Fitch tightens liquidity and lowers Gabon’s rating further into junk due to skyrocketing debt

Gabon’s long-term foreign-currency issuer default rating was reduced from “CCC” to “CCC-” by global credit ratings agency Fitch on Friday, citing the government’s restricted access to regional debt markets and growing fiscal deficits.

“The significantly higher local-currency funding needs and greater strains in local-currency financing conditions explain the differential between the Local- and Foreign-Currency IDRs,” the rating agency stated in a statement.

According to Fitch, Gabon has been under increasing strain as a result of diminishing oil output over time, ambitious public expenditure plans, and increased debt concerns weighing on the outlook. As a result, the appetite for government debt has significantly deteriorated in the second half of the year.

The World Bank however cautioned that Gabon’s financial situation is still precarious despite a recent political shift and reform momentum.

According to Fitch, a large budgetary expansion will propel the Central African country’s government debt to rise significantly to 80.4% of GDP in 2025.

Additionally, the agency upgraded the country’s long-term local currency IDR rating from “CCC” to “CC”.