IMF Approves $553.2m Credit Facility For Gabon

Posted by Eric Ojo African News, Featured, Latest Headlines Monday, August 2nd, 2021

(AFRICAN EXAMINER) – International Monetary Fund (IMF) has approved $553.2 million for Gabon to assist the country in its fight against COVID-19 pandemic and support the implementation of the authorities’ 2021–23 Economic Recovery Strategy of the West African nation.

The fund which is a three-year extended arrangement under the Extended Fund Facility (EFF) as approved by the IMF Board, also allows for an immediate disbursement equivalent to US$115.25 million for budget support.

The programme 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.

Meanwhile, reforms will focus on creating fiscal space for priority social spending, reducing debt vulnerabilities, strengthening governance and transparency, and enhancing financial inclusion.

The government’s proactive response helped contain the spread of COVID-19 and save lives. However, the pandemic and the fall in oil prices have severely hit the economy, increasing macroeconomic imbalances, and weighing on economic activity, unemployment, and poverty.

While the economy is showing incipient signs of recovery, the outlook remains challenging and contingent on the pandemic path, effective rollout of the vaccines, and the implementation of structural reforms.

Deputy Managing Director and Acting Chair of IMF Executive Board, Mr. Mitsuhiro Furusawa said Gabon’s economy is gradually recovering after the COVID-19 pandemic-induced economic downturn in 2020.

Mr. Furusawa noted that 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, adding that a slow rollout of vaccines or further infection waves could delay the recovery to 2022 or beyond.

“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.

“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”, he said.

He further explained that Gabon’s programme is supported by the implementation of policies and reforms by the CEMAC regional institutions in the areas of foreign exchange regulations and monetary policy framework, and to support an increase in regional net foreign assets which, according to him, are critical to programme’s success.

The Gabonese government will also ensure that the programme helps in reducing fiscal and public debt vulnerabilities, and foster sustainable, green, and inclusive private sector-led growth. To this end, efforts, including in improving governance and transparency to enhance domestic revenue, including from the oil and mining sectors, and spending efficiency, are essential to create fiscal space for much-needed investment and social spending.