The Executive Board of the International Monetary Fund (IMF) on Thursday approved the disbursement of US$147 million to be drawn under the Rapid Financing Instrument (RFI) to help Gabon confront the impact of the COVID-19 pandemic, the Fund said in a statement.
The funds will assist Gabon in meeting the urgent balance of payments needs stemming from the COVID-19 pandemic and the terms of trade shocks.
“The COVID-19 pandemic and collapse in oil prices have weakened the macroeconomic outlook, with the possibility that the pandemic could turn more severe and persistent than anticipated with lasting impact on commodity prices, growth, and fiscal and external positions,” IMF Deputy Managing Director Mitsuhiro Furusawa said.
“In the short term, a temporary widening of the budget deficit is warranted to contain the virus outbreak and offset the social and economic impact of the pandemic,” he added.
According to Furusawa, the regional Central Bank and Banking Commission are taking steps to support growth and preserve financial sector stability.
Furusawa also said that authorities should stand ready to suspend all emergency measures once the crisis subsides.
“Over the medium term, public debt needs to be put back on a firmly downward path. The decline in oil prices will necessitate faster fiscal adjustment and economic diversification,” he said.
Sustaining the reform momentum of recent years to achieve a more revenue-based and growth-friendly fiscal consolidation, enhance governance and debt management, and improve the business climate, will be critical.”