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									                    CONFIDENTIAL   JULY 2008




Gabonese Republic
GABONESE REPUBLIC



                Executive Summary

                   Strong economic performance in 2007 and in Q1 2008
                       Robust 5.6% real GDP growth in 2007 (6.2% for real non-oil GDP, 3.4% for real oil GDP)
                       Overall balance of payments surplus
                   Improvement in public finances
                       Primary budget surplus and reduction of the non-oil deficit
                       Ongoing reforms aiming at increasing permanent income (including non-oil permanent income)
                       Continued efforts to strengthen control on public expenditures
                   Active and prudent debt management
                       Buyback of 86% of Paris Club debt leading to a decrease in external debt to 13.8% of GDP
                       Creation at the World Bank of an amortization fund (‘Investment Management Account’) in respect of the US$1 bn international
                        bond issue of December 12th 2007. First payment in the Investment Management Account will occur before 2008 year end.
                       Continuation of privatizations
                   Continued efforts to improve transparency and governance
                       Publication of the 3rd EITI report
                       Increase to 60% of the share of public contracts awarded on tender
                       Establishment of a Medium Term Expenditure Framework (MTEF)
                       Establishment of a Treasury committee in charge of supervising budget execution
                       Improved investors’ assessment of Gabon’s efficiency, reflected in the continued increase in the price of Gabonese external bonds
                        in the secondary market

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GABONESE REPUBLIC



               Table of Contents

               I     ECONOMIC PERFORMANCE IN 2007 AND TRANSPARENCE EFFORTS

               II    ECONOMIC EXPECTATIONS FOR 2008

               III   GABON’ S NEW EXTERNAL DEBT PROFILE

               IV    POLITICAL ENVIRONMENT

               V     SOCIAL ENVIRONMENT




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GABONESE REPUBLIC




I       Economic Performance in 2007 and Transparence Efforts
GABONESE REPUBLIC                                                                                 I ECONOMIC PERFORMANCE IN 2007 AND TRANSPARENCY EFFORTS



               Macroeconomic Developments

                   Robust growth in 2007
                       5.6% increase in real GDP
                           6.2% increase in real non-oil GDP
                           Recovered growth in the oil sector: real oil GDP growth at 3.4%

                   Consumer prices
                       5.9% yoy increase in consumer prices mainly caused by the combined effect of a 26% adjustment in fuel prices in March 2007,
                        inflation in imported foodstuff and internal demand pressures

                   Strong external position: 20,1 % in December 2007 as the International bond issue proceeds were taken into account (13% in
                    March 2007 and 10.3% in March 2008)

                   Gabon’s contribution to the international reserves of the BEAC has been below expectations

                   Budget surplus has been below expectations
                       Non-oil deficit has decreased from 18.0% in 2006 to 13.3% in 2007, while expectations were at 11.6% (IMF program objective)
                           Fuel subsidies have reached FCFA 54.4 bn in 2007 (0.9% of non-oil GDP)
                       Gabon’s own resources have served to buyback part of Paris Club debt
                       The State has assumed insolvent public companies’ and public bodies’ debts, as well as local authorities’ deficits




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GABONESE REPUBLIC                                                                               I ECONOMIC PERFORMANCE IN 2007 AND TRANSPARENCY EFFORTS



               Macroeconomic Developments (cont’d)

                   Monetary situation
                       6.9% money supply growth due to an increase in net foreign assets and growth of credit to the economy
                       Decrease in State claims due to temporary accounting of the US$1 bn international bond proceeds on Citigroup Libreville’s balance
                        sheet. This amount was subsequently transferred to Paris Club creditors in consideration of the Paris Club debt buyback in January
                        2008

                   Balance of payments
                       The trade surplus more than compensates the deficit in services, income and current transfers
                       Increased capital account deficit in 2007 (FCFA -773.9 bn) due to foreign investments in the oil sector and a still-high public debt
                        amortization level (FCFA -246.5 bn)




