Improving Governance in Gabon: Potential Economic Benefits

Governance Reforms and Economic Growth

A recent analysis by the IMF model explores the potential effects of governance reforms on Gabon’s economy over a ten-year period. The study focuses on three key areas for improvement: firms’ distortion (bribery), public investment efficiency, and revenue mobilization.

Optimistic and Moderate Scenarios

Optimistic Scenario:

• Private Investment: 2.98% average annual increase
• Private Consumption: 0.40% average annual increase
• Non-oil Output: 1.12% average annual increase
• Change in Public Debt: -3.5% of GDP

Moderate Scenario:

• Private Investment: 1.51% average annual increase
• Private Consumption: 0.21% average annual increase
• Non-oil Output: 0.57% average annual increase
• Change in Public Debt: -2% of GDP

Key Findings

• Prioritizing Governance Reforms: Reducing bribery and other distortions affecting firms’ decisions has a larger impact on growth and fiscal space compared to improving public investment efficiency or revenue mobilization. • Comprehensive Reform Package: A comprehensive reform package addressing all three areas would lead to significant improvements in private investment, private consumption, and non-oil output, as well as a decline in public debt. • Cumulative Effects: The effects of the reforms are cumulative, with each area of governance improvement building on previous reforms to create a multiplier effect.

Conclusion

The report suggests that improving governance in Gabon has the potential to lead to significant economic benefits, including increased growth, investment, and fiscal space. By addressing firms’ distortion, public investment efficiency, and revenue mobilization, Gabon can unlock its economic potential and achieve sustainable development.