fully
depleted over a three year period. This compares with the current amount of Treasury deposits
with the BEAC (excluding cash balances) of about CFAF 250 billion, and the objective of the
authorities to accumulate at least CFAF 500 billion in the Fund for Future Generations deposit
window at BEAC.

B. Fiscal Sustainability
6.
Expenditures can be anchored in the medium to long term using a fiscal
sustainability framework which aims at stabilizing the total net wealth. Specifically, the
framework allows for a scaling-up of investment to address infrastructure needs, raise overall
productivity and enhance long-term potential growth. In this context, welfare can be improved
by drawing down natural resource wealth in the short term, to the extent that the scaling-up of
investment has a high enough return.
7.
An illustrative scenario suggests that Gabon, after having met its infrastructure
needs, would need to engage a fiscal consolidation to preserve long-term fiscal
sustainability. The main elements of the analysis are the following:


A medium-term path for spending consistent with a declining path for the non-resource
primary fiscal deficit (NRPD). After having built up basic infrastructure during the
implementation of the development plan, the authorities would scale down capital spending

INTERNATIONAL MONETARY FUND

GABON

in 2016–30. This would also allow room for growth in maintenance costs for the new
infrastructure. Fiscal consolidation would be pursued over time to bring the NRPD to the
average fiscal balance of emerging market economies.


Long-run level of the NRPD needed to maintain a given level of wealth.3 It is assumed that the
NRPD would decline gradually to reach a level of just over 2 percent of non-hydrocarbon
GDP, which would be consistent with maintaining total net wealth at about 76 percent of
non—hydrocarbon GDP in 2030 (Figure II.2).

Figure II.2. Gabon: Non-Resource Primary Deficit, Financial Assets
and Wealth
(Percent of non-hydrocarbon GDP)
350

300

Non-oil primary deficit (left hand axis)

250

Total wealth (right hand axis)
Net financial assets (right hand axis)

200

150
100

50
5

0
-50

0
2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

Source: IMF staff calculations.



Calibrate assumptions of fiscal policy to ensure consistency with the fiscal sustainability
framework assumed (Table II.1). Government capital spending would decline to around
8 percent of non-hydrocarbon GDP, which is a ratio similar to the one observed in other
emerging market economies. At the same time, primary current expenditure, after a decrease
reflecting the removal of (non-poor related) subsidies, is expected to increase, driven by the
higher costs of utilizing the enhanced capital stock and improved social services. The
expected increase in non-resource revenue mobilization would reflect reforms of tax
administration and enforcement aimed at increasing tax collection, and the curtailment of tax
exemptions.

Net wealth is defined as the sum of the present value of future oil revenue plus net financial assets. For a formal definition of
the net wealth-stabilizing level of the NRPD, see the annex to “Macroeconomic Policy Frameworks for Resource-Rich
Developing Countries”, (IMF Policy Paper; August 24, 2012).

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Table II.1. Gabon: Selected Fiscal and Financial Indicators 2011–2030
2011

2012

Non-hydrocarbon revenue
Primary expenditure
Capital
Primary current
Non-hydrocarbon primary balance (NRPB)
Hydrocarbon revenue

22.4
42.4
20.3
22.1
-20.4
27.8

18.9
42.3
18.8
23.5
-25.7
26.3

2013
2016
2020
2025
(Percent of non-resource GDP)
18.4
18.8
18.6
22.4
41.9
34.9
28.5
27.4
19.6
15.5
12.1
9.9
22.3
19.5
16.4
17.6
-25.2
-16.9
-10.5
-5.5
22.7
14.7
10.9
8.0

Net financial assets
Natural hydrocarbon wealth
Total wealth

8.7
0.0
930.0

8.8
317.1
829.3

5.9
279.0
284.9

-0.9
199.4
198.5

-3.0
135.0
131.9

5.6
87.4
93.0

2028

2030

22.8
23.9
8.7
15.2
-3.4
6.9

23.4
25.0
7.9
17.1
-2.0
6.2

15.0
65.3
80.2

23.0
53.1
76.1

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

8.
Such a scenario shows that aiming at a (non-oil) fiscal position comparable to the
level of emerging market economies would be consistent with fiscal sustainability over the
longer term. This would allow building up positive financial net wealth, along with remaining oil
wealth, in 20 years from now.4 The adjustment path appears feasible but would require a gradual
decline in capital spending, a restraint in current expenditures and a strengthening in public
financial management and tax administration. It would leave total wealth (as measured by the oil
and financial wealth) to a level equivalent at one quarter of today’s estimated oil wealth, but the
Gabonese economy would be equipped with the infrastructure needed for a more sustained and
job creating private sector development.

Gabon has an oil horizon of 50-60 years at currently projected production levels. Oil resources would therefore not be
exhausted at the end of the illustrative scenario presented here.

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APPENDIX III. OIL SUBSIDIES IN GABON

Premium gasoline

1.
Like many other oil exporters, the Gabonese authorities have chosen to keep
domestic oil prices below
Price of types of gasoline in various Franc Zone African
international prices for many
countries (per liter in CFA francs)
900
years. Earlier work conducted at the
Senegal
800
Fund found that the premium of
Cote d'Ivoire
700
international oil prices (inclusive of
Cameroon
600
Congo
taxes) over domestic prices was
Benin
500
about 25 percent in the mid-2000s
Gabon
Equatorial Guinea
400
(Leigh 2006). Recent analysis
Chad
300
conducted at the Ministry of
200
Petroleum confirms this earlier
100
calculation. As of February 2012,
0
international premium gas prices
0
100
200
300
400
500
600
700
were about 27 percent higher than
Diesel
domestic prices while international
Sources: Gabonese authorities and GDI
diesel prices were 32 percent higher. Domestic oil prices in Gabon are among the lowest in a
sample of West African oil and non-oil exporters, with only the Republic of Congo and Equatorial
Guinea having lower prices for diesel prices and Equatorial Guinea and Chad with lower premium
gas prices.
2.
The total value of the oil price subsidy amounts to about 2 percent of GDP and is
considerably higher than many other Sub-Saharan African countries. This calculation is
based on taking the difference between the domestic and international prices of various
components of oil and weighting the aggregate by the consumption shares of various types of
oil. The oil categories that receive price subsidies include premium gas, regular gas and diesel,
with diesel having the highest use at about 73 percent of the total. Premium gas contributes
11 percent while regular gas makes up 5 percent. The other categories include jet fuel and
butane but jet fuel is not taxed. Interestingly, the component with the highest subsidy (diesel) is
mostly used by businesses while the two other oil components with lower subsidies are mostly
used by households.
3.
Since oil prices are projected to remain high and oil demand projected to increase
rapidly, the fuel subsidy is not expected to decline much over the short term. Current
projections indicate that the subsidy will remain at about 1.6 percent of GDP through 2015. Given
the high level of subsidy, the government is currently considering three options to reduce the
budgetary cost. The first option is to eliminate the subsidy completely by raising the oil price to
international levels. This would completely alleviate fiscal expenditures but could result in an
unfavorable social impact. The second option would be to liberalize the premium gasoline and
diesel prices but prevent lamplight and butane gas prices from rising over a statutory ceiling.
This would help protect the expenditure budgets of poorer segments of the population that
spend large amounts of their budget on these expenditures.

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GABON

4.
Leigh and al. (2006) have found that the poorest two deciles spend about
1-2 percent of their expenditures on butane gas and between 1–1½ percent of their
expenditures on lighting kerosene. These significant shares compare with almost zero
expenditure for the richest decile on lighting kerosene and about 1 percent of expenditures for
butane gas. The richest decile spend most money on transport fuel (super gasoline and diesel)
with an expenditure share of about 2½ percent. Expenditures of the richest decile are much
higher than for the poor so that the value of the fuel subsidy is so much larger for the richest at
57,000 CFA per capita compared with only 4,000 CFA for those in the poorest decile.
5.
The third option is to maintain prices stable for consumers and raise prices for oil
used for industrial purposes. The problem with this option is that it does not get at the issue of
better targeting because the richest individuals would still benefit from subsidized prices.
Moreover, it would be difficult to monitor and create distortions and incentives for people to
avoid declaring their business status to receive subsidized oil.
Gabon's subsidized price structure (per liter in February 2012, unless otherwise specified)
super
household

petrol

business

household

diesel

business

household

total

business

Domestic price based on world oil price
inclusive of import taxes

654.7

537.2

73.6

64.0

70.3

total price

728.3

601.2

692.7

Domestic subsidized price

535.0

275.0

470.0

Oil price subsidy (CFAF Libreville)

193.3

326.2

222.7

Subsidy as fraction of world price

0.27

0.54

Consumption

87.2

Subsidy total (in billions of CFA francs)

17.4

13.1

130.9

0.2

0.1

1.5

Consumption taxes

Subsidy (in percent of GDP)

3.0

25.4

622.4

0.32
14.9

162.2

425.8

1.8

Source: Gabonese authorities and staff estimates

6.
Sogara is Gabon’s refining company, responsible for refining the component of
Gabon’s oil production that is used for domestic consumption. It has been in operation for
over 40 years and its equipment is old. Moreover, stringent oil sulphur content guidelines imply
that Gabon will not be able to refine its oil in the near future without significant new investment.
Although its financial position has improved in recent years, it still receives small government
subsidies (about 0.1–0.2 percent of GDP) and its debt liability to the government has been
restructured. Even though 75 percent of the company is privately owned, all of its financial
support has come from the government.
7.
The staff’s position is that the company is not financially sustainable and therefore
consideration should be given to its closure with domestic consumption needs obtained
through imports. Indeed, because of strike activity earlier this year which involved the closure of
the company for over two months, refinery output is projected to decline by 25 percent in 2012,
with imports making up the difference. There is some discussion with a Korean firm about taking
over the company and establishing a much larger refinery and therefore the authorities may wait
to see if this other option pans out before making any decisions on the future of the company.

