LIBREVILLE, October 14th, 2024 - Released today by the World Bank, the Gabon Economic Update 2024 presents fiscal policy reforms to optimize fiscal revenues while allowing Gabon to advance the green growth potential of its wood industry. Titled Designing Fiscal Policies for Sustainable Forestry, the report begins with an analysis of recent developments and outlook for Gabon's economy, followed by a detailed exploration of the role of fiscal instruments in fostering sustainable forest management and economic growth, the special topic selected for this edition.
Gabon experienced lower growth in 2023 (2.4%) amid transport disruptions that impacted wood and manganese production. Following contested election results at the end of August, and subsequent coup that ushered in a political transition, the new authorities announced intentions to embark on a path towards strengthened institutions, better governance, and transparency of public finances to create more jobs and raise living conditions.
The report notes that the fiscal position has deteriorated slightly in 2023. To respond to high social needs and address long-standing infrastructure gaps, the authorities have been increasing public spending, by adopting social support measures and expanding investments and public services. In the meantime, domestic revenue collection increased but at a slower pace. Combined with rising interest rates, these spending pressures led to an increase in public debt. The report underscores the importance of accelerating reforms and putting in place measures and controls to ensure more efficient public spending and more revenue collection, which will be key to allow Gabon to continue improving living conditions without compromising the sustainability of its public finances.
This fourth edition of the Gabon Economic Update argues that, while Gabon needs to receive adequate international support for the essential climate services provided by its forests, fiscal policies can serve as a complementary tool to promote economic and conservation goals.
"Thanks to strong conservation efforts, Gabon created an important local wood industry based on sustainable production and certification requirements, positioning itself as a source of inspiration for the region," said Aissatou Diallo, World Bank Resident Representative for Gabon.
The report indicates that there is still strong potential for future growth in the forestry sector. The wood industry has grown to become a major player in the economy. It is the first source of formal private jobs and represented 3.2% of GDP and 6% of exports in 2023. The forestry sector has also gained in importance for public finances, contributing 41.9 billion CFA francs to the national budget in 2023, equivalent to 0.3% of GDP and almost four times more than in 2016.
The report highlights the significance of ongoing reforms such as the revision of the forestry code and the implementation of a digital wood traceability system to combat illegal logging. Sonia Barbara Ondo Ndong, co-author of the report, underlined that "These reforms could set the framework for fiscal policies to generate more public revenues while further promoting conservation goals."
According to Erick Tjong, co-author of the report, "Fiscal policies for forestry could be part of a broader strategy to align economic and environmental goals, raising more revenues for the state while promoting jobs and higher value added in a sustainable timber industry".
