The Executive Board of the International Monetary Fund (IMF) approved a purchase of SDR108 million (about US$152.61 million) under the Rapid Financing Instrument (RFI). This purchase brings total IMF COVID-19 support under the RFI to Gabon to US$299.61 million. It is Gabon’s second purchase under the RFI since the onset of the pandemic.
The goal is help Gabon meet her urgent balance of payments needs. This is a fruit of the Executive Board’s decision of April 9, 2020. The board decided to temporarily double the annual access limit under the RFI to 100 percent of quota (see IMF Policy Paper No. 20/018).
IMF’s Deputy Managing Director Mitsuhiro Furusawa’s Statement.
“The dual COVID-19 pandemic and the terms of trade shocks continue to severely affect human conditions and hamper growth prospects in Gabon. The economic contraction has deepened since the first Rapid Financing Instrument (RFI) request in April 2020. External and fiscal positions have worsened, giving rise to additional financing needs. Public debt remains sustainable, but downside risks have increased significantly. The near-term outlook remains subject to considerable uncertainty and downside risks.
“The authorities’ measures to limit the spread of the COVID-19 pandemic while safeguarding debt sustainability and improving reporting are commendable. A package of monetary easing measures was approved by the regional central bank. The Gabonese authorities adopted a revised budget focused on addressing imminent healthcare needs to save lives. It also included protecting the most vulnerable, and supporting the private sector, notably small businesses. The revised budget contemplates a larger deficit to accommodate automatic stabilizers and crisis-related emergency measures. The authorities are also committed to further improve transparency. They will also manage public finances to ensure proper use of COVID-19 emergency resources.
“The IMF emergency assistance will support the authorities’ policy response and catalyze donor support. Contingency planning as well as close monitoring of financial sector vulnerabilities also remain critical.
“The authorities’ commitment to promote strong and inclusive growth over the medium term is welcome. Measures to achieve a more revenue-based and growth-friendly fiscal consolidation, enhance governance and debt management, and improve the business climate, will be critical to put public debt on a firmly downward path, and help sustain strong and inclusive growth.”