LIBREVILLE: Fitch Ratings has cut Gabon’s credit rating further into junk territory, citing widening government deficits and declining demand for the country’s debt.
The ratings company said in a statement last Friday that it had downgraded the nation’s long-term foreign currency rating for the second time this year, to CCC- from CCC.
“Widening fiscal deficits, increasingly limited regional debt market access, a dearth of official creditor financing and high amortisations have resulted in severe strains on domestic and external government liquidity and rising arrears,” Fitch said.
Fitch downgraded Gabon’s long-term foreign currency rating in January based on fiscal constraints, including limited regional market access and rising arrears to creditors.
The ratings company said that “demand for Gabonese bonds has been declining”, noting that several auctions this year had bid to cover ratios below 50%.
Gabon is moving to clear arrears with some of its partners following the April presidential election victory of Brice Oligui Nguema, an army general who seized power in a 2023 coup.
The government said this week that it will begin an audit of mining contracts as it seeks to strengthen governance amid talks with the International Monetary Fund (IMF) for a new lending programme.
Fitch’s base case scenario assumes no additional help from the IMF.
The ratings company said that obstacles to a new programme include the government’s expansionary fiscal policy, its continuous accumulation of external arrears and the “likely requirement of drastic and unpopular policy changes”.
The previous programme was suspended after Nguema seized power.
Rising debt levels could also complicate negotiations.
Fitch forecasts that government debt will reach 80.4% of gross domestic product this year and 85.5% in 2026, while cautioning that a “lack of visibility” means levels may be even higher than predicted. — Bloomberg