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APPENDIX IV. PUBLIC FINANCE MANAGEMENT REFORM
1.
Budget execution has not been satisfactory. Weaknesses in the public finance
management system were key factors for the low rates of implementation of priority
programs─in particular, in the social, economic and public works sectors─affecting the quality
and efficiency of government spending. A World Bank Public Expenditure Review found that the
main shortcomings included: (i) budgetary programming that does not really rely on the
priorities defined by the GPRSP and the absence of multi-year programming, (ii) the absence of
prior project studies indicating the actual cost, technical specifications, schedule and delivery
deadlines, (iii) late disbursement of budgetary allocations, (iv) late introduction (in 2010 only) of
procurement plans and commitment plans in the sectoral ministries, (v) the low capacity of
sectoral ministries to draw up and monitor procurement plans, (vi) the modification of the
sectoral ministries’ budgets without earlier consultation and without the prior authorization of
Parliament, (vii) shortcomings in the auditing of services rendered leading to discrepancies
between budget execution and physical performance, and (viii) the length of the expenditure
chain, particularly in the payment phase due to the low quality of supporting documents, but
also to cash shortages (the 60–day payment period may be reduced once the texts on the
nomenclature of supporting documents have been adopted).1
2.
Gabon is implementing a medium-term budget reform to support efforts to
advance the Strategic Development Plan. Following a regional CEMAC agreement, the
Gabonese authorities have agreed to implement a program budgeting by objectives.2 The new
organic finance law aims at reforming the public finance management framework to turn it
result-based, more efficient, and transparent to strengthen budgetary and accounting
information. The budget to be formulated in the form of program objectives and assessed on the
basis of outcomes will better align the budget with national priorities specified by the
development plan.
3.
The transition to a new budget structure, by program objectives, requires a
transitional period of approximately three years. During this period, ministries are preparing
medium-term expenditure frameworks structured in the form of programs. Budgeting by
program objectives involve working on specific areas such as:


Budget architecture: with the support of AFRITAC, a common budgetary process is being
implemented for all programs run by all ministries, including internal controls and audit
mechanisms.



Legal reform: the implementation legal changes regarding accounting and ordinances to
secure and make possible budget financial controls;

Gabon, Public Expenditure Review─Better management of public finance to achieve Millennium Development Goals─Report No.
62548-GA, March 2012.
2

CEMAC members have adopted a Directive (N°01/08-UEAC-190-CM-17 and Organic Law N°31/2010 from October 21, 2010
promulgated in October 2012) to reform budgetary process and execution.

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GABON



Human resources: the launch of an information system to support human resource
administration including the rationalization of administrative entities and procedure manuals
for managing program budgets;



Accounting: a new budgetary accounting by objectives establishing cost analysis and a
nomenclature for the budgets compatible and aligned with CEMAC guidelines.



Communication: to produce timely and accurate information about projects─duration and
medium-term goals connected to the different budgets─to help implement the budget
process.

Program Implementation
4.
To implement the program, the authorities have created an inter-ministerial group
with the responsibility of implementing the project. Budget by Program Objectives is being
implemented through a pilot covering four ministries: economy, national education, energy and
budget. The project’s next steps are targeting the definition of objectives, strategies and
indicators. In particular, the timetable to finalize the project by 2015 include the following steps:
a. Preparation of the new Organic Finance Law (2008–2010) (completed)
b. Preparation of supporting documentation (2011–2013)
c.

Structuring pilot cases involving four ministries─education, energy, economy, and
budget─(August 2011–July 2012) (completed)

d. Expanding the program structure to all ministries (July 2012–March 2013)
e. Launching the 2014 budget under the new guidelines in parallel with the current
methodologies and guidelines.
f.

Preparing the 2015 budget under the new format for all ministries/sectors.

5.
It is envisaged that, during the three-year-transitional period, ministries involved in
the pilot program finalize their medium-term expenditure frameworks.

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APPENDIX V. EMPLOYMENT AND INCLUSIVENESS
Despite high and sustained growth registered since 2003, unemployment rate in the formal sector
has been increasing, especially among the youth and women. This jobless growth results from
different factors including lack of economic diversification, an education system ill suited to the
needs of the labor market, rigid job market regulation, and inadequate coordination among
different national agencies to facilitate employment.1

A. Has growth been inclusive?
1.
Although recent growth in Gabon has been fairly positive, it has not been sustained
and broadly based2. With the oil sector contributing for more than half of the GDP and around
55 percent of the fiscal revenues, growth has been volatile and driven by oil sector shocks. The
share of agriculture (less than 3 percent of the GDP) and forestry sectors (less 1 percent) have
decreased steadily whereas the share of the construction sector, dominated by public investment
cycles, is highly import intensive. Looking ahead, a diversification of the economy towards the
non-oil sector through infrastructure projects financed by public investment, enhanced business
climate and developing of mining sector and transformation industries are expected to offset the
decline in the oil production.
2.
The use of oil revenues and growth have not been very inclusive. While per capita
GDP in Gabon at more than 10’000 USD is one of the highest in SSA, one third of the population
lives in poverty and more than 20 percent of the active population is excluded from the formal
labor market. The dominance of the oil sector, a poor education system leading to labor skills
mismatch, a rigid labor regulation and lack of basic infrastructure have led to high
underemployment especially among the youth and women.

B. Background – Demographic and social indicators
3.
The population of Gabon is young and urban. According to the 2011 household
survey, nearly 36 percent of the total population of 1.6 million is under 15, in contrast to a mere
4.7 percent aged 60 or over. The working age population (age 15 to 64) is estimated at
50 percent of the population, with half between the ages of 15 to 29.

This appendix draws on discussions of the IMF staff with the Gabonese authorities and World Bank staff.

According to the Growth Commission, World Bank, cases of successful inclusive growth tend to span over three decades.

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Development in the working force 1990-2010
(Total employees)

Local
governement
4%

Other
industries
Agro Industry
1%
3%
Agriculture
Mines
Forestry
Oil
2% 2% 1% 3%
Electricity &
rafinery
MNOP
2%
BTP
8%
3%

Labor distribution

90000
80000
70000
60000

Transports
7%

50000
40000
30000

Services
7%

20000
Public Sector
51%

10000

Public Sector

2010

2008

2006

2004

2002

2000

1998

1996

1994

1992

1990

Banks &
insurances
2%

Private Sector

Sources: Gabonese authorities and IMF staff.

Commerce
4%

Note: Data available only for the formal sector.

4.
The people of Gabon are predominantly urban, migrant and poor. The urban
population is estimated at 84 percent, mostly in the three main cities of the country. Over
20 percent of the total population is migrants (foreigners) with a large majority originating from
Western and Central African Countries. About one third of the population lives in poverty.
5.
Unemployment is widespread but affects mostly women and the youth. The national
Unemployment Rates, 2009/10
unemployment rate is preliminary estimated at
(in Percent)
70
28 percent (if the discouraged unemployed
Overall
Youth
60
people are taken into account and at 20 percent
50
according to the ILO definition). About 87 percent
40
of the unemployed people live in the urban areas,
30
and 60 percent are women. The level of youth
20
unemployment, preliminary estimated at
10
37 percent, is comparable to other SSA middle
0
Gabon South Africa Botswana
Lesotho
Namibia Swaziland
income countries.
Source: ILO database

6.
Most economic activity and jobs occur in the formal public sector. The formal sector
is dominated by civil servants and employees of former state-owned enterprises. Following
scaling up of investment, public employment accounted for 62 percent of the formal working
force in 2010. Private formal employment is highest in the forestry (employing about 3 percent of
the working force), services and manufacturing sectors. The share of the informal sectors has
increased and represents about 47 percent of the total working force. Lower share of the private
employment might also mask the shift of some employers in the informal sector resulting from
high relative minimum wages and rigid labor market regulation in the formal sector.

C. What are the reasons of the jobless growth?
7.
Four main factors explain the jobless growth: lack of economic diversification, an
education system ill suited to the needs of the private sector, a rigid job market and lack of a
clear policy to facilitate employment.

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8.
The Gabonese economy is highly reliant on the oil sector. Formal private sector
activity is dominated by the capital intensive oil sector, which provides only around 2,400 jobs,
and more recently mining and public sector-related construction (contractors). Economic
diversification is hindered by lack of infrastructure (roads and energy/electricity, lower access to
financing), an unfavorable business environment and weak governance.
9.
The inadequate education system leads to skills mismatch. Gabon’s rates of schooling
and literacy are higher than the SSA average, yet its education focuses primarily on general
education rather than technical training. The share of students going to tertiary education is at
the SSA average, but most students enroll in arts and humanities (63 percent), limiting job
opportunities to public administration or teaching. Having less than 8 percent of students in
technical education is leading to a severe shortage of technically skilled workers needed in the
labor market. In addition, the quality of teaching has not kept pace with growing school
attendance, as noted by rising student-teacher ratios and also the highest repeating rates in
world for students. The high share of well educated unemployed and rising underemployment is
indicative of a mismatch between the skills demanded by the growing economic diversification
and those offered by job seekers.
10.
Rigid job market regulation and costly social contributions. Procedures under the
current labor code for separation are cumbersome, complex and costly, including for layoffs due
to economic or technical reasons. At the same time, quota system and cumbersome
administrative measures hinder private sector to hire foreigners and meet labor demand
requiring technical skills. In addition, only 2.5 percentage points out of 22.5 of social
contributions are paid by employees, leaving a higher cost for enterprises. All those factors
inhibit hiring and therefore reduce formal employment flexibility.
11.
Lack of coordination of agencies hinders the implementation of measures to make
the labor market more dynamic. Gathering information on the labor market is challenging
given the large informal sector and also inconsistent figures among multiple agencies dealing
with employment in the country. Despite the fact that the National Employment Office is still the
main employment agency, only a small fraction of job seekers (less than 10 percent of enrolled
unemployed) find employment through its intermediation. Reasons include lack of knowledge of
the process or belief that it would not be helpful—indeed, roughly 60 percent of job seekers use
personal relationships (parents/friends) to find employment. At the same time, the policies and
programs aimed at promoting employment are underfunded, and are undergoing changes in
their institutional framework. More broadly, the roles and responsibilities of the various ministries
and agencies in charge of labor market issues (the National Employment Office, Social Security,
Ministry of Economy) are not clearly defined.

