Lastly, wewill possibly work towards establishing consensus within the Global Communityon policies that, in the best possible manner, solve this crisis, and preventfuture crises from taking place.To sum up,our key goal is to establish effective trade policies, ensure meritocracy withinfinancial institutions, support banks so that they maintain and continue theircredit activity, increase foreign investment in our nation, and create morejobs in the economy. We can possibly concede on less foreign investment andless expenditure on physical infrastructure. We would also work towards the creationof a custom union for African states that permits free trade, adopting a commonexternal tariff that may be decided with the consensus of the African countries,or perhaps widening the base of CEMAC (Central African Economic and MonetaryCommunity). Negotiation with bilateral custom unions can also take place as thiswill help stabilize commodity markets allowing developing, rich resourcecountry before they are struck with mass unemployment. To solve such a problematic crisis, Gabonbelieves in certain things. Firstly, crucial steps should be taken to securedepositors up to a much higher level than at present. Secondly, laws and rulesfor vetting the membership of boards and the top management of banks should berevised to ensure meritocracy within institutions.
In a third step, supportshould be given to the banks that immediately require funds at reasonable costsfor maintaining and expanding their credit activity to satisfy the borrowingrequirements of their clients. In addition to this, Funds should be granted toguarantee re-employment and new job creation. Moreover, in order to confronteconomic instability throughout the world, attention should be diverted to theneeds and requirements of the developing and less-developed nations. A sensibleway to approach this is by investing in their physical and socialinfrastructure, separately from any current aid program. Contracts placed forthis purpose in the developed world would not only help preserve jobs there butwould also create new jobs and enlarge the consumer market in the developingworld. Global spending from the large fiscal stimulus should focus on investingin people and technology to create long-lasting, incentive-driven jobs thatwill increase worldwide competitive capacity for decades. The Global Communityshould work towards framing pragmatic trade policies with regards to lessprotectionist measures so that it proves as an incentive for Less-Developed andDeveloping countries to expand their export base. Furthermore, we would wantstability to persist in Exchange Rates so that sudden fluctuations do not harmthe health of the economy by either boosting or contracting AggregateDemand(AD) to an extent that is undesirable.
In the observedtrends and nature of Gabon’s economy, it can be understood that our economy is fueledby trade, especially exports of oil. We believe that trade is the most crucialsubject of discussion for us as the global markets are collapsing which mayadversely affect our exports and imports. Considering the agriculture and foodaspect of trade, Gabon heavily relies on imported food items and since thereare high barriers (tariffs) it is likely that these prices will shoot up thusburdening the economy.
Not just us, but various other developing countries facesuch an issue, and many require agricultural subsidies. In some cases, theyielding harvesting may lead to practices such as ‘dumping’ which may placeGabon’s agricultural sector at risk. In addition, the use of natural resourcesmay be a difficult spot to be in while great economies collapse. Theperformance of other economies is critical to ours as it directly has a stakein our ability to remain solvent during the crisis. Since we are highlydependent on oil, a fall in global oil prices will put us under enormous fiscalpressure. This will also hurt the competitivenessin non-resource economic sectors effecting the exchange rate. These factorsplace us on the front line of the crisis. ‘A ripplethat turned into a tsunami’ is how the Financial Crisis is described.
Gabon is acentral African country which is rich in natural resources. It possesses thehighest urbanization rates in Africa, where 80% of Gabonese live in urbanareas. Gabon is an Upper Middle-Income country. Its economic growth has beendriven by the oil sector (being the fifth largest oil producer in Africa). Theoil sector accounts for 80% of exports, 45% GDP, and 60% of budget revenue. However,the inadequate quality of Gabon’s business climate poses a challenge to thediversification of its economy. This makes us more vulnerable to the financialcrisis as our domestic markets would not be backed up if our export revenuefalls.
According to factual data, Gabon’s real trade growth decelerated to 5.8%in 2008, and is expected to turn negative in 2009, with trade falling by 0.1percent, Imports increased by 13.2% and growth is forecast to slow down evenfurther to 2.6% in 2009. This is due to the unemployment and recession in othercountries which have led to lower average incomes and thus reduction in the tradeof oil.