Fitch Ratings has downgraded Gabon’s sovereign credit rating further into junk territory, citing widening fiscal deficits, mounting liquidity pressures and weakening investor appetite for the oil-producing country’s debt.
The ratings agency said it had lowered Gabon’s long-term foreign-currency issuer default rating to CCC- from CCC, marking the second downgrade this year and underscoring the heightened risk of default.
Fitch Ratings said the decision reflects growing budget shortfalls, constrained access to the regional debt market and heavy near-term debt servicing obligations. It also pointed to limited financing options from official creditors, which have compounded liquidity strains.
According to Fitch, Gabon faces “acute” financing pressures as borrowing conditions tighten and investor confidence weakens. Demand for Gabonese government securities has deteriorated sharply, with recent bond auctions attracting participation ratios of below 50 percent, a sign of waning appetite among investors in the regional market.
The downgrade comes at a difficult time for Gabon’s public finances. Although the country is a significant oil producer, revenue gains from higher crude prices have been insufficient to offset rising expenditure and structural weaknesses in fiscal management. Budget deficits have widened, while arrears to suppliers and creditors have continued to accumulate.
Fitch said access to the Central African regional debt market has become increasingly constrained, limiting the government’s ability to roll over maturing obligations. The agency also highlighted heavy debt repayments falling due in the near term, raising the risk of payment delays or restructuring.
Gabon’s total public debt remains elevated relative to peers in the Central African Economic and Monetary Community (CEMAC), analysts say, leaving little room for fiscal manoeuvre. The country has previously relied on a mix of domestic borrowing and external financing, but both channels have become more challenging as investor sentiment has soured.
The downgrade adds to pressure on the authorities to restore confidence through fiscal consolidation and governance reforms. Fitch noted that the government has signalled its intention to address domestic arrears and strengthen transparency, including by auditing mining and extractive-sector contracts, a key source of state revenue.
More Read
Such measures form part of a broader effort by the transitional authorities to improve public financial management following the 2023 military takeover, which ousted long-time president Ali Bongo Ondimba. The change in leadership initially raised hopes of reform, but progress has been uneven amid fiscal constraints and social pressures.
Fitch cautioned that Gabon’s rating remains vulnerable to further downgrades if financing conditions deteriorate further or if the government fails to secure sufficient funding to meet its obligations. Conversely, an improvement in liquidity, stronger budget discipline or successful engagement with creditors could help stabilise the outlook.
Sovereign ratings in the CCC category indicate a very high level of credit risk, with default considered a real possibility. For Gabon, the latest cut is likely to further raise borrowing costs and complicate efforts to return to international capital markets.
As one of Africa’s more affluent countries on a per-capita basis, Gabon has long relied on oil revenues to underpin its economy. But analysts say that without deeper structural reforms and more credible fiscal adjustment, the country will continue to face acute debt stress a challenge now firmly reflected in its deepening