D. Key measures to support job creation
12.
The high level of unemployment and the complexity of the challenges to
overcoming jobless growth necessitate a multipronged approach. Intensified efforts will be

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GABON

required to (a) increase employment opportunities in the private non-oil sector, (b) improve the
quality and the adequacy of education to eliminate the skills mismatch, and (c) create a legal
environment supportive of a favorable business climate and dynamic labor market.
13.
Addressing labor supply challenges. Increasing formal sector employment requires a
reduction in the current skill mismatch through improvements in the adequacy of education. As a
first step, a skills assessment aimed at understanding private sector labor skill needs (demand)
and labor supply in the formal and informal sectors (supply) should be conducted. This should be
supported by sustained dialogue between the public and private sectors and training
institutions—technical and vocational training programs should be reformed in line with market
needs. The quality and the technical orientation of the education system should be improved.
Accordingly, the budget allocation in education should be augmented.
14.
Reforming the legal and regulatory framework to support employment creation.
Key actions should include: (i) elaborating a national labor market policy (current policies and
regulations reviewed and revised) and defining clear roles and responsibilities to facilitate
coordination across ministries and agencies; (ii) providing adequate funding for the
implementation of the national employment policy as a first step toward a long-term labor
market policy; and (iii) swiftly implementing well targeted (youth) employment programs based
on experience and best practice of other countries.

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APPENDIX VI. ASSESSING DEBT SUSTAINABILITY
A.

External debt sustainability

1.
Debt level and structure. Gabon’s external debt amounted to US$3 billion (15.5 percent
of GDP) in 2012 (Table A1), with bilateral debt accounting for about half.
2.
Baseline scenario. Under the baseline scenario, the medium term overall fiscal deficit
stabilizes at about 3½ percent of GDP. Real output growth stabilizes at about 7 percent per
annum over the medium term with non-oil GDP growth averaging almost 10 percent and oil
growth projected to decline by slightly less than 1 percent per annum. Gabonese implicit interest
rates remain quite high over the medium term at about 8–9 percent, considerably above
international borrowing rates. International oil and other commodity prices reflect World
Economic Outlook projections through 2017. Under this scenario, the debt-to-GDP ratio rises to
peak at 19.4 percent in 2017. In 2017, we assume that the international bond for US$1 billion that
was issued in 2007 to reduce the government debt burden is rolled over.
3.
Shocks. Some of the risks to the outlook are substantial. While the impact of changes in
interest rates and non-oil growth are benign, the current account and depreciation shocks are
more substantial. A one half standard deviation of historical movements in the current account
would raise the deficit by 4 percentage points of GDP per annum. This corresponds to a
17 percent reduction in oil prices over the projection period and would result in a rise in the debt
ratio to over 34 percent of GDP in 2017. The combined shock also has a large impact on the debt
ratio, peaking at 29 percent of GDP in 2017.

Public debt sustainability

4.
The analysis covers only central government debt, because limited information is
available beyond the central government. The findings mirror the external debt sustainability
analysis:
5.
The scenarios based on historical averages and the standard stress tests confirm the
declining and benign profile of debt for the forecast period. The projections under the
historical scenarios differ from the baseline in two respects: an average annual GDP growth of
1.5 percent and a primary surplus of 7.1 percent. Under the baseline scenario, the public sector
debt ratio would increase gradually to 28 percent of GDP in 2017. Even under standard stress
tests, the projected level of public debt would remain well below 40–60 percent of GDP, the
range that is often deemed too high for an emerging market.

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Table 1. Gabon: External Debt Sustainability Framework, 2007-2017
(In percent of GDP, unless otherwise indicated)

2007

1 Baseline: External debt
2 Change in external debt
3 Identified external debt-creating flows (4+8+9)
4
Current account deficit, excluding interest payments
5
Deficit in balance of goods and services
6
Exports
7
Imports
8
Net non-debt creating capital inflows (negative)
9
Automatic debt dynamics 1/
10
Contribution from nominal interest rate
11
Contribution from real GDP growth
12
Contribution from price and exchange rate changes 2/
13 Residual, incl. change in gross foreign assets (2-3) 3/
External debt-to-exports ratio (in percent)
Gross external financing need (in billions of US dollars) 4/
in percent of GDP

2008

Actual
2009

2010

2011

2012

2013

Projections
2015
2016

2014

2017

34.3

13.9

17.8

15.8

14.8

15.5

15.0

16.4

17.7

18.4

19.4

1.6
-0.4
-16.5
-29.8
58.0
28.2
-6.1
22.2
3.2
-2.7
21.7
2.0

-20.4
-35.2
-24.5
-36.7
63.6
26.8
-4.9
-5.8
1.2
-0.3
-6.7
14.8

3.9
-8.1
-8.6
-17.4
52.3
34.8
-4.7
5.3
1.1
0.5
3.7
12.0

-2.0
-15.3
-9.9
-22.1
53.6
31.5
-3.4
-2.0
1.0
-1.0
-2.0
13.3

-1.0
-21.4
-14.9
-27.5
57.7
30.2
-3.7
-2.8
0.8
-0.9
-2.7
20.4

0.7
-17.1
-13.3
-24.9
56.4
31.5
-3.8
-0.1
0.9
-0.9
...
17.9

-0.6
-15.7
-11.5
-23.6
56.4
32.8
-4.4
0.2
1.1
-0.9
...
15.1

1.5
-11.6
-8.2
-19.5
52.2
32.7
-3.6
0.2
1.2
-1.0
...
13.0

1.3
-8.8
-5.8
-16.2
48.6
32.4
-3.2
0.2
1.3
-1.1
...
10.1

0.7
-6.7
-4.0
-13.6
45.8
32.2
-2.8
0.1
1.3
-1.2
...
7.4

1.0
-4.4
-1.8
-10.7
43.1
32.5
-2.9
0.3
1.6
-1.3
...
5.4

59.1

21.8

34.0

29.4

25.6

27.6

26.6

31.5

36.4

40.1

45.0

-1.3
-10.7

-1.3
-8.0

-0.5
-4.4

-0.9
-6.1

-2.3
-12.4

-1.7
-9.5

-1.6
-8.1

-0.9
-4.5

-0.4
-2.1

0.0
0.1

1.3
5.5

15.5

10.6

2.9

-7.7

-20.4

-34.3

6.1
-7.9
5.7
-4.5
2.0
13.3
3.8

5.9
0.2
7.5
6.0
10.1
11.5
4.4

6.8
-2.4
8.5
-3.5
4.1
8.2
3.6

6.9
-2.2
8.1
-2.6
3.7
5.8
3.2

7.1
-1.5
7.8
-0.5
4.8
4.0
2.8

7.5
-0.6
9.4
0.6
7.7
1.8
2.9

Scenario with key variables at their historical averages 5/
Key Macroeconomic Assumptions Underlying Baseline
Real GDP growth (in percent)
GDP deflator in US dollars (change in percent)
Nominal external interest rate (in percent)
Growth of exports (US dollar terms, in percent)
Growth of imports (US dollar terms, in percent)
Current account balance, excluding interest payments
Net non-debt creating capital inflows

5.2
-39.9
6.2
22.5
21.3
16.5
6.1

1.0
24.4
4.3
37.6
19.5
24.5
4.9

-2.9
-20.9
6.2
-36.9
-0.4
8.6
4.7

6.7
12.8
6.9
23.5
8.9
9.9
3.4

7.0
20.9
6.3
39.3
24.1
14.9
3.7

1/ Derived as [r - g - r(1+g) + ea(1+r)]/(1+g+r+gr) times previous period debt stock, with r = nominal effective interest rate on external debt; r = change in domestic GDP deflator in US dollar terms, g = real GDP growth rate,
e = nominal appreciation (increase in dollar value of domestic currency), and a = share of domestic-currency denominated debt in total external debt.
2/ The contribution from price and exchange rate changes is defined as [-r(1+g) + ea(1+r)]/(1+g+r+gr) times previous period debt stock. r increases with an appreciating domestic currency (e > 0) and rising inflation (based on GDP deflator).
3/ For projection, line includes the impact of price and exchange rate changes.
4/ Defined as current account deficit, plus amortization on medium- and long-term debt, plus short-term debt at end of previous period.
5/ The key variables include real GDP growth; nominal interest rate; dollar deflator growth; and both non-interest current account and non-debt inflows in percent of GDP.
6/ Long-run, constant balance that stabilizes the debt ratio assuming that key variables (real GDP growth, nominal interest rate, dollar deflator growth, and non-debt inflows in percent of GDP) remain at their levels
of the last projection year.

GABON

Figure 1. Gabon: External Debt Sustainability: Bound Tests 1/ 2/
(External debt in percent of GDP)
Interest rate shock (in percent)

Baseline and historical scenarios
20

Baseline:

8.2

19 10

Scenario:

8.8

Historical:

5.7

50
30

Baseline

10
-10
-30 Gross financing need under
baseline
(right scale)
-50
-70
2007

2009

2011

-34
Historical

2013

-5

-10

-15

-20

-25

-30
2017

2015

0
2007

Growth shock (in percent per year)
50

i-rate
shock

Baseline

2009

2011

2013

2015

2017

Non-interest current account shock
(in percent of GDP)

Baseline:

9.5

Baseline:

6.2

Scenario:

4.6

Scenario:

3.4

Historical:

2.9

Historical:

15.

