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Investing.com -- Fitch Ratings maintained Gabon’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ’ CCC (WA:CCCP)’ on Friday, reflecting the country’s ongoing fiscal challenges despite its higher GDP per capita compared to peers.
The rating agency cited Gabon’s high dependence on volatile hydrocarbon revenue and persistent public finance management problems as key factors behind the decision. These weaknesses are further complicated by limited access to regional debt markets and external funding sources.
Following presidential elections in April 2025 won by transitional president Brice Oligui, the new government aims to balance the budget excluding capital expenditure by 2026. The election outcome removes an obstacle to obtaining concessional funding from some multilateral lenders, though detailed fiscal and economic programs are still being developed.
Fitch estimates government spending increased by 15% in 2024, with the budget deficit reaching 2.5% of GDP on a commitment basis. This included increased payroll spending and a surge in capital expenditure from 2.3% of GDP in 2023 to 5.5% in 2024, primarily focused on short-term projects in the capital.
The country continued to accumulate arrears, estimated at 2.8% of GDP in 2024, bringing the budget close to balance on a cash basis. These arrears include 1.6% of GDP to external creditors and about 1.2% to domestic suppliers.
The rating agency projects budget deficits will persist in 2025 and 2026 at 2.4% and 2.1% of GDP respectively on a commitment basis. Fitch expects Gabon to continue accumulating arrears, though at a slower pace.
Gabon’s debt is forecast to remain stable at around 75.3% of GDP in 2025 and 74.3% in 2026, compared to 72.9% in 2024. This stability reflects lower nominal GDP due to decreased oil prices and slower economic growth in 2025.
The country refinanced its remaining 2025 maturity in the first quarter of 2025 with a new $570 million bond maturing in 2028 and 2029, yielding 12.7%. The next Eurobond principal payments are due from 2028, reducing the risk of default in the short term despite liquidity constraints.
Gabon completed an exchange of local-currency regional market bonds and bills on April 28, 2025, which Fitch determined did not constitute a default event. This exchange reduced debt repayments by approximately 1.4% of GDP in 2025 and 0.8% in 2026, while significantly extending the country’s debt maturity profile.
Real GDP grew by 3.4% in 2024, with oil GDP rising 3.1% and the non-oil economy expanding 3.4%. Fitch projects growth will slow to 2.2% in 2025 due to weaker oil growth and reduced government spending stimulus.
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