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Prime Minister Julien Nkoghe Bekalé announced on Monday that Gabon will launch an economic recovery plan, supported by its traditional technical and financial partners including the Bank of Central African States, the International Monetary Fund, the African Development Bank and the French Development Agency.
This ‘Stabilization and Economic Recovery Plan’ will be submitted in a few weeks to the President of the Republic, Ali Bongo Ondimba. It will be based on an assessment of the national industrialization strategy and will be guided by two main priorities: lessening the dependence of the national economy on oil and accelerating the Strategic Plan for Food Sovereignty.
“This is about seizing the opportunity of this crisis to rethink the growth model of our economy. This new crisis has revealed the heavy dependence of our economy on oil, despite the diversification efforts undertaken over the past decade as well as our country’s vulnerability in terms of food security,” Prime Minister Bekalé noted.
Like all countries in the world, Gabon is facing a double crisis. A crisis in global demand linked to the Covid-19 and the slowing economy (especially exports to China) and a sharp drop in oil prices. Despite the rise of certain sectors such as timber and mining, petroleum still accounts for 68% of Gabon’s exports, 45% of its GDP and 40% of its budgetary revenue.
However, analysts share a moderate optimism regarding Gabon’s economic future. Central banks are mobilized to support public and private actors, as well as multilateral institutions and the International Monetary Fund recently approved a disbursement of CFA 88 billion in favor of Gabon. Already, it seems acted out that the repayment deadlines are extended.
Finally, although the country wishes to reduce its reliance on oil, it will remain the key driver of the Gabonese economy for years to come. Through its successful ongoing licensing round during which the country signed 12 production and sharing agreements, it aims to revamp exploration activities and move forward with an ambitious energy plan. In the short-term, Gabon is counting on the oil price increase due to heightened demand in the aftermath of COVID-19.
Gabon is one of Africa’s pioneer oil producers as extraction started in 1957. Its production peaked in 1997 reaching close to 370,000 barrels per day. The national oil company Gabon Oil Company recently went through a restructuring aiming to alleviate high operating costs and increase efficiency, while a new more attractive oil and gas code was introduced in 2019 to attract foreign investment.