30
Growth
shock

CA shock

25
20

20
15

Baseline

5
0
2007

2009

2011

2013

2015

2017

0
2007

Combined shock 3/
50

2013

2015

2017

Combined
shock

2011

Real depreciation shock 4/

50
40

2009

30 %
depreciation

15
10

Baseline

5
0
2007

2009

2011

2013

2015

2017

0
2007

2009

2011

2013

2015

2017

Sources: International Monetary Fund, Country desk data, and staff estimates.
1/ Shaded areas represent actual data. Individual shocks are permanent one-half standard deviation
shocks. Figures in the boxes represent average projections for the respective variables in the
baseline and scenario being presented. Ten-year historical average for the variable is also shown.
2/ For historical scenarios, the historical averages are calculated over the ten-year period, and the
information is used to project debt dynamics five years ahead.
3/ Permanent 1/4 standard deviation shocks applied to real interest rate, growth rate, and current
account balance.
4/ One-time real depreciation of 30 percent occurs in 2012.

INTERNATIONAL MONETARY FUND

NTERNATIONAL MONETARY FUND

GABON

Table 2. Gabon: Public Sector Debt Sustainability Framework, 2006–17
(Percent of GDP, unless otherwise indicated)
2006

1 Baseline: Public sector debt1
o/w foreign-currency denominated
2 Change in public sector debt
3 Identified debt-creating flows (4+7+12)
4 Primary deficit
5
Revenue and grants
6
Primary (noninterest) expenditure
Automatic debt dynamics 2

Contribution from interest rate/growth differential3
Of which contribution from real interest rate
Of which contribution from real GDP growth

8
9
10

Contribution from exchange rate depreciation4
Other identified debt-creating flows
Privatization receipts (negative)
Recognition of implicit or contingent liabilities
Other (specify, e.g. bank recapitalization)

11
12
13
14
15

16 Residual, including asset changes (2-3)5
Public sector debt-to-revenue ratio

Gross financing need6
in billions of U.S. dollars

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016 2017

42.1
32.5

39.4
32.2

16.7
14.4

23.2
17.0

20.3
15.6

19.0
15.6

19.2
15.9

20.6
15.0

22.7
16.5

24.8
17.7

26.0
18.4

28.4
19.4

-11.7
11.5
9.2
31.7
20.1

-2.7
3.1
7.8
27.3
17.4

-22.7
7.9
10.5
29.5
17.3

6.5
8.1
5.9
29.6
22.2

-3.0
2.4
1.8
25.5
22.4

-1.3
-3.8
-3.2
27.9
24.7

0.2
-0.3
0.4
26.4
26.8

1.4
1.3
1.5
24.7
26.2

2.1
1.2
1.7
24.3
26.0

2.1
1.1
1.8
23.9
25.7

1.2
0.8
1.7
23.4
25.1

2.4
0.9
1.8
22.8
24.6

2.3

-4.6

-2.6

2.2

0.6

-0.5

-0.7

-0.2

-0.5

-0.7

-0.9

2.7
3.3
-0.6

-2.0
0.1
-2.1

-0.5
-0.2
-0.4

1.4
0.9
0.5

-0.2
1.2
-1.4

-0.5
0.8
-1.3

-0.7
0.3
-1.1

-0.2
0.9
-1.0

-0.5
0.8
-1.3

-0.7
0.8
-1.4

-0.9
0.7
-1.6

-0.9
0.9
-1.8

-0.4
0.0
0.0
0.0
0.0

-2.6
-0.2
-0.2
0.0
0.0

-2.1
0.0
0.0
0.0
0.0

0.8
0.0
0.0
0.0
0.0

-0.7
0.0
0.0
0.0
0.0

1.5
0.0
0.0
0.0
0.0

0.3
0.0
0.0
0.0
0.0

0.0
0.0
0.0
0.0
0.0

0.1
0.0
0.0
0.0
0.0

-23.3

-5.8

-30.6

-1.6

-5.4

-2.2

2.3

4.5

5.8

6.0

5.2

6.9

132.8 144.6

56.6

78.6

79.5

68.1

72.8

83.6

6.6
1.0

0.9
0.1

1.9
0.3

1.4
0.3

4.3
0.8

5.2
1.0

5.6
1.1

5.8
1.2

5.9
1.3

9.3
2.2

19.0
19.0

19.2
19.5

27.5
25.0

37.8
32.4

48.3
40.1

48.3
48.2

57.6
48.8

-3.9
-0.4

-3.0
-0.4

Scenario with key variables at their historical averages 7
Scenario with no policy change (constant primary balance) in 2010-17

93.6 103.9 111.1 124.9

Key Macroeconomic and Fiscal Assumptions Underlying Baseline
Real GDP growth (percentage change)
Average nominal interest rate on public debt (in percent)8
Average real interest rate ( in percent)
Nominal appreciation (in percent)
Inflation rate
Growth of real primary spending (deflated by GDP deflator)
Primary deficit
1

1.2

5.6

1.0

-2.9

6.7

7.0

6.1

5.9

6.8

6.9

7.1

7.5

4.7
6.1
0.9
-1.4
2.2
9.2

5.6
0.6
9.1
5.0
89.1
7.8

4.8
-0.4
7.0
5.3
0.4
10.5

7.0
5.1
-5.2
1.9
24.3
5.9

7.3
5.9
-4.7
1.4
7.5
1.8

5.4
4.2
5.1
1.3
18.2
1.5

5.2
2.2
-9.0
3.0
15.2
-1.4

8.0
5.0
-2.2
3.0
3.3
-2.9

7.5
4.5
-0.3
3.0
6.1
-3.2

6.9
3.9
-0.5
3.0
5.7
-3.3

6.4
3.4
-0.4
3.0
4.6
-3.2

6.9
3.9
-0.5
3.0
5.5
-3.6

Indicate coverage of public sector, e.g., general government or nonfinancial public sector.

Derived as [(r - p(1+g) - g + ae(1+r)]/(1+g+p+gp)) times previous period debt ratio, with r = interest rate; p = 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).
3

The real interest rate contribution is derived from the denominator in footnote 2/ as r - π (1+g) and the real growth contribution as -g.

The exchange rate contribution is derived from the numerator in footnote 2/ as ae(1+r).

For projections, this line includes exchange rate changes.

Defined as public sector deficit, plus amortization of medium and long-term public sector debt, plus short-term debt at end of previous period.

The key variables include real GDP growth; real interest rate; and primary balance in percent of GDP.

Derived as nominal interest expenditure divided by previous period debt stock.

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.

GABON

Figure 2. Gabon: Public Debt Sustainability: Bound Tests 1/
(Public debt in percent of GDP)

Baseline and historical scenarios

Real interest rate shock (in percent)
7.0 110

110
100

Gross financing need under
baseline (right scale)

6.0

80
69.9

70
60
50
30
20

Baseline

28.4

10
0
2007

2009

2011

2013

5.0 80
70
4.0 60
3.0 50
40
2.0 30

Historical
scenario

Baseline:
Scenario:
Historical:

100

2015

1.0

0.0
2017

Growth shock (in percent per year)

4.3
9.4
-0.3

i-rate
shock

55.9
28.4

Baseline

20
10
0
2007

2009

2011

2013

2015

2017

Primary balance shock (in percent of GDP) and
no policy change scenario (constant primary balance)
110

110

100

Baseline:

100

6.6
5.6
Historical: 1.5

Scenario:

90
80

60
Growth
shock 38.1

50
40

Baseline:

1.2

Scenario:

1.2
7.1

Historical:
No policy
change

PB shock

41.8

30
28.4
Baseline

20
10
0
2007

2009

2011

2013

2015

2017

10
0
2007

2009

2011

2013

2015

2017

Real depreciation and contingent liabilities shocks
3/

Combined shock 2/
110

100

60
Combine
d shock 33.6

28.4
Baseline

110

48.8

30%
depreciation
Contingent
liabilities
shock

76.4

50
40
30

30
Baseline 28.4

28.4

Baseline

10
0
2007

2009

2011

2013

2015

2017

0
2007

2009

2011

2013

2015

2017

Sources: International Monetary Fund, Country desk data, and staff estimates.
1/ Shaded areas represent actual data. Individual shocks are permanent one-half standard deviation
shocks. Figures in the boxes represent average projections for the respective variables in the baseline
and scenario being presented. Seven-year historical average for the variable is also shown.
2/ Permanent 1/4 standard deviation shocks applied to real interest rate, growth rate, and primary
balance.
3/ One-time real depreciation of 30 percent and 10 percent of GDP shock to contingent liabilities
occur in 2013, with real depreciation defined as nominal depreciation (measured by percentage fall in
dollar value of local currency) minus domestic inflation (based on GDP deflator).

INTERNATIONAL MONETARY FUND

GABON

APPENDIX VII. ALTERNATIVE SCENARIO ANALYSIS
1.
The authorities’ limited fiscal buffers are tested under a prolonged slow global growth
scenario for the period 2012–17. Under the baseline, over the medium term, oil prices are
assumed to decline only moderately in real terms on the back of a tepid recovery of the world
economy. Nonetheless, the October 2012 World Economic Outlook (WEO) has presented a “lower
global growth” alternative scenario in which economic agents gradually realize that the potential
output is lower than baseline in advanced and emerging markets. More specifically, the scenario
assumes,


a slower growth in advanced economies, which implies more subdued external prospects for
emerging economies;



a global real GDP level falling and staying below the baseline for a prolonged period, and weak
global demand depresses commodity prices, and



global oil prices decreasing by 4 percent in 2013 and, on average, 24 percent below baseline in
2014-17.