                                                   (FCFA bn)                                       2006     2007
                                                   Current account balance                       925,5     867,8
                                                   Trade balance                                2350,7    2531,5
                                                   Capital account balance                       -536,8   -773,9
                                                   Overall balance                                 193       8,7




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GABONESE REPUBLIC                                                                           I ECONOMIC PERFORMANCE IN 2007 AND TRANSPARENCY EFFORTS



               Macroeconomic Developments (cont’d)

                   Developments in the key sectors of the Gabonese economy
                     Oil
                       Domestic production of crude oil recorded by all companies operating in Gabon in 2007 has reached 12,128 million tons, 1.7%
                          higher than in 2008 (11,927 million tons), notably because of
                           efforts made by the various operators in mature fields
                           starting exploitation of marginal oilfields
                       0.5% increase in exports by end-December 2007, standing at 11,307 million tons
                       The main destination, the USA, absorbs three quarters of Gabonese crude oil supply
                       Decline in oil revenues vis-à-vis 2006 notably because of
                           the recovery of investment by oil companies (amortization has accelerated) in 2007
                           the decline in production of principal operating companies (Total, Shell) and increased production companies whose
                             marginal tax is lower
                     Manganese
                       Strong demand for manganese in a context of pressures on global ore supply, leading to
                           an increase in production of manganese by 11.9% compared to 2006, reaching 3,333 million tons
                           an increase in exports and sales of 13.7% and 13.8% respectively
                           an increase in value of sales of 43.2% for a total of FCFA 272,483 bn in 2007 compared to FCFA 190 bn in 2006, bolstered
                             by increasing prices of manganese ores
                     Timber
                       In 2007, 9.6% increase of exports of timber (all species combined), reflecting strong demand from China (largest consumer of
                          Gabonese timber with 1,103 million cubic meters)
                     Refining
                       14.9% increase of the volume of processed crude oil processed, reaching 821,011 metric tons (MT) against 716,776 MT in 2006
                       Imports of refined products, including diesel, by the Sogara to meet local demand


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GABONESE REPUBLIC                                                                                                                   I ECONOMIC PERFORMANCE IN 2007 AND TRANSPARENCY EFFORTS



               Macroeconomic Developments (cont’d)

                    Evolution of key figures


                   % of annual change, unless otherwise stated                             Expected      Effective % of annual change, unless otherwise stated                        2007       2007
                                                 Real sector                            May 2007        End 2007                             Money and credit                        May 2007   End 2007
                   GDP, constant prices                                                   5.6             5.6      Credit to the economy                                              20.5        17.5
                     Oil GDP                                                              5.3             3.4      Broad money (M2)                                                   14.4         7.2
                     Non-oil GDP                                                          5.7             6.2      Velocity of broad money (non-oil GDP)                               2.5         2.6
                   GDP, current prices                                                    2.3             11.1     % GDP, unless otherwise stated
                   GDP deflator                                                           -3.1            5.2                             Gross national savings                        -         40.9
                     Oil GDP                                                             -11.6            4.1      Public sector                                                        -         144
                     Non-oil GDP                                                          6.1              8       Private sector                                                       -         26.5
                   Consumer prices                                                                                                        Gross fixed investment                        -         26.2
                     Yearly average                                                         5.5            4       Public sector                                                        -          4.5
                     End of period                                                          4.5           5.9      Private sector                                                       -         21.7
                   % of annual change, unless otherwise stated                                                     % GDP, unless otherwise stated
                                              External sector                                                                              Central government
                   Exports, f.o.b. (FCFA)                                                  -2.1           9.7      Non-oil primary balance (% of non-oil GDP)                         -11.6      -13.3
                     Of which: oil                                                         -4.7           7.2      Primary surplus (base case)                                         9.7        7.6
                   Imports, f.o.b. (FCFA)                                                  15.1           17.7     Domestic bank financing                                             -3.3       -8.1
                   Export volume                                                           5.5            3.4      Nex external financing                                              -3.9       4.4
                   Import volume                                                           16.4           15.7     External current account balance (including official transfers)    16.9       14.8
                   Terms of trade (-: deterioration)                                       -6.1           4.4      External public debt (including to the IMF)                        27.6         *
                                                                                                                                                                                                 34.9
                   Nominal effective exchange rate (-: depreciation)                                       2.1      Total gross public debt                                            36.7        *
                                                                                                                                                                                                  44.5
                   Real effective exchange rate (-: depreciation)                                          5.1
                   Central Government finance                                                                                            Memorandum items
                   Total revenue                                                           0.4             3.4      Nominal GDP (FCFA billion)                                        5,106      5,544
                     Oil revenue                                                           -7.4            5.4      Nominal non-oil GDP (FCFA billion)                                2,713        2,777
                        Non-oil revenue                                                      14.4             19     Price of Gabonese crude oil (thousands FCFA per barrel)             28.6       33.3
                     Total expenditure                                                         -4            3.9
                        Current                                                               -6.2           1.2
                        Capital                                                               -0.5           3.3


