Chapter1. Economic Situation
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Report No. 62548-GA Gabon Public Expenditure Review Better management of public finance to achieve Millennium Development Goals. Public Disclosure Authorized March 2012 Department for Poverty Reduction and Economic Management 3 Africa Region Public Disclosure Authorized Public Disclosure Authorized Document de la Banque mondiale Public Disclosure Authorized GABON Currency Equivalents Effective exchange rate as at January 31, 2012 Currency unit CFA Franc USD 1.00 CFAF 500 State Financial Year January 1- December31 Weights and measures Metric System Abbreviations and Acronyms AGROGABON Agriculture and Livestock Development Corporation ANGT National Agency for Major Projects BEAC Bank of Central African States CAN African Cup of Nations CEMAC Central African Economic and Monetary Community CGAE General State Administrative Account CGCE General Account of State Accounting Officers CHU University Teaching Hospital CNLEI National Commission Against illicit Enrichment CPAF Classification of Public Administration Functions CRH Residential Loan Refinancing Fund DCAF Central Directorate of Administrative and Financial Affairs DGB Directorate-General for Budget DGCRCP Directorate-General for the Control of Public Resources and Offices DGFC Directorate-General for Financial Control DGMP Directorate-General for Public Procurements EDSG Gabon Population and Health Census EGEP Gabonese survey on poverty evaluation and monitoring EITI Extractive Industries Transparency Initiative FINEX External financing FNH National Housing Fund GDP Gross Domestic Product GPRSP Growth and Poverty Reduction Strategy Paper GSS Government Secondary School ii HEVEGAB Rubber Production Company of Gabon IMF International Monetary Fund LOLFEB Organic law governing finance laws and budgetary implementation LOSDES Law containing guidelines of the economic and social development strategy MDG Millennium Development Goals MTEF Medium-term Expenditure Framework MW Megawatt ONE National Employment Board PASAC Agricultural Program for Food Security and Growth PNDS National Health Development Program PNLP National Malaria Control Program PNSA National Food Security Program PSGE “Gabon Emergent” strategic plan SEEG Gabonese Energy and Water Corporation SOGARA Gabonese Oil Refining Company SUCAF African Sugar Company of Gabon UNDP United Nations Development Program WHO World Health Organization Vice President : Obiageli Katryn Ezekwesili Director of Operations : Gregor Binkert Sector Director : Marcelo Giugale Sectoral Department Officer : Jan Walliser Chief Economist of the sub region : Raju Singh Team leader : Rick Emery Tsouck Ibounde iii Gabon Review of Public Expenditure TABLE OF CONTENTS ACKNOWLEDGEMENTS ............................................................................................................................................................................. VI EXECUTIVE SUMMARY ............................................................................................................................................................................ VIII CHAPTER1. ECONOMIC SITUATION ................................................................................................................................................ 1 A. A COUNTRY THAT IS STILL LARGELY DEPENDENT ON OIL ................................................................................................................. 1 B. ACHIEVING THE MILLENNIUM DEVELOPMENT GOALS REMAINS A CHALLENGE ........................................................................... 4 CHAPTER2. ANALYSIS OF THE 2005 TO 2009 BUDGET IMPLEMENTATION .............................................................. 7 A. 2005 TO 2009 BUDGETARY POLICY: GENERAL CONSIDERATIONS ................................................................................................. 7 B. A SIGNIFICANT SHARE OF THE STATE BUDGET WAS ABSORBED BY GENERAL SERVICES .............................................................. 9 C. THE SHARE OF THE BUDGETS ALLOCATED TO THE SOCIAL SECTORS WAS BELOW THAT OF OTHER AFRICAN COUNTRIES AND OTHER MIDDLE-INCOME COUNTRIES .................................................................................................................................................. 11 D. CAPITAL BUDGETS ALLOCATED FOR PRIORITY PROGRAMS OF THE 2006 TO 2008 GPRSP WERE FAR BELOW EXPECTATIONS. ...................................................................................................................................................................................... 13 CHAPTER3. MEDIUM TERM BUDGET SUSTAINABILITY AND ACCUMULATION OF FINANCIAL RESOURCES ............................................................................................................................................................................................... 