2.
The alternative scenario would carry a significant financial impact on the Gabonese
economy. Given the high dependence of hydrocarbon production, government revenues and
foreign currency earnings would be drastically reduced (Figure). On the one hand, as Gabon has a
limited fiscal cushion to address downside risks stemming from low oil prices,1 the simulations
suggest that the fall in hydrocarbon receipts could drain government savings and official
international reserves in the period under consideration (2012–17). On the other hand, as the rest of
the economy is not directly dependent on world demand, lower energy prices would convey
negligible changes on real GDP (not shown in the Figure).

The government deposits with the BEAC (excluding cash holdings), which represent the main fiscal savings, were equivalent to
5 percent of non-oil GDP at end-2011 (or 18 percent of oil revenue).

INTERNATIONAL MONETARY FUND

GABON

Gabon. Prolonged Slow Global Growth Scenario, 2012–17
Fiscal Overall Balance
(Percent of GDP)

Gross Public Debt
(Percent of GDP)
40.0

0.0

35.0

-1.0

30.0

-2.0

25.0

-3.0

20.0

-4.0

15.0

-5.0

10.0

-6.0

5.0

-7.0

0.0

2012

2013

2014

2015

2016

2017

-8.0
2012

2013

2014

Baseline

2015

2016

2017

Non Oil Fiscal Balance
(Percent ofNon Oil GDP)

0.0

-10.0
-15.0
-20.0
-25.0
-30.0
2013

2014

Baseline

2015

2016

2017

2.5

2012

Alternative Scenario

Current Account Balance
(Billion of U.S. dollars)

2013

2014

2015

Baseline

2.0

3,000.0

1.5

2,500.0

2016

2017

Alternative Scenario

International Reserves
(Millions of USD)

3,500.0

1.0

Alternative Scenario

Gross Government Deposits
(Percent of Non Oil GDPs)

5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0

-5.0

2012

Baseline

Alternative Scenario

2,000.0

0.5

1,500.0

0.0

1,000.0

-0.5

500.0

-1.0

0.0

-1.5
2012

2013
Baseline

2014

2015

2016

2017

Alternative Scenario

2012

2013

Baseline

2014

2015

2016

2017

Alternative Scenario

Source: IMF Staff estimates.

INTERNATIONAL MONETARY FUND

GABON
January 30, 2013

STAFF REPORT FOR THE 2012 ARTICLE IV
CONSULTATION—INFORMATIONAL ANNEX
Prepared By

The African Department
(in consultation with other departments)

CONTENTS
RELATIONS WITH THE FUND ____________________________________________________________ 3
RELATIONS WITH THE WORLD BANK ___________________________________________________ 6
STATISTICAL ISSUES ______________________________________________________________________ 8

GABON



Relations with the Fund. Gabon has been a member of the International Monetary
Fund since 1963. CEMAC member countries accepted the obligations of Article VIII in
June/July 1996. The three-year SBA for about US$118 million expired in May 2010,
with only the first three reviews completed. Recurrent fiscal slippages made it difficult
to sustain the Fund-supported program.



Relations with the World Bank. In 2010, the World Bank signed a $10 million
service agreement with the government, which covers sectoral assistance, as well as a
comprehensive growth analysis and public financial management reform.



Exchange rate regime: Gabon is a member of the Central African Economic and
Monetary Community (CEMAC). The common currency, the CFA franc, is pegged at
the fixed rate of 655.957 CFA franc per euro. Gabon’s tax on wire transfers constitutes
a restriction on the making of payments and transfers for current international
transactions subject to approval under Article VIII, Section 2 (a) of the Articles of
Agreement.



Statistical Issues. Gabon has subscribed to the General Data Dissemination System
(GDDS). While data are broadly adequate for surveillance purposes, staff analysis was
affected by the timeliness and coverage of fiscal data, the poor quality of balance of
payments data, and the limited information on labor cost and productivity.

INTERNATIONAL MONETARY FUND

RELATIONS WITH THE FUND
(As of January 4, 2013)
I.

Membership Status: Joined September 10, 1963

II.

General Resources Account:

Article VIII
SDR Million

%Quota

Quota

154.30

100.00

Fund holdings of currency

153.77

99.66

0.54

0.35

SDR Million

%Allocation

Net cumulative allocation

146.72

100.00

Holdings

132.81

90.52

Reserve Position
Holdings Exchange Rate
III.

SDR Department:

IV.

Outstanding Purchases and Loans: None

Latest Financial Arrangements:

Type
Stand-By
Stand-By
Stand-By

Date of
Arrangement
May 07, 2007
May 28, 2004
Oct 23, 2000

Expiration
Date
May 06, 2010
Jul 31, 2005
Apr 22, 2002

Amount Approved Amount Drawn
(SDR Million)
(SDR Million)
77.15
0.00
69.44
41.66
92.58
13.22

VI.
Projected Payments to Fund (Expectation Basis)
(SDR Million, based on existing use of resources and present holdings of SDRs):
Forthcoming
2011
2012
2013
2010
Principal
Charges/Interest
0.11
0.06
0.06
0.06
0.06
0.06
0.06
Total
0.11

2014
0.06
0.06

VII.

Implementation of HIPC Initiative: Not Applicable

VIII.

Implementation of Multilateral Debt Relief Initiative (MDRI): Not Applicable

INTERNATIONAL MONETARY FUND

GABON

IX.

Safeguards Assessments:

The Bank of the Central African States (BEAC) is the regional central bank of the Central African
States. The most recent safeguards assessment of the BEAC was completed on July 6, 2009. The
findings of this assessment indicate that implementation of previous safeguards
recommendations on financial reporting, internal audit, and internal control has been limited,
and that the changing risk profile of the BEAC foreign exchange holdings requires further actions
to strengthen safeguards at the BEAC. Subsequent to revelation of Paris office fraud, a series of
initial measures and longer term safeguard measures were agreed between IMF and BEAC in
order to continue with country programs. In December 2009, BEAC adopted an action plan with
the aim of reforming its own governance and strengthening key safeguards. BEAC adopted
additional measures to address the weaknesses highlighted by the first special audit. A new
assessment mission of IMF Staff is tentatively planned to visit the BEAC by March 2013.
X.

Exchange Rate Arrangement:

Gabon is a member of the Central African Economic and Monetary Community (CEMAC). The
common currency, the CFA franc, is pegged to the Euro at a fixed rate of CFAF 655.957= €1.
Gabon does not have a separate currency.
Like other members of the Central African Economic and Monetary Community (CEMAC), Gabon
has accepted the obligations of Article VIII, Section 2, 3 and 4 of the IMF Articles of Agreement.
Gabon levies a tax on all wire transfers, including for the making of payments and transfers for
current international transactions, which gives rise to an exchange restriction subject to Fund
approval under Article VIII, Section 2(a) of the Fund’s Articles of Agreement.
XI.

Article IV Consultations:

(a) Gabon was on a 24–month Article IV consultation cycle while the Stand-By Arrangement was
on track and has since been moved to a 12–month cycle.
(b) The Executive Board concluded the last Article IV consultation with Gabon on
February 18, 2011.
XII.

FSAP Participation:

A national module for Gabon of the joint IMF/World Bank Financial Sector Assessment Program
(FSAP) was completed in 2002 and discussed by the Executive Board in March 2002 (IMF Country
Report No. 02/98). A regional FSAP module for the CEMAC was completed in 2006 and discussed
by the Executive Board in 2006 (IMF Country Report No. 06/321).
XIII.

Resident Representative:

The Fund no longer has a resident representative in Libreville and the IMF office is staffed with a
local economist

INTERNATIONAL MONETARY FUND

GABON

XIV.
A.

Technical Assistance:
Central Africa Regional Technical Assistance Center (AFRITAC)

Area

Focus

Public Financial Management
Public Financial Management
Public Financial Management
Revenue administration
Public Financial Management
Public Financial Management
Customs
Revenue administration
Revenue administration
Public Financial Management
Public Financial Management
Revenue Administration
Public Financial Management
Public Financial Management
Public financial management
Revenue Administration
Public Financial Management
Revenue administration

Program Budgeting
Strengthening Accounting Systems
Program Budgeting
Improving Tax Collection
Reinforcing Public Finance
Implementing a budget by objectives
Strengthening Customs Administration
Implementing SMEs Tax Administration
Implementing Quarterly National Accounts
Training workshop on Budget Administration
Reinforcing Public Finance
Improving Tax Collection at Customs
Improving Public Expenditures
Modernizing SME Administration
Implementing a budget by objectives
Improving Capacity at Customs
Implementing a budget by objectives
Assistance in reform implementation

Oct. 2012
Sep. 2012
Sep. 2012
Sep. 2012
Aug. 2012
July. 2012
Apr. 2012
Apr. 2012
Jan. 2012
Jan. 2012
Nov. 2011
Nov. 2011
Sep. 2011
Sep. 2011
Aug. 2011
May. 2011
Mar. 2011
Mar. 2011

Headquarters

Department
FAD
STA
FAD
FAD
FAD

XV.

Time of
Delivery

Purpose
Tax Administration (7 missions)
Implementing Quarterly National Accounts
Customs Administration (4 missions)
Public Financial Management (9 missions)
Public Expenditure and Financial Accountability

Thru 2012
Dec. 2012
Thru 2012
Thru 2012
Nov. 2012

Trade Policy:

CEMAC’s average common external tariff is about 19 percent, far exceeding levels in other
regional customs unions (Oliva, 2007) and has high dispersion. The maximum most favored
nation tariff rate is 30 percent, 10 percentage points higher than for WAEMU. The tariff structure
embraces the infant industry argument by taxing manufactures and agricultural products most.
Goods produced in member countries are eligible for a zero-rate preferential tariff, but
qualification is subject to problems of monitoring. The existing regime confers community origin
on mining and agricultural products originating from the CEMAC region and on locally
manufactured goods with a 40 percent local content. However, the poor certification quality is
often rejected by other member countries (Martijn and Tsangarides, 2007).