                      * Exceptionally high public debt figures between international bond issue (December 2007) and Paris Club debt buyback (January 2008)                                  7
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GABONESE REPUBLIC                                                                          I ECONOMIC PERFORMANCE IN 2007 AND TRANSPARENCY EFFORTS



               Efforts towards diversification of the economy

                   20% increase in non-oil receipts, thanks to
                       The computerization of tax services
                       The establishment of a single tax interlocutor

                   Strengthened control of public expenditure and higher capital expenditures in 2007
                       3.4% increase in capital expenditure
                       Current expenditures over non-oil GDP have decreased to 30.2% in 2007 from 34.6% in 2006




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GABONESE REPUBLIC                                                                                I ECONOMIC PERFORMANCE IN 2007 AND TRANSPARENCY EFFORTS



               Efforts towards increased transparency

                   Transparency
                       Management of oil revenues
                           3rd EITI report submitted in March 2008
                             Survey and comparison of payments to the State reported by the oil companies

                           Reconciliation of oil revenue data from both Gabon’s budget and and the EITI report
                       Fiscal policy transparency and strengthening of implementation follow-up
                           Presentation of the 2008 budget in very tight timing
                           New functional Central Government expenditures classification used for budget preparation
                           Increase to 60% of the share of public contracts awarded on tender
                           Establishment of a Medium Term Expenditure Framework (MTEF) taken into account in the preparation of the budget
                            current and capital expenditures
                           Restructuring and development of the health insurance system financing
                             Employer contributions for employees and civil servants
                             Creation of a 10% tax on mobile phone operators’ income (fully included in the budget) for economically weak Gabonese
                               people in the framework of the Caisse d’assurance maladie




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II      Economic Expectations for 2008
GABONESE REPUBLIC                                                                                                       II ECONOMIC EXPECTATIONS FOR 2008



                Forecasts for 2008 have been revised compared to forecasts made in Dec 07
                   Key features
                     Very good performance of manganese and timber (contributing to non-oil GDP)
                     Lowered expectations for oil production
                     Higher expected oil price – benchmark price: US$111 per barrel
                   Upward revision of 2008 real oil GDP from 2.4% to 4.4%
                     This forecast takes into account SOGARA’ s increased refining capacity
                        Real non-oil GDP growth forecasts remain unchanged at 4.7%
                     Price indexes expectations have been revised upwards, notably because of expected continuous increase in commodities’ prices
                        The rate of growth of GDP deflator has been revised upwards, from 4.9% to 12.2%
                        Consumer prices are expected to increase by 3.8% (3.0% before revision)
                   Fiscal policy
                     Fiscal surplus revised upwards: FCFA 896.5 bn (12.6% GDP), vs FCFA 661.6 bn (11.3%) before
                     Establishment of strict measures
                        FCFA 190.1 bn ceiling on goods and services expenses
                        Non-SOGARA subsidies and transfers capped at FCFA 152.3 bn
                        Capital expenditures limited to FCFA 279.9 bn, of which FCFA 73. 6 bn to be externally drawn
                     Difficult short-term fuel prices adjustment and need to curb rising food prices because of the social context
                        Non-oil primary deficit should be at 11.2% instead of 10.0% as initially forecasted
                        Fiscal revenue loss of approximately FCFA 7 bn due to a suspension of rights and customs duties, value added taxes and all
                           Para fiscal taxes to mitigate rising food prices
                        Almost FCFA 5.7 bn expenditure in 2008 to support the price of flour
                        Fuel subsidies revised upwards to FCFA 102.3 bn
                        Wage bill forecast has been revised upwards from an initial FCFA 311.8 bn figure to FCFA 317.5 bn, vs FCFA 301.2 bn in
                           2007, to record already-taken measures (creation of new institutions and reintegration of temporarily seconded civil servants)

