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International Monetary Fund. African Dept.
The economic shock associated with the COVID-19 pandemic is set to have long-lasting effects on the economic outlook for CEMAC. The pandemic itself seems to be now broadly under control in the region, and the policy response from national and regional authorities, supported by significant emergency financing by the Fund, helped mitigate the initial economic fallout. With lower medium-term oil prices, the outlook projects that CEMAC’s fiscal and external adjustments will be slower than previously envisaged, entailing large external financing needs (around €6.6 billion for 2021–23). Gross international reserves will now reach the equivalent of 5 months of imports by 2025 vs. 2022 pre-pandemic, while net foreign assets (NFA) will be below previous expectations. Public debt would remain at elevated levels, albeit on a declining trend after the increase in 2020. This outlook is highly uncertain and contingent on the evolution of the pandemic and its impact on oil prices. Other significant risks include: delayed implementation of the ongoing or a second phase of new Fund-supported programs, difficulties in filling large external financing needs, and a deterioration in the security situation.
International Monetary Fund. African Dept.
This Selected Issues on Gabon seeks to quantify the impact of governance reforms on growth. It uses a dynamic stochastic general equilibrium (DSGE) model calibrated to Gabon to simulate the potential benefits from governance and anti-corruption reforms to growth and public debt. Vulnerabilities in the fiscal institutional framework constrain effective revenue collection and reduce the efficiency of public spending, thus limiting fiscal space for priority pro-growth spending. The results of a DSGE model for Gabon suggest that macro-fiscal gains from governance reforms could be substantial. The potential additional growth can range from 0.8 to 1.5 percent per year over the next 10 years, and debt can decline by 1.0 to 2.0 percent of non-oil gross domestic product per year over the same period. It is urgent to improve governance and curb corruption to boost domestic revenue, enhance public finance management and the quality of spending, and improve the business environment to promote private investment and facilitate private sector activity.
International Monetary Fund. African Dept.
This Selected Issues paper looks at some Central African Economic and Monetary Community (CEMAC) specific regional dimensions of a possible strategy to enhance governance, which would support specific reforms in this area at the country level. The paper describes the specific dimensions of governance covered in the note. The paper also analyzes governance and corruption in the areas of public financial management, anti-money laundering, and the link between the oil sector and public resources. The CEMAC regional institutions will have to play a central role to lead progress in these areas, and support member countries’ own efforts. Due to such actions result in giving a coherent framework to actions conducted at the country level, the synergic dimension can spur a virtuous circle, key to earn the benefit of an economic and monetary union. The success of the regional strategy that CEMAC member countries and regional institutions are implementing to exit the severe crisis they are facing depends critically on creating the conditions for laying the ground for a diversified economy, within a well-functioning regional market and an environment that provides opportunities for all and where public resources are geared to most productive use.
International Monetary Fund. African Dept.
This paper discusses Gabon’s Request for an Extended Arrangement Under the Extended Fund Facility (EFF). The main goal of the program is to ensure macroeconomic stability and lay the basis for sustainable and equitable growth. To this end, the program seeks to ensure debt sustainability at the national level and help restore and preserve external stability at the regional level. It is built upon three pillars: (1) well-balanced fiscal consolidation that minimizes the impact on growth and protects vulnerable groups; (2) structural fiscal reforms to improve the efficiency and transparency of public spending; and (3) policies to enhance financial sector stability and economic diversification. The IMF staff supports the authorities’ request for an extended arrangement under the EFF.
International Monetary Fund. African Dept.
This Selected Issues paper discusses the structure of the financial sector in Chad and describes the key macro-financial linkages. Macro-financial linkages in Chad are driven by a government sector that dominates economic activities in the more modern sectors of the economy, thanks to oil-related revenues. The main macro-financial linkages are indirect through the associated sharp fiscal adjustment and the government’s quest for additional financing. Direct credit risks linked to the oil sector appear limited. However, there seems to be a link between declining oil prices and deteriorating banking soundness indicators. The current economic conditions negatively affect private companies dependent on public contracts, potentially hitting the health of banks’ loan portfolios.
Ms. Dalia S Hakura, Mr. Adrian Alter, Matteo Ghilardi, Mr. Rodolfo Maino, Mr. Cameron McLoughlin, and Mr. Maximilien Queyranne
La situation d'endettement de la république du Congo s'est considérablement améliorée depuis 2010, grâce à l'allégement de la dette obtenu dans le cadre de l’initiative en faveur des pays pauvres très endettés et de l’initiative d’allégement de la dette multilatérale engagées par le FMI et la Banque mondiale. D'importantes recettes pétrolières ont permis au pays d'accroître ses dépenses et ses réserves de change. Cependant, la pauvreté et l’inégalité restent comparativement élevées. Ce document examine les défis que doit relever le Congo pour gérer les recettes qu’il tire des ressources naturelles et assurer une croissance soutenue et inclusive.
International Monetary Fund. African Dept.
This 2014 Article IV Consultation highlights that Gabon’s growth performance has recently been strong, but fiscal pressures have increased significantly. Real GDP growth has averaged about 6 percent in the last four years on the back of substantial scaling-up of capital spending as the authorities implement their strategy Plan Stratégique Gabon Emergent to promote economic diversification and growth inclusiveness. The medium-term growth outlook has weakened as a result of the sharp decline in oil prices, but is expected to remain relatively strong. Growth is expected to be driven by a number of projects under way in agro-industry, mining, and wood processing.
Ms. Dalia S Hakura, Mr. Adrian Alter, Matteo Ghilardi, Mr. Rodolfo Maino, Mr. Cameron McLoughlin, and Mr. Maximilien Queyranne
The Republic of Congo has seen dramatic improvement in its debt situation since 2010, following debt relief through the IMF and World Bank Heavily Indebted Poor Countries/Multilateral Debt Relief Initiative. Large oil revenues have allowed the country to boost spending and increase foreign exchange reserves. Yet poverty and inequality remain comparatively high. This paper examines Congo’s challenge to manage its natural resource revenue and attain sustained inclusive growth.