INTERNATIONAL MONETARY FUND

GABON

RELATIONS WITH THE WORLD BANK
(As of January 15, 2013)
Title

Products

Provisional
timing of
missions

Expected delivery
date

A. Mutual information on relevant work programs
The World Bank
work program in
the next 12 months

World Bank advisory services are
ongoing in the following areas:
- Transport Sector: Preparation of
concession for new port in Port Gentil,
analysis of transport costs and
management of road infrastructure
- Public Finance Management:
Improvement of the budgetary cycle,
debt sustainability analysis and reform
plan, analysis of the fiscal system
(including marginal effective tax rate,
exemptions, and processes)
- Mining Sectors: Creation of a mining
cadaster, review of the mining code,
reduction of gas flaring, EITI
application, role and structure of new
mining association
- Sources of growth: Revision of PPP
law and value chain analyses for
priority sectors

Growth and employment policy
note: This note analyzes the main
reasons for the weak impact of
growth on employment and develops
recommendations for more inclusive
growth.
Export Diversification and
Competiveness Policy note: This
note will synthesize Gabon’s non-oil
export potential provides sectorspecific recommendations to address
the challenges of export
diversification.
World Bank lending: A $58M IBRD
Loan for the Central African
Regional and National Backbone
project (CAB4) supporting the
development of high speed

INTERNATIONAL MONETARY FUND

January 2013:
Review meeting of
annual work plan
with team leaders
for all activities

June 2013

January 2013

February 2013: Field
mission to carry out
the analytical work

June 2013

March 2013: 2nd
supervision mission

5 year project

GABON

telecommunication infrastructure
was signed in May 2012. It is
expected that the Loan agreement
will be effective as of February 2013.
IFC investments: IFC is currently
considering investments in the
Forestry and in the Manufacturing
sectors.
IFC investment climate advisory: IFC
is providing technical assistance to
improve the business environment in
selected areas measured by the Doing
Business report. Four priority areas
were defined:
- Business creation for foreign and
domestic investors
- Procedures for construction
permits and access to property by
creating a one-stop shop
- Procedures to import and export
goods
- Tax incentives and tax
administration (in coordination
with other WB support in this area).
SME capacity building:
IFC has a partnership agreement with
the Banque Gabonaise de
Développement (BGD) to provide
support and training to SMEs.
The IMF work
program in the next
12 months

Article IV Consultation

Missions to be
spread over CY
2013

tbd

March–April 2013:
Progress review
mission

March 2013:
Official launch of
the SME Toolkit
website

March 2013

November 2012

December 2012

B. Requests for work program inputs
Fund request to
Bank
Bank request to
Fund

Update on macroeconomic framework
Article IV documents

Joint products in
the next 12 months

C. Agreement on joint products and missions
Collaboration on data on non-oil sector
growth

FY13

Ongoing

INTERNATIONAL MONETARY FUND

GABON

STATISTICAL ISSUES
1.
Data provision has some shortcomings, but is broadly adequate for surveillance. Staff’s
analysis is affected by shortcomings in the accuracy, reliability and adequacy of periodicity and
timeliness for certain data, as well as consistency between datasets. The statistical producing
agencies do not have sufficient access to source data and lack an institutional framework in
which to share information and coordinate compilation efforts.
2.
Gabon participates in the General Data Dissemination System (GDDS) but has not
updated the metadata or plans for improvement since 2002. Except for consumer prices, the
authorities do not report any real sector or government finance statistics (GFS) to STA for
publication in International Financial Statistics (IFS) or for electronic dissemination. Detailed
economic and financial statistics, including long historical time series, are published in the
Tendances de l’Économie, issued twice a year by the General Directorate of Statistics and
Economic Studies (DGSEE) of the Ministry of Economy, Trade, Industry, and Tourism. More recent
sectoral developments are described in detail in the Tableau de Bord de l'Économie, issued
quarterly by the Ministry of the Economy.
National accounts
3.
Central AFRITAC (AFC) is working with authorities to incorporate the System of National
Accounts 1993 methodological recommendations, particularly in the valuation of sectoral value
added at basic prices. Coverage of developments in oil and other key export sectors is based on
a range of indicators that may not fully capture the profits these sectors generate. Despite recent
improvements in collecting and processing oil sector statistics, there are still significant
inconsistencies between national accounts and balance of payments statistics. In addition, more
frequent household surveys are required to improve the quality and quantity of data on income
distribution and consumption. Two AFC missions have provided technical assistance on the
treatment of statistics and fiscal statements (SFS), and the implementation of Access software for
the SFS compilation. Efforts are needed to establish a more consistent database. The processing
of the SFS of 2007 for the compilation of the national accounts of the same year is planned to be
finalized by end-2008.
Employment and unemployment
4.

Data on unemployment and the total labor force are not systematically available.

Prices
5.
In 2007 the authorities began publishing an improved CPI index, which covers the same
basket of goods and services as the CEMAC Harmonized Consumer Price Index (HCPI) and uses a
weighting scheme derived from Gabon’s 2005 household expenditure survey. However, it only
covers the capital city of Libreville.

INTERNATIONAL MONETARY FUND

GABON

Government finance statistics
6.
A major shortcoming is limited institutional coverage, as social security operations are
not included in the statement of operations of central or general government. Audited accounts
of oil sector operations are generally available annually and sometimes quarterly, but with a
significant reporting lag. Other needed improvements relate, inter alia, to the recording in the
budget accounts of government-owned capital formation financed by oil companies and the
recording of government domestic payment arrears.
Monetary statistics
7.
The Bank of Central African States (BEAC) regularly reports in electronic form monthly
monetary, interest rate, and exchange rate statistics for Gabon and other CEMAC member
countries for publication in IFS, but delays occur sometimes in the submission of data.
Institutional coverage of the monetary statistics for Gabon is comprehensive, but accuracy is
affected by cross-border movements of currency among CEMAC member countries.
8.
The BEAC started in mid-2007 a project to migrate monetary statistics of member
countries of the CEMAC to the methodology in the Monetary and Financial Statistics Manual
(MFSM). As part of this project, a regional workshop was organized by the BEAC in
December 2007 to finalize the mapping of source data from commercial banks to the MFSM
concepts and framework. STA participated in this workshop to provide guidance and advice. The
BEAC has recently submitted test monetary data for Gabon using the standardized report forms
for the period January 2000–December 2007.
External public debt
9.
There are comprehensive data on the stock of external public debt and its composition,
as well as detailed projections on debt service due. Data are provided, usually to Fund missions,
by the General Directorate of Debt (Direction générale de la dette) of the Ministry of Economy,
Finance, Budget, and Privatization.
Balance of payments and trade statistics
10.
Balance of payments statistics are compiled by the national directorate of the BEAC and
the estimates are validated by staff from BEAC headquarters. Data are disseminated with
considerable delay, and the latest available official statistics are for 2006. Since 1995, compilation
of balance of payments statistics has conformed to the Balance of Payments Manual, 5th edition.
Source data are collected through: (i) surveys of enterprises by the central bank (the main source
of data); (ii) reports from banks and the postal administration on foreign exchange transactions
of other enterprises, retailers, and private individuals; and (iii) BEAC reports on banknote
movements between Gabon and other BEAC countries. External trade data are mostly based on
estimates, which are not cross-checked with customs data. Data on other items of the current
account are not very reliable or accurate due to low response rates to enterprise surveys, despite
partial correction through adjustments. Foreign direct investment in the financial account is likely

INTERNATIONAL MONETARY FUND

to be underestimated owing to insufficient detail in the oil sector survey. The magnitude and
detailed breakdown of private capital flows, particularly short term, suffer because data are not
comprehensive.

INTERNATIONAL MONETARY FUND

GABON

Gabon: Table of Common Indicators Required for Surveillance
(As of January 15, 2013)
Date of
latest
observation

Date
received

Frequency
of
data7

Frequency
of
reporting7

Frequency
of
publication7

Dec. 2012

Oct. 2012

Jan. 2013

Oct. 2012

Jan. 2013

Broad Money

Oct. 2012

Jan. 2013

Central Bank Balance Sheet

Oct. 2012

Jan. 2013

Consolidated Balance Sheet of the

Oct. 2012

Jan. 2013

Interest Rates2

Dec. 2012

Consumer Price Index

Nov. 2012

Jan. 2013

Revenue, Expenditure, Balance and

June. 2012

Dec. 2012

N/A

June. 2012

Dec. 2012

N/A

Dec. 2011

Dec. 2012

N/A

External Current Account Balance

Dec. 2011

Dec. 2012

Exports and Imports of Goods and

Dec. 2011

Dec. 2012

Exchange Rates
International Reserve Assets and Reserve
Liabilities of the Monetary Authorities

Reserve/Base Money

Banking System

3
Composition of Financing – General
4

Government

Revenue, Expenditure, Balance and
3

Composition of Financing – Central
Government
Stocks of Central Government and
Central Government-Guaranteed Debt

Services
GDP/GNP
Gross External Debt
International Investment Position

2008

Dec. 2012

Dec. 2011

Dec. 2012

N/A

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.
Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and
bonds.
3
Foreign, domestic bank, and domestic nonbank financing.
4
The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds)
and state and local governments.
5
Including currency and maturity composition.
6
Includes external gross financial asset and liability positions vis-à-vis nonresidents.
2

Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A); Irregular (I); Not Available (NA).

