Building a Greener Future: Gabon’s Struggle to Convert Wealth into Wider Well-Being

Gabon’s economy grew modestly in 2024, but poverty, debt, and reliance on oil remain deep-rooted challenges. The World Bank urges urgent reforms and global climate finance to harness Gabon’s vast natural wealth sustainably.

Research produced by the World Bank's Economic Policy team (EAWM2) in collaboration with EGVPI and researchers from the University of Oxford, offers a detailed examination of Gabon's macroeconomic conditions and natural wealth management. The country's GDP grew to 2.9 percent in 2024, up from 2.4 percent the previous year. This recovery was fueled mainly by increased oil production and heavy investment in public infrastructure, roads, utilities, and government buildings. Oil output alone rose by 4.6 percent, bolstered by newly exploited fields and easing OPEC+ restrictions. However, the economy remains vulnerable and narrow in base. Non-oil sectors like manganese and timber, key exports, were constrained by falling demand from China, logistical bottlenecks, and frequent electricity outages. These imbalances reveal a fragile growth model heavily reliant on extractives, with limited reach to the broader population.

Unemployment continues to be a critical issue, affecting 20 percent of the workforce, especially among youth. Poverty has worsened in recent years, now affecting 34.6 percent of Gabonese who survive on less than USD 6.85 per day (PPP). Despite the government's attempts to promote vocational training and entrepreneurship, significant mismatches persist between skills taught and market needs. A large share of public training graduates enter fields with limited employment opportunities, while high-demand sectors like forestry and services remain underserved. Moreover, public social spending has declined to just 18.2 percent of the national budget in 2024, significantly below other upper-middle-income countries.

Declining Inflation Offers Relief but Fiscal Gaps Widen

Inflation cooled significantly in 2024, falling to just 0.9 percent by December, aided by tight monetary policies from the regional central bank (BEAC) and a global drop in food and fuel prices. However, Gabon's heavy dependence on imports, especially food, which makes up about 60 percent of consumption, keeps its economy exposed to global price swings. The government has sought to ease the burden through the "Vie chère" program, which expanded to over 100 basic goods and included price caps, tax breaks, and subsidies. These measures, though popular, are proving fiscally unsustainable. Fuel subsidies alone cost the treasury CFAF 110 billion (0.9% of GDP), while VAT exemptions added another CFAF 40 billion. Such programs offer limited long-term impact and fail to address underlying structural problems like inefficient logistics, high tariffs, and low agricultural productivity.

Fiscal pressure intensified as government expenditures rose by 24 percent in 2024, mainly in infrastructure and social transfers, while oil revenues shrank due to lower global prices. Consequently, Gabon shifted from a 1.8 percent fiscal surplus in 2023 to a 3.7 percent deficit in 2024. The non-oil primary balance deteriorated sharply to -15.9 percent. With increasing debt service obligations and limited access to financing, the country's public debt climbed to 72.5 percent of GDP, breaching the CEMAC convergence ceiling. A downgrade in credit ratings by Fitch and Moody's further strained the country's borrowing capacity, leading to a buildup of external arrears and liquidity concerns.

Debt Reprofiling and Market Pressures Mount

To navigate rising debt distress, Gabon launched a series of active debt management operations in late 2024 and early 2025. These included the early buyback of part of its June 2025 Eurobond and the domestic debt restructuring initiative known as the "Mouele Project." This large-scale reprofiling, involving ten major CEMAC-region banks, extended the maturity of domestic debt from an average of 2.3 years to 6 years, alleviating near-term repayment pressures. However, debt service remained a significant burden, consuming 42.6 percent of public revenues in 2024.

Borrowing costs have surged. In February 2025, Gabon issued a private bond at an eye-watering 12.7 percent interest rate, one of the highest among emerging markets, reflecting investor fears about political risks, policy uncertainty, and fiscal fragility. In parallel, domestic interest rates for Treasury bills and bonds have risen steadily, highlighting the crowding out of private sector credit and the increasing exposure of local banks to sovereign risk.

Natural Wealth Abundant but Underutilized

Despite its economic challenges, Gabon remains exceptionally rich in natural capital. A core focus of this year's update is the country's wealth accounting. Between 1995 and 2020, Gabon's total national wealth rose by 35 percent to USD 105 billion (in 2019 USD). However, wealth per capita declined by 34.7 percent during the same period, highlighting the country's failure to convert natural riches into productive assets or human capital. Natural capital accounts for 42 percent of total wealth, with forests playing a central role.

Gabon is one of the few nations worldwide that acts as a net carbon sink. Its forests stored an estimated 29.8 billion tons of CO₂ in 2020, valued at USD 74.7 billion based on the social cost of carbon. Yet this immense ecological service goes largely uncompensated. Gabon's forest ecosystems also provide significant value through timber, soil protection, wild foods, and bushmeat. However, ecotourism remains underdeveloped, generating just USD 22 million in 2020, due to poor infrastructure and limited international reach. Meanwhile, local industries remain focused on primary processing; higher-value sectors like furniture manufacturing remain nascent.

Reforms and Global Climate Finance Hold the Key

To escape the trap of low per capita wealth and high fiscal dependency on oil, Gabon must urgently reform. The World Bank calls for a strategic realignment of public spending, improved governance of state-owned enterprises, and structural measures to unlock local value addition in mining, wood processing, sustainable agriculture, and ecotourism. A major recommendation is the expansion of targeted cash transfer programs to replace costly and regressive subsidies, alongside investments in education and healthcare.

Internationally, Gabon and other forest-rich nations need access to effective climate finance mechanisms. Despite efforts through initiatives like the Central African Forest Initiative (CAFI), Gabon has yet to capture a fair share of global funds for carbon retention. The report advocates for improved global frameworks, such as fairer REDD+ mechanisms and sovereign green financing tools, to ensure countries like Gabon are rewarded for preserving the world's forests. Without such partnerships, Gabon risks squandering both its development momentum and the environmental legacy it safeguards for the planet.