The executive board of the International Monetary Fund (IMF) on Wednesday approved a three-year extended arrangement under the Extended Fund Facility (EFF) for Gabon for about $553.2 million “to navigate the COVID-19 pandemic crisis and support the implementation of the authorities’ 2021–23 Economic Recovery Strategy.” The board’s approval allows for an immediate disbursement equivalent to US$115.25 million for budget support.
IMF said the COVID-19 pandemic and the fall in oil prices have severely hit the Gabonese economy, deteriorating fiscal and external balances, and increasing unemployment and poverty, adding that the new program “aims to support the short-term response to the COVID-19 crisis and lay the foundations for green and inclusive private sector-led growth and a strong and sustainable recovery that benefits all Gabonese. Reforms will focus on creating fiscal space for priority social spending, reducing debt vulnerabilities, strengthening governance and transparency, and enhancing financial inclusion.”
“Gabon’s economy is gradually recovering after the COVID-19 pandemic-induced economic downturn in 2020. However, the pandemic and the sharp fall in oil prices have aggravated pre-existing economic and financial vulnerabilities, and the near-term outlook remains subject to considerable uncertainty and downside risks. A slow rollout of vaccines or further infection waves could delay the recovery to 2022 or beyond,” wrote Mr. Mitsuhiro Furusawa, IMF Deputy Managing Director and Acting Chair.
Furusawa added that the new arrangement under the Extended Fund Facility “will support the country’s post-pandemic recovery and anchor reform implementation. The overriding priority remains saving lives and livelihoods. As the crisis abates, the focus will shift to tackle longstanding structural issues to put public debt on a firm downward trajectory and foster a high, sustainable, green, and inclusive private sector-led growth.”
“The pace of fiscal consolidation should be aligned with the recovery needs. Fiscal policy should continue supporting the recovery in the near term. Once the recovery is on a solid footing, a more ambitious fiscal consolidation will be needed to reduce public debt levels and vulnerabilities while securing a high and inclusive growth. To this end, efforts, including in improving governance and transparency to enhance domestic revenue and spending efficiency, are essential to create fiscal space for much-needed investment and social spending,” he added.
According to him, “advancing the structural reform agenda will also be important to sustain a durable and inclusive recovery. Enhancing the banking sector and financial inclusion, improving the business environment, and strengthening the anti-corruption framework would address some longstanding bottlenecks in the economy and promote private investment and inclusive growth.”