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GABONESE REPUBLIC                                                                                                              II ECONOMIC EXPECTATIONS FOR 2008



                Reforms to increase Gabon’s permanent income

                   Reforms of public finance management
                       Publication in the national press by end-June 2008 of the list of projects selected for the 2008 “fêtes tournantes” and their costs
                           Implementation of these projects in accordance with the budgetary procedures
                       Establishment of a Medium Term Expenditure Framework (MTEF) used for the 2009 budget preparation and better estimate 2008
                        expenditures
                       Audit of cross-debts between the State, businesses and public bodies and of accumulation of arrears vis-à-vis third parties planned
                        for late 2008
                           Consolidation after verification of the financial statements of public companies and local budgets, so that the preparation of a
                            TOFE for the entire public sector is made possible by 2010
                       Establishment of a treasury committee charged with examining budget execution and identify priorities, as well as with designing a
                        quarterly cash plan in line with the program
                       Modeling of oil resources and revenues by KPMG, that will
                           Provide more reliable forecasts
                           Permit a better evaluation of the contracts with oil companies




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GABONESE REPUBLIC                                                                                                        II ECONOMIC EXPECTATIONS FOR 2008



                Reforms to increase Gabon’s permanent income (cont’d)

                   Financial sector liberalization
                       Ongoing efforts to foster an environment conducive to financial sector development
                           Government support to regional authorities in their efforts to monitor that banks comply with prudential ratios
                           Preparation of an action plan to reduce the State’s involvement in banks by end-December 2008 and eliminate the requirement
                            for banks to subscribe to equipment goods issues up to 10% of their deposits
                           Removal of BEAC’ s statutory advances scheduled for January 1st 2009:
                             Currently, BEAC may grant statutory advances to a member State up to a ceiling equivalent to 20% of budget revenues
                              reckoned during the previous year
                             The removal of these statutory advances began in 2002 and should be completed by January 2009

                   External liberalization
                       Contribution to the regional debate regarding external trade liberalization
                           Reduction in CEMAC’s Common External Tariff (CET)
                           Removal of the distortions in the rates applied by the different countries of the CEMAC impeding private sector’s growth

                   Privatizations
                       Continued privatization programme
                           Final disposal to Morocco Telecom of the majority stake of the State in Gabon Telecom
                             The audit of 2006 financial statement was published on the website of the Ministry of Finance
                             The State has assumed the new social plan to consolidate the financial position of the new company




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III Gabon’s New External Debt Profile
GABONESE REPUBLIC                                                                                                III GABON'S NEW EXTERNAL DEBT PROFILE



                Buyback of 86% of Paris Club debt

                   Financing the buyback
                       Buyback of US$1.6 bn Paris Club debt owed to bilateral creditors who have accepted the Government’s tender, with resources
                        coming from
                           An international sovereign bond issue (US$1 bn)
                           A regional bond issue (FCFA81.5 bn) in CEMAC
                           Statutory advances granted by BEAC (FCFA130 bn)
                           Gabon’s own resources for the balance
                       Remaining Paris Club debt outstanding stands at US$260 mn (Germany, Canada, USA, Japan)