INTERNATIONAL MONETARY FUND

Public Information Notice (PIN) No. 13/20
FOR IMMEDIATE RELEASE
February 19, 2013

International Monetary Fund
700 19th Street, NW
Washington, D. C. 20431 USA

IMF Executive Board Concludes 2012 Article IV Consultation with
Gabon
On February 13, 2013, the Executive Board of the International Monetary Fund (IMF)
concluded the Article IV consultation with Gabon.1
Background
The authorities have launched an ambitious public investment and reform program to
transform Gabon into a diversified emerging market economy by 2025. Although current
economic conditions remain supportive, a critical issue ahead is how to use oil and mineral
resources efficiently to support inclusive growth. While Gabon has the fourth highest level
of income per capita in Sub-Saharan Africa, poverty and unemployment remain
widespread, and the economy is heavily dependent on oil, which makes it vulnerable to
volatile oil prices.
Gabon’s recent economic performance has been robust. Partly driven by a scaling-up of
public investment, the non-oil economy has performed well, in particular mining, wood
processing, and construction, helping to boost real gross domestic product (GDP) growth to
1

Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with
members, usually every year. A staff team visits the country, collects economic and financial
information, and discusses with officials the country's economic developments and policies. On
return to headquarters, the staff prepares a report, which forms the basis for discussion by the
Executive Board. At the conclusion of the discussion, the Managing Director, as Chairman of
the Board, summarizes the views of Executive Directors, and this summary is transmitted to the
country's authorities. An explanation of any qualifiers used in summings up can be found here:
http://www.imf.org/external/np/sec/misc/qualifiers.htm.

7 percent in 2010–11. On the other hand, oil production in maturing fields has been on a
declining trend. In 2012, real GDP is projected to rise at about 6 percent, with the continued
support of large public investment. Inflation remains under control within the Central African
Economic and Monetary Community convergence criteria, at around 3 percent for the
annual average, notwithstanding a sharp increase in food prices in mid-2012. Bank
deposits and private credit grew rapidly in 2011–12, but from a low base, and banks remain
highly liquid.
The external position remained strong, with high oil prices and increasing manganese
exports contributing to a large current account surplus while imports associated with the
scaled-up public investment and the African Cup of Nations soccer tournament rose
rapidly. In 2011, the current account surplus reached its highest level since 2008, at
14 percent of GDP, and is projected to decline only slightly in 2012 as hydrocarbons and
manganese exports are expected to falter a little. With large repatriation of profits by
foreign oil companies offsetting the current account surplus to a large extent, official
reserves have increased only moderately in 2011–12. The real effective exchange rate has
remained broadly stable, despite significantly improved terms of trade in 2010–11.
The fiscal stance has been expansionary since 2009 and the overall fiscal balance would
register a deficit in 2012 for the first time since 2000. While oil revenues expanded by
80 percent between 2009 and 2012, public expenditure increased by 70 percent over the
same period. In particular, capital spending tripled, reflecting the public investment
associated with the economic development plan and the infrastructure requirements for
hosting the African Cup of Nations. Current expenditures have also been boosted by an
increase in the wage bill and subsidies for petroleum products. As a result, the non-oil
deficit is projected to peak at 27 percent of non-oil GDP in 2012.
Beyond 2012, the outlook is favorable but subject to risks. Large public investment will
continue to improve infrastructures and the authorities plan to take swift actions to improve
the business environment and the labor market. Non-oil growth is thus expected to remain
robust, as new sources of growth emerge, including in Special Economic Zones. As oil
production in mature fields will continue to decline until new fields can be explored, the
current account surplus will deteriorate over the medium term, ending in broad balance by
2017. The budget will register small deficits over the next five years as the government
executes its investment program while fiscal oil receipts would decline. The foremost risk to
the outlook is a possible global slowdown that could lead to a prolonged decline in oil and

manganese prices, which the authorities would face with limited fiscal buffers. Moreover,
the success of the authorities’ strategy to transform Gabon into an emerging market heavily
depends on the efficiency of public investment and effective reforms to unlock the potential
for private sector development and economic diversification.
Executive Board Assessment
Executive Directors welcomed Gabon’s robust economic performance in recent years,
driven by high oil prices and public investment. However, despite strong economic growth,
poverty remains widespread and unemployment is high. Against this backdrop, Directors
commended the launch of a long-term development plan to transform Gabon into a
diversified emerging market economy. They urged ambitious policies and reforms to
support more inclusive growth and build adequate policy buffers against oil price volatility.
While recognizing the need for higher investment and social spending, Directors
encouraged a more prudent fiscal stance and a measured pace of increase in public
investment. This is important to safeguard medium-term fiscal sustainability and to ensure
that public investment spending does not outstrip administrative and absorptive capacities.
Directors called for restraint on wage bill growth, lower and better targeted subsidies for oil
products, and an expansion in the non-oil tax base. They saw merit in a simple fiscal oil
price rule to help anchor spending. Directors also urged continued efforts to strengthen
investment planning and execution capacities, improve the quality of investment spending,
increase fiscal transparency, and enhance public finance management in order to ensure
the efficient use of oil resources.
Directors concurred that comprehensive reforms are needed to remove structural
constraints on inclusive and diversified growth and private sector development, which is
key to job creation and poverty reduction. Particular attention should be given to enhancing
the business environment to spur private investment. Education and labor market reforms
are also vital to better match labor supply and demand.
Directors underscored the importance of preserving financial stability and deepening
financial intermediation. They encouraged the authorities to improve the institutional
environment for access to credit; complete the restructuring of two distressed public banks;
and strengthen financial regulation and supervision, including the regime against money
laundering and terrorism financing.

Directors encouraged development of a statistical action plan to improve the quality and
timeliness of economic and financial data.
Public Information Notices (PINs) form part of the IMF's efforts to promote transparency of the IMF's
views and analysis of economic developments and policies. With the consent of the country
(or countries) concerned, PINs are issued after Executive Board discussions of Article IV consultations
with member countries, of its surveillance of developments at the regional level, of post-program
monitoring, and of ex post assessments of member countries with longer-term program engagements.
PINs are also issued after Executive Board discussions of general policy matters, unless otherwise
decided by the Executive Board in a particular case.

5
Gabon: Selected Economic Indicators, 2008–17
2008

2009

2010

2011
2012
2013
2014
2015
Est.
Projections
(Annual percent change, unless otherwise indicated)

1.0

-2.9

6.7

2016

2017

Real sector
GDP at constant prices
Oil

7.0

6.1

5.9

6.8

6.9

7.1

7.5

-0.9

-3.7

5.9

-2.4

0.8

0.3

-0.6

-0.7

-0.6

Non-oil

2.1

-2.4

7.2

12.1

8.7

8.3

9.8

9.7

9.9

GDP deflator

16.2

-6.6

18.3

15.1

1.2

2.4

-2.1

-1.7

-1.0

-0.6

15.4

-3.5

39.3

35.9

0.3

3.6

-4.4

-3.5

-2.8

-2.2

Yearly average

5.3

1.9

1.4

1.3

3.0

End of period

5.6

0.9

0.7

2.3

3.1

3.0

Exports, f.o.b.

37.2

-9.1

26.0

40.2

-5.1

5.8

-4.0

-3.2

-1.0

0.4

Imports, f.o.b.

8.1

2.8

18.1

24.3

3.6

8.8

2.1

1.2

3.6

7.9

17.6

-6.8

16.7

24.9

-8.2

2.6

-2.3

-2.4

-1.8

-3.2

Oil
Consumer prices

External sector

Terms of trade (deterioration= – )
Central government finance
Total revenue

27.0

-8.9

8.9

34.6

3.1

0.0

3.1

3.2

4.0

Oil revenue

42.0

-8.5

17.8

39.2

6.4

-3.5

-4.3

-3.7

-4.6

-2.6

Total expenditure

13.7

-1.4

26.6

4.0

4.4

6.1

Non-oil primary balance (in non-oil GDP)

-2.5

-1.7

-8.0

-2.1

-26.4

-25.2

-22.2

-9.8

-17.1

-15.4

Overall balance (commitment basis)

10.5

5.9

1.8

2.3

-1.0

-2.9

-3.2

-3.3

-3.2

-3.6

7.4

-1.4

-2.4

-2.5

2.9

2.7

1.6

1.9

2.1

3.0

Net external financing
External public debt (including to the
Fund)

-3.8
13.9

-2.2
17.8

0.6
15.8

1.9
14.8

-0.6
15.5

2.2
15.0

3.3
16.4

3.1
17.7

2.4
18.4

2.0
19.4

Total public debt (Percent of GDP)

16.0

23.9

20.4

18.2
18.8
20.6
22.7
24.8
(Percent Change, unless otherwise indicated)

25.9

28.4

Credit to the economy

6.0

-7.9

1.9

42.0

24.4

26.0

…

Broad money
Velocity ratio of NOGDP over broad
money

8.8
3.3

2.2
3.0

19.2
3.1

26.5
2.8

12.5
2.8

11.6
2.8

…
…

Net domestic financing

33.3
17.2
10.9
2.8
(Percent of GDP, unless otherwise indicated)

Money and credit

(Percent of GDP, unless otherwise indicated)
Gross national savings

47.7

38.4

38.9

45.0

44.1

42.7

40.1

38.0

36.4

34.4

Gross fixed investment

22.0

27.1

30.0

30.8

31.7

32.4

33.3

33.6

33.8

34.2

Current account balance

23.3

7.5

8.9
14.1
12.4
10.4
6.9
4.5
(CFA francs billion, unless otherwise indicated)

2.7

0.2

Nominal GDP

7,045

5,702

7,201

8,867

9,527

10,327

10,805

11,350

12,036

12,856

Nominal non-oil GDP
National Currency per U.S. Dollar
(Average)

3,731
448

3,475
471

4,238
531

4,936
534

5,553
536

6,200
…

6,882
…

7,592
…

8,406
…

9,328
…

Memorandum items

Sources: Gabonese authorities and IMF staff estimates and projections.