25 CHAPTER4. PUBLIC FINANCE MANAGEMENT REFORM FOR IMPROVED PUBLIC SPENDING EFFICIENCY ............................................................................................................................................................................................... 29 List of Figures FIGURE ES 1: BUDGETARY REVENUES AND EXPENDITURES (BILLIONS OF FCFA) ........................................................................... VIII FIGURE ES 2: USE OF BUDGETARY SURPLUSES FROM 2005 TO 2009 (BILLIONS OF FCFA) .............................................................. IX FIGURE ES 3: RATIO OF SECTORAL BUDGETARY EXPENDITURE IN RELATION TO GDP, 2005 TO 2009 AVERAGE ..................................... X FIGURE ES 4: AVERAGE BUDGETED AND AUTHORIZED EXPENDITURE FROM 2005 TO 2009 (AS A % OF THE TOTAL) .............................. XI FIGURE ES 5: 2006-2008 GPRSP PRIORITY PROGRAMS AND CAPITAL BUDGETS ........................................................................ XIII FIGURE 1-1: DISTRIBUTION OF GDP (%) PER SECTOR, AVERAGE FOR 2005 TO 2009 ..................................................................... 1 FIGURE 1-2: GABON: PROGRESS TOWARDS THE MILLENNIUM DEVELOPMENT GOALS ..................................................................... 6 FIGURE 2-1: FISCAL BALANCE AS A % OF NON-OIL GDP, 2005 TO 2011 ..................................................................................... 7 FIGURE 2-2: WAGE BILL AND TRANSFERS AS A % OF GDP, 2005 TO 2010 .................................................................................... 8 FIGURE 2-3: CURRENT EXPENDITURE AND CAPITAL SPENDING, AS A % OF GDP, 2005 TO 2010 ........................................................ 8 FIGURE 2-4: ALLOCATION OF EXPENDITURE (BASED ON PAYMENT AUTHORIZATIONS), AVERAGE FOR THE 2005 TO 2009 FINANCIAL YEARS .................................................................................................................................................................... 10 FIGURE 2-5: RATE OF BUDGET EXECUTION 2005-2009 (PAYMENT AUTHORIZATIONS AS A % OF BUDGET ALLOCATIONS) ...................... 10 FIGURE 2-6: PUBLIC EDUCATION EXPENSES OF AFRICAN COUNTRIES IN 2008 ............................................................................... 11 FIGURE 2-7: PRIORITY PROGRAMS OF THE 2006-2008 GPRSP AND CAPITAL BUDGETS ................................................................. 13 FIGURE 2-8: PRIORITY CAPITAL EXPENDITURE AS A % OF GPRSP, 2006-2008 ............................................................................ 13 FIGURE 2-9 : CAPITAL EXPENDITURE FOR THE AGRICULTURAL, LIVESTOCK AND RURAL DEVELOPMENT SECTOR, 2006-2009, ANNUAL AVERAGE, CFAF BILLIONS ................................................................................................................................. 22 FIGURE 3-1: OIL PRODUCTION, MILLIONS OF BARRELS PER YEAR, FORECASTS ................................................................................ 25 FIGURE 3-2: ADJUSTMENT SCENARIO OF NON-OIL PRIMARY DEFICIT ........................................................................................... 26 FIGURE 3-3: ADJUSTMENT SCENARIO, EXPENDITURE AND REVENUE AS A % OF TOTAL GDP ............................................................. 27 FIGURE 3-4: ACCUMULATION OF FINANCIAL RESOURCES AND ANNUAL INCOME, 2010-2060 ......................................................... 27 iv FIGURE A 1 : 3: GDP GROWTH RATE, 2004-2020 ............................................................................................................... 40 FIGURE A 2 : PUBLIC INVESTMENT EXPENDITURE, 2008-2020, IN CFAF BILLIONS ........................................................................ 41 FIGURE A 3 : MAP OF GABON ............................................................................................................................................. 44 List of Tables TABLE ES 1: BUDGETARY EXPENDITURES PER SECTOR AS A PERCENTAGE OF NOMINAL GDP (BASIS OF PAYMENT AUTHORIZATION) ........... IX TABLE ES 2: COST OF PROGRAMS IN THE PRIORITY SECTORS IN THE 2006-2008 GPRSP AND ALLOCATIONS (BILLIONS OF CFAF) .......... XII TABLE 1-1: MAIN ECONOMIC INDICATORS OF GABON FROM 2005 TO 2010 ................................................................................. 2 TABLE 2-1: BUDGETARY ALLOCATIONS AS A % OF TOTAL, AVERAGE FOR 2005-2009 ...................................................................... 9 TABLE 2-2: PUBLIC EXPENDITURE ON EDUCATION FOR MIDDLE-INCOME COUNTRIES IN 2009 .......................................................... 12 TABLE 2-3: PUBLIC SPENDING ON HEALTH, AFRICAN COUNTRIES AND MIDDLE INCOME COUNTRIES 2009 .......................................... 12 TABLE