Cote d'Ivoire: AfDB Group approves a € 200 m loan to support Gabon's reform programme

Abidjan, Cote d'Ivoire (PANA) - The Board of Directors of the African Development Bank (AfDB) on Wednesday  approved a € 200 million loan to Gabon, to support the country’s economic and financial reforms programme (EFRSP).

In a statement, the Bank said the loan aims to revive economic growth by strengthening the sustainability of public finances, as well as the structural transformation of the economy in a context marked by the recent oil price decline, which has seriously hit the economy.

"This loan is the first of two programme-based General Budget Support (GBS) operations covering the 2016-17 period for an indicative total financing of €500 million supporting the implementation of reforms aimed at unlocking Gabon’s significant growth potential," said the Bank.

Gabon has experienced strong economic growth during the first implementation phase of the emerging Gabon Strategic Plan (EGSP), with the economy growing at an average of 6% (2010-2014).

Growth was driven by an increase in the public investment rate estimated at 22 % of the budget, particularly in the infrastructure, as well as construction and services sectors. However, emergence of fiscal and external imbalances, compounded by the lack of economic diversification, has put Gabon’s prospects at risks.

Falling oil revenues have resulted in a growth slowdown, with real GDP growth down to 4% in 2015 against 5% in 2014.

“We look at this operation within discussions we had with the Economic and Monetary Community of Central African States (CEMAC), and think, this is our response to the fall in oil price that has had a significant impact on Gabon’s economy. This is a great support we are providing the country, in collaboration with other development partners,” Bank Group President, Akinwumi Ayodeji Adesina said.

Declining oil prices have also weakened macroeconomic stability of Gabon, through the negative impact on public finances, external balances and public debt.

These have also highlighted the vulnerabilities of a hydrocarbon-dependent growth model and public spending. The shock, in terms of trade, also affected the external position which moved from a surplus of 7.8% of GDP in 2014 to a deficit of 0.2% in 2015.

The government’s economic reform programme seeks to shift from a hydrocarbon-based growth model with limited impact on poverty reduction, to a more diversified, inclusive, job-creating and private-sector-led growth model.

In this context, the EFRSP aims to strengthen fiscal consolidation through increased revenue mobilisation and expenditure rationalization with a particular emphasis on enhancing payroll and public debt control, as well as public investment effectivenes.

The programme also will support economic diversification through improving the investment climate, access to finance and agricultural sector competitiveness.
-0- PANA AR 11Jan2017

11 january 2017 19:54:15

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