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Economy - overview: Gabon enjoys a per capita income four times that of most nations of sub-Saharan Africa. This has supported a sharp decline in [extreme poverty]?; yet because of high income inequality a large proportion of the population remains poor. Gabon depended on timber and manganese until oil was discovered offshore? in the early 1970s. The oil sector now accounts for 50% of GDP. Gabon continues to face fluctuating prices for its oil, timber, manganese, and uranium exports. Despite the abundance of natural wealth, the economy is hobbled by poor [fiscal management]?. In 1992, the fiscal deficit widened to 2.4% of GDP, and Gabon failed to settle arrear?s on its bilateral? debt, leading to a cancellation of rescheduling agreements with official and private creditors. Devaluation? of its [Francophone currency]? by 50% on 12 January 1994 sparked a one-time [inflationary surge]?, to 35%; the rate dropped to 6% in 1996. The IMF provided a one-year standby arrangement in 1994-95 and a three-year [Enhanced Financing Facility]? (EFF) at near commercial rates beginning in late 1995. Those agreements mandate progress in privatization and [fiscal discipline]?. France provided additional financial support in January 1997 after Gabon had met IMF targets for mid-1996. In 1997, an IMF mission to Gabon criticized the government for overspending on off-budget items, overborrowing from the central bank, and slipping on its schedule for privatization and administrative reform. The rebound of oil prices in 1999 helped growth, but drops in production hampered Gabon from fully realizing potential gains. With support from higher oil prices, growth will move up in 2000-01. GDP: |
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Gabon enjoys a per capita income four times that of most nations of sub-Saharan Africa. This has supported a sharp decline in [extreme poverty]?; yet because of high income inequality a large proportion of the population remains poor. Gabon depended on timber and manganese until oil was discovered offshore? in the early 1970s. The oil sector now accounts for 50% of GDP and 80% of exports. Oil production is now declining from its apogee of 370,000 barrels per day in 1997. The 1998 fall-off in oil prices had a negative impact on government revenues and the economy. Little thought or plans have been made for an after-oil scenario. Gabon public expenditures from the years of significant oil revenues have not been spent efficiently. Overspending on the Transgabonais railroad, the oil price shock of 1986, and the franc CFA devaluation of 1994 have caused debt problems. Gabon has earned a poor reputation with the Paris Club and the IMF for poor management of its debt and revenues. IMF missions (related to the now lapsed EFF program) have criticized the government for over-spending on off-budget items (in good years and bad), over-borrowing from the Central Bank, and slipping on the schedule for privatization and administrative reform. Gabon's oil revenues have given it a strong per capita GDP of more than $4,000, extremely high for the region. On the other hand, a skewed income distribution and poor social indicators are evident. The economy is highly dependent on extraction of abundant primary materials. After oil, timber and manganese mining are the other major sectors. Gabon continues to face fluctuating prices for its oil, timber, manganese, and uranium exports. Foreign and Gabonese observers have consistently lamented the lack of transformation of primary materials in the Gabonese economy. Various factors have so far stymied more diversification (a small market of 1 million people, dependence on French imports, inability to capitalize on regional markets, lack of entrepreneurial zeal among the Gabonese, and the fairly regular stream of oil "rent"). The small processing and service sectors are largely dominated by just a few prominent local investors. In 1992, the fiscal deficit widened to 2.4% of GDP, and Gabon failed to settle arrear?s on its bilateral? debt, leading to a cancellation of rescheduling agreements with official and private creditors. Devaluation? of its [Francophone currency]? by 50% on 12 January 1994 sparked a one-time [inflationary surge]?, to 35%; the rate dropped to 6% in 1996. The IMF provided a one-year standby arrangement in 1994-95 and a three-year [Enhanced Financing Facility]? (EFF) at near commercial rates beginning in late 1995. Those agreements mandate progress in privatization and [fiscal discipline]?. France provided additional financial support in January 1997 after Gabon had met IMF targets for mid-1996. In 1997, an IMF mission to Gabon criticized the government for overspending on off-budget items, overborrowing from the central bank, and slipping on its schedule for privatization and administrative reform. The rebound of oil prices in 1999 helped growth, but drops in production hampered Gabon from fully realizing potential gains. GDP: |
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