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International Monetary Fund. Fiscal Affairs Dept.
In response to a request from the Gabonese authorities, a mission from the Fiscal Affairs Department of the IMF visited Libreville to conduct an evaluation of public investment management, using the Public Investment Management Assessment methodology. The report highlights that enhancing the efficiency of public investment is essential, given Gabon’s current budget constraints. Improving public investment management (PIM) should help stem the declines in public investment efficiency in Gabon. In terms of infrastructure quality, public investment efficiency has fallen to half of the expected optimal level, compared to a 20 percent decline both worldwide and in Sub-Saharan Africa, as well as a 31 percent decline in member states of the Central African Economic and Monetary Union. The findings of the PIM assessment reveal structural deficiencies in planning procedures and institutional arrangements. Eight recommendations are put forward to enhance PIM efficiency in the short and medium terms, with three urgent steps needed to rationalize planning.
International Monetary Fund. Fiscal Affairs Dept.
The development of infrastructure is one of the pillars of the Emerging Gabon Strategic Plan (PSGE). Implemented as of 2012, the PSGE has been establishing priority strategic guidelines to transform Gabon into an emerging economy by 2025. Its primary aims are to ensure and expedite the country’s sustainable development and growth by focusing on potential growth sectors. Public investment grew continuously from 2009 to 2013, when it peaked at 15.2 percent of GDP; it averaged 5.7 percent growth from 1990 to 2018. At the same time, private investment declined, as did growth and public capital stock. These outcomes indicate that public investment in Gabon does not drive growth and that investment expenditure does not automatically translate into actual accumulation of assets, which raises questions about the efficiency of those outlays.
Victor Duarte Lledo and Mr. Marcos Poplawski Ribeiro
This paper investigates economic, political, and institutional constraints to fiscal policy implementation in sub-saharan Africa. We find that planned fiscal adjustments or expansions are less likely to be implemented the larger they are, the more inaccurate the growth forecasts they are based on, the more fragile the regulatory system in the country, and the weaker the institutions framing the design, approval, and execution of the budget. The findings support ongoing efforts in the region to improve the quality and timeliness of economic data; enhance forecasting capacity; adopt realistic fiscal plans; and strengthen governance, budgetary institutions, and public financial management procedures.
International Monetary Fund
Gabon showed robust economic growth, low inflation, and large fiscal savings from high oil revenue, underpinned by prudent macroeconomic policies and structural reforms under the Stand-By Arrangement (SBA). Executive Directors suggested that stronger fiscal discipline is essential to keep the economy stable. They stressed the need for strengthening public financial management and adjusting fiscal programs to accommodate higher-than-programmed fuel subsidies. They advised that enhancing the investment climate by strengthening governance and increasing transparency, as well as by lifting the temporary price controls, will remove constraints to the growth of non-oil activity.
International Monetary Fund
Gabon partially complies with the principles of the Code of Good Practices on Fiscal Transparency and the Guide on Resource Revenue Transparency. Much remains to be done to ensure that government finances are managed transparently, in conformity with international best practices. Knowledge and dissemination of reliable and accurate fiscal information are essential. The budget must be prepared in such a way that the best short- and medium-term choices can be made in achieving the government’s key objectives—development and poverty reduction.
Mr. Philippe Beaugrand, Mr. Montfort Mlachila, and Mr. Boileau Loko
The paper reviews the principles and practical considerations involved in the choice between foreign and domestic financing of fiscal deficits, and derives a series of recommendations broadly applicable to Central and West African countries. The paper develops a simple analytical framework and shows that highly concessional external debt is usually a superior choice to domestic debt in terms of financial costs and risks, even in the face of a probable devaluation. The paper stresses the importance of the availability and terms of financing, and of overall long-term debt sustainability. It concludes that these countries need to take a gradual approach to domestic debt financing, beginning with the issuance of short-term bills, and ensure a solid track record of meeting their debt-service obligations.
International Monetary Fund
This paper examines how military spending has been affected by Fund-supported programs. It looks at the changes in military expenditure as a share of gross domestic product (MIL/GDP) and of total expenditure (MIL/EX) for two subsamples of Fund-supported programs, broadly divided into fiscal tightening and fiscal accommodating. Under fiscal tightening, the evidence suggests that MIL/GDP decreases during Fund-supported programs, but that MIL/EX increases, revealing resilience to budgetary adjustments. Under fiscal accommodation, as total government expenditure tends to increase, so does military expenditure; however, the ratio MIL/EX declines, as fewer additional resources are allocated to the military.