The report is a joint InternationalMonetary Fund IMF-World Bank Financial Sector AssessmentProgram (FSAP), which examined Gabon's macroeconomicand financial context, and identified its financialsoundness, as well as vulnerabilities. The country'sfinancial sector is overall, profitable and stable, thoughstill relatively underdeveloped. Banks - which dominate thefinancial sector - find their activities and growthpotential, limited by the size of the non-oil economy, giventhat financing of the oil sector is largely undertakenoutside the country. While the government retains a strongrole in the financial sector, as owner and as client,through public enterprises, solvency levels in some of thebanks are close to the forthcoming regulatory minimum ofeight percent (effective in 2004).This risk is enhanced bythe banking sector's portfolio concentration. Moreover,fiscal problems have in the past had direct, and indirectnegative repercussions on the performance of the financialsector. The report further analyzes the legal, regulatoryand supervisory issues, stating the judicial system isdeficient, enhancing risks and costs of doing business,including for the financial sector, while the insurancemarket is for the most part, stagnant, and lacking productinnovation. Recommendations for legal and judicial issuesinclude a strengthened framework that enables transparency,including predictability in the disposition of financialsector litigation; and, recommendations for the financialsector development suggest pursuing adequate riskdiversification strategies; merging with regional stockexchanges; and, identifying financial mechanisms toestablish a micro-finance sector.
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