June 26, 2018 / 12:34 PM / in 25 days

Gabon's economy to recover in 2018, needs progress on reforms, IMF says

LIBREVILLE, June 26 (Reuters) - Gabon’s economic growth is expected to rise to 2 percent in 2018 from 0.5 percent a year ago thanks to robust growth in agriculture, mining and logging, which enabled it avoid a recession, the International Monetary Fund said.

The oil-dependent central Africa nation was forced to turn to the IMF for a bailout after oil prices slumped from 2014 to 2016. In return, it promised to carry out tough reforms, including deep spending cuts. Now economic activity is stabilising, the IMF said a statement late on Monday.

“Economic growth appears set to recover in 2018 and reach 2 percent, which is a more modest bounce back than previously expected,” Alex Segura-Ubiergo, who led an IMF review mission to Gabon from June 13 to 25, said in the statement.

The IMF board approved about $642 million facility in June last year to help Gabon’s recovery programme.

The mission said it was still concerned over Gabon’s weak program performance, substantial fiscal slippages, and disappointing progress on structural reforms.

“There was also insufficient progress to contain current spending — wages and salaries, transfers, subsidies and special accounts — and weak non-oil revenue collections,” IMF said.

It added that the government’s efforts to clear domestic and external arrears was also slower than expected, and many important structural reforms had been delayed or not implemented as planned.

Gabon last week announced further austerity measures that included a 15 percent reduction of spending by government institutions and administration and a 10 percent reduction the salary of cabinet members.

It also announced staff reductions at ministries and other government agencies, froze hiring at all levels, forced those on long-term sick leave to retire and planned to cancel the contracts of temporary hires who are over 60.

The belt-tightening could spark protests in Africa’s fourth- largest oil producer, which has seen output decline to around 220,000 barrels per day as its fields mature.

A leader of Gabon’s largest public administration trade union, Dynamique Unitaire, on Tuesday rejected the austerity measures announced by the government and called for nationwide civil disobedience campaign. (Reporting by Geraud Wilfried Obangome, writing by Bate Felix, editing by Larry King)

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