                   Agreement with the World Bank concerning the creation of an account (IMA: Investment Management Account) dedicated
                    to repayment of the principal of the international bond debt
                       Gabon will pay up to US$50 mn per year in this fund
                           These funds will be used to either buy back and cancel Gabon’s debt on the secondary market or invest in high quality zero
                            coupon bonds maturing not later than Gabon’s international bond issue . Residual bonds not covered by the IMA is expected
                            to reach approximately 40% of original bond issue at maturity, December 12th 2017
                           The agreement has already signed between Gabon , BEAC and the World Bank




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GABONESE REPUBLIC                                                                                                      III GABON'S NEW EXTERNAL DEBT PROFILE



                Gabon’s external debt profile (excluding IMA)


                US$ billion



                 1.20




                 1.00




                 0.80




                 0.60




                 0.40




                 0.20




                    -
                          2008   2009   2010   2011             2012   2013        2014   2015          2016          2017     2018      2019     2020

                                                      Int Fin            Reg fin          Residual Paris Club debt service




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GABONESE REPUBLIC                                                                                            III GABON'S NEW EXTERNAL DEBT PROFILE



                Gabon’s external debt profile (including IMA)


                US$ billion


                 0,8




                 0,6




                 0,4




                 0,2




                   -
                          2008   2009   2010   2011        2012      2013       2014               2015          2016        2017        2018


                                                 Fin int   IMA    Fin reg   Service Club de Paris Residuel



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GABONESE REPUBLIC                                                   III GABON'S NEW EXTERNAL DEBT PROFILE



                Continuous improvement in the appreciation of Gabon in the secondary
                market
                     9



                 8,5



                     8



                 7,5
                                                                                         Philippines (BB-/BB-)
                                                                                         Jamaica (B+/B+)
                                                                                         Ukraine (B+/BB-)
                     7
                                                                                         Indonesia (BB-/BB-)
                                                                                         Gabon (BB-/BB-)
                                                                                         Ghana (B+/B+)
                 6,5



                     6



                 5,5



                     5
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              /1


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                   /0


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                 09


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                 06


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                 02


                 16


                 30


                 14


                 28


                 11


                 25


                 09


                 23


                 06


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GABONESE REPUBLIC                                                                              III GABON'S NEW EXTERNAL DEBT PROFILE



                Terms of the bond issues


                          GABON’S INTERNATIONAL BOND ISSUE                   GABON’S REGIONAL BOND ISSUE
                Issuer                     Gabonese Republic       Issuer               Gabonese Republic
                Rating                     BB- (S&P, Fitch)        Rating               BB- (S&P)
                Format:                    RegS/144A               Format:              COSUMAF Bond Issue
                Amount                     US$1,000 million        Amount               FCFA81.5 billion
                Coupon                     8.20%                   Coupon               5.5%
                Issue price                100%                    Issue price          100%
                Price                      Mid-swaps + 356 bps     Maturity             December 5, 2013
                Maturity                   December 12, 2017       Profile              Sinkable
                Profile                    Bullet                  Cotation             BVMAC
                Spread over UST            426 bps
                Cotation                   London Stock Exchange
                Co-lead managers           CITI, JPMORGAN




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IV Political Environment
GABONESE REPUBLIC                                                                                                    IV POLITICAL ENVIRONMENT



                The political environment in 2008

                   Political stability has been maintained

                   Formation of a new Government in January 2008 with a 20% reduction in the number of ministries

                   Organization of transparent local elections in April 2008

                   International recognition of Gabon with the election of Mr. PING to the Presidency of the AU commission in March 2008

                   Active participation in resolving conflicts in the subregion (CAR, Chad…)




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GABONESE REPUBLIC




V       Social Environment
GABONESE REPUBLIC                                                                                                                  IV SOCIAL ENVIRONMENT



               The social environment in 2008
                   The main claim of the ‘Expensive Life’ action group relates to rising transport costs

                       One of the main factors to take into account when adjusting fuel prices is the impact on transport costs

                       A possible solution could be an improved management of transport facilities

                   The Caisse d'Assurance Maladie

                       Starts effectively in 2009

                       census of economically weak Gabonese people

                       An additional tax on Western Union transfers is envisaged to complement the tax on mobile telephony (FCFA10 bn)




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