- Gabon's major creditor countries have agreed to reschedule euro 717 million of the country's debt. Gabon has accumulated large debts despite its large but declining oil revenues. The recent announcement of deep-ploughing economic reform in the country has however opened doors to IMF support and debt renegotiations.
The so-called Paris Club - an informal grouping of the world's leading creditor nations - today announced it had concluded an agreement with Gabonese authorities, consolidating around euro 717 million.
- This sum consists of euro 456 million of arrears and euro 261 million of maturities falling due between 1 May 2004 and 30 June 2005, according to a press release by the Paris Club. "This rescheduling is expected to reduce debt service due to Paris Club creditors over the period from euro 953 million to euro 270 million," the release added.
The agreement follows the IMF's approval of a stand-by arrangement on 28 May and was said to be "consistent with the financing needs of Gabon" during the next year. This debt consolidation was expected to make "an important positive contribution to Gabon's economic outlook and to strengthen its financial situation."
Paris Club creditors had taken note of the measures in Gabon's economic and financial programme and stressed "the importance of its continued and full implementation," according to the statement. The government of Gabon has pledged to implement wide-ranging reforms of its economic policy.
During decades of high oil revenues to be split on a small population, Gabon was largely independent of international aid and finance. Oil revenues however led to high prices, a lack of development in other economic sectors, lack of transparency and corruption, a check on economic policy reform and overspending.
During the last five years, the central African country has experienced growing economic problems. As oil production is successively being reduced, government overspending continued and Gabon became ripe for economic policy reform. A request to the IMF was answered with assistance in shaping a reform programme that recently found approval.
During the heydays of oil revenues, Gabon had no problems in achieving large state loans, which more than often were lost to non-transparent prestigious projects. Gabon currently owed more than euro 2.4 billion only to Paris Club creditors, which until now had to be repaid by normal business standards.
According to the Paris Club, euro 2.2 billion of these debts now are included in the new a more favourable terms. The agreed rescheduling means that these credits are to be "repaid progressively over 14 years, including 3 years of grace."
While the new agreement only treats repayment until 30 June 2005, the Paris Club agreed in principle to consider a treatment of Gabon's debt after that date. This however was made dependent on Gabon's fulfilment of the commitments under the present rescheduling and a possible conclusion of a new agreement with the IMF.
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