Gabon: Weaker oil accounts reveal policy shortages

​After the oil price slump, economic growth proved quite resilient, with a slight deceleration to +3.5% in 2016, down from +5.6% in 2013. Such good performance stemmed from policy stability. Since Gabon’s currency is the CFA Franc, it serves as a buffer against devaluation risks. Other key oil exporters such as Nigeria and Angola do not benefit from a similar system. 

Exchange rate stability translated into low inflation (+2.5% in 2016), helping domestic demand to preserve its purchasing power. Alongside with a moderate initial level of public debt (29% of GDP in 2013), the government decided to allow automatic stabilizers behave freely and adopted a countercyclical stance, letting the public deficit increase to a modest -3% of GDP in 2016 (from +3% surplus in 2014). Yet a sharp increase in public debt may push it close to 50% of GDP next year. Moreover, political stability could become an issue on the back of protests and declining legitimacy following the last Presidential election.