Statement by Mr. Assimaidou on Gabon
February 13, 2013
On behalf of my authorities, I would like to express my appreciation to the Executive Board,
Management, and staff for their continued advice and assistance to Gabon. My authorities found
very fruitful the discussions held with staff during their visit to Gabon in November 2012. My
authorities appreciate staff recommendations and inputs in their economic development plan.
Over the past three years, my authorities have been implementing a large economic
development plan, Plan Stratégique Gabon Emergent (PSGE), aimed at transforming the oildependent Gabonese economy into an emergent economy by 2025. This economic plan is
underpinned by (i) a vast public investment program (PIP), which focuses on addressing
Gabon's huge physical and digital infrastructure gaps, notably in the energy, telecoms,
transportation and social sectors, and (ii) a set of institutional and structural reforms covering a
wide range of areas, including public administration, public financial management and business
environment. The PGSE is offering significant investment opportunities for international
investors, many of whom are now present in Gabon, notably in the construction, energy,
housing, industry and mining sectors.
Recent developments
The implementation of the PSGE has boosted economic activity in Gabon. Real GDP grew at
an average rate of more than 6 percent over the period 2010-2012, driven by high public
investment spending. Contribution to growth essentially came from the non-oil sector with the
mining, construction and wood-processing sectors spearheading non-oil economic growth.
Production in the oil sector remained broadly stable, owing to sustained efforts by oil companies
to optimize production in existing fields. The current account surplus exceeded 10 percent of
GDP on average and international reserves increased, reflecting favorable international oil price
developments. Inflation increased in 2012 but remained below the regional convergence
criterion of 3 percent.
Higher oil prices also helped fiscal balances which register surpluses in 2010 and 2011, despite
the increase in total spending in that period, including a trebling of public investment spending.
In 2012, the fiscal balance is projected to turn into a deficit due to a still high public investment
spending and higher current expenditures, reflecting an expansion of social expenditures. Public
debt ratio remained low at 18.8 percent of GDP in 2012, well below the regional convergence
criteria of 70 percent and still below the country’s own debt ratio ceiling of 35 percent set in the
debt management strategy adopted in 2011.
As regards fiscal reforms, the reform of the public financial management framework is
advancing well. In particular, the preparatory work to introduce by 2015 the new budgeting
framework, Budget by Program Objectives, as required by a CEMAC regional directive, is

progressing as scheduled, with the assistance of the Fund. A pilot phase of the implementation
of the new budgeting framework is underway in four ministries: budget, economy, education
and energy. As part of the budget reform, the number of procedures in the expenditure process
has been halved. The selection, preparation, execution and monitoring of public investment
projects are being strengthened with the assistance of foreign technical expertise.
On the revenue side, the reform of the tax administration is also proceeding well with the
assistance of the Fund. A component of this reform concerns the strengthening of SMEs tax
administration. Oil revenue management has been strengthened with the revision of the legal
framework for the sovereign wealth fund, to make it more consistent with Santiago Principles.
Transparency in the oil revenue management was improved with the publication of annual EITI
reports for the years 2007 to 2010.
The Gabonese banking sector is well-capitalized, liquid and profitable. As the result of the
buoyant economic activity, credit to private sector picked up but remains highly concentrated in
a few sectors such as oil, telecoms and construction. The ratio of NPLs to total loans is low at
4.4 percent. The restructuring of two small banks experiencing financial difficulties and high
NPLs is underway, in line with the recommendations of the regional banking supervision
commission (COBAC).
The business environment is being improved. In particular, my authorities are undertaking a
reform of the land administration and regulatory framework. They believe that such a reform is
crucial to support economic diversification, notably for the purpose of developing a sustainable
housing sector and deepening the financial sector. As part of this reform, the number of
procedures to obtain a construction permit has been reduced from 134 to 7. In order to increase
the country’s attractiveness as destination for FDI, a law on public-private partnerships has been
adopted, existing sectoral codes are being amended, and master plans are being developed for
other sectors. My authorities are pursuing the strengthening of institutional framework dedicated
to private sector development, with the restructuring of the chamber of commerce and the
creation of an enterprise development agency for SMEs.
My authorities believe that a successful economic diversification will bring about employment
opportunities and contribute to reduce poverty. Aware of the labor skill mismatch, my
authorities have taken measures to address it. In particular, they are upgrading some existing
professional institutes and have set up, with the collaboration of the private sector, new
professional training schools in oil and mining. They plan to establish another school to train
specialized labor for construction. In the meantime, they have exerted flexibility in the
application of labor regulations to allow greater hiring of foreign workers, notably in the
agriculture sector. They have also reformed the scholarship program to align it with the
objectives of the PGSE.

Program for the medium-term
My authorities remain resolved to achieve a sustainable economic development through an
efficient use of natural resources that will benefit the entire population while preserving the
environment. They continue to believe that the focus on developing infrastructure remains
warranted as it is critical to improve the competitiveness of the non-oil economy, support
economic diversification, create employment and increase the country’s attractiveness for FDI.
Most of the major infrastructure projects currently underway are expected to be completed by
2017. They will maintain reform momentum to increase growth potential and social inclusion.
As experience is gained in the implementation of the plan, actions are taken to review its content
in order to ensure its relevance and feasibility. In particular, a new management team has been
appointed at the helm of the national agency for major public works (ANGT), which is tasked
with the planning, management, and implementation of large public infrastructure projects. The
new management team is reviewing the list of investment projects, to ensure that they yield high
return and are of high quality, and to make them consistent with the country's absorptive
capacity and financial constraints for the period ahead.
In that context, Gabon’s medium-term economic outlook remains bright, as the implementation
of the PGSE will continue to support economic activity. Real GDP growth is expected to remain
high at more than 6 percent over the next five years, despite an anticipated decline in oil
production. The current account balance could deteriorate on account of projected decline in oil
exports and lower oil prices. My authorities concur with staff’s assessment of risks to this
economic outlook and acknowledge the policy challenges going forward in the implementation
of the economic program should those risks materialize.
My authorities remain committed to a prudent fiscal policy that will preserve the
implementation of the investment program from oil price volatility, while ensuring mediumterm fiscal sustainability and continuous compliance with CEMAC fiscal convergence criteria.
They particularly agree on the need to avoid a procyclical fiscal policy which will hamper a
smooth implementation of the strategic development plan. Staff’s recommendations on the need
to anchor fiscal policy and increase existing fiscal buffers were timely and very much
appreciated, and are being carefully examined. My authorities stress that a fiscal anchor should
adequately balance the needs for increasing savings for risk management purposes with those to
address pressing infrastructure and social gaps.
As staff indicated, fiscal stance will remain expansionary over the medium-term reflecting
sustained high public investment spending in the context of the PGSE. My authorities believe
that their own revenues would cover their budgetary expenditures for the period ahead. That
said, they took note of staff’s projections of continuous fiscal deficits over the next five years
starting in 2013 while pointing that they could tap into international markets to finance them
without threatening debt sustainability. In the meantime, should adverse oil price shock
materialize, my authorities will postpone the launch of new investment projects.

Fiscal reforms will be pursued, with the assistance of international organizations. In particular,
they will pursue the reform of the public administration and notably the public workforce
management. My authorities welcome the report of the World Bank Public Expenditure Review,
whose recommendations will be helpful in strengthening the PFM reform underway. On tax
exemptions granted in the context of special economic zones (SEZ), my authorities continue to
believe that the impact of the SEZs on growth and fiscal revenue will outweigh the
corresponding tax expenditures. As regards oil subsidies, my authorities are also examining
staff’s recommendations and would very much appreciate additional insight following the recent
FAD study on the subject.
My authorities will pursue the improvement of the business environment, with the assistance
of IFC, and continue to boost human capital and address the labor skill mismatch through the
reform of the education system and the institutional and regulatory framework for the labor
market. Likewise, the development of the financial sector will help to increase financial
intermediation and facilitate access by SMEs while preserving compliance with prudential
regulations. My authorities will also continue to improve the production and timeliness of
statistical data.
As regards the tax on wire transfers, my authorities believe that this tax does not hamper cash
transfers and is consistent with proposals in the international arena to tax capital flows.
Furthermore, the removal of this tax remains a politically sensitive issue as the proceeds of this
tax aliment the health insurance fund.
Conclusion
To conclude, the implementation of the economic development plan boosted economic activity
in Gabon against the backdrop of favorable international oil price developments. Going forward,
my authorities will ensure the implementation of the plan remains sound, well-sequenced and
cost-efficient. They are committed to pursue prudent macroeconomic policies and structural
reforms to reduce risks to the smooth execution of the investment program underpinning the
development plan and achieve a more socially inclusive economic growth. They continue to
count on the technical assistance of the Fund and other international organizations in their
development endeavors.

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Has XFA                         : No
XMP Toolkit                     : Adobe XMP Core 4.2.1-c043 52.372728, 2009/01/18-15:08:04
Part                            : 1
Conformance                     : B
Create Date                     : 2013:03:01 10:07:03-05:00
Creator Tool                    : PScript5.dll Version 5.2.2
Modify Date                     : 2013:03:08 12:54:59-05:00
Metadata Date                   : 2013:03:08 12:54:59-05:00
Producer                        : Acrobat Distiller 9.5.2 (Windows)
Format                          : application/pdf
Title                           : Gabon: 2012 Article IV consultation--Staff Report; IMF Country Report 13/55; January 30, 2013
Creator                         : IMF
Document ID                     : uuid:5c97101d-def2-4a61-9209-b14779183803
Instance ID                     : uuid:234372d6-f1ef-4fcf-8bca-f94e8b5baa7c
Page Count                      : 78
Author                          : IMF
Keywords                        : Gabon:, 2012, Article, IV, consultation--Staff, Report;, IMF, Country, Report, 13/55;

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Gabon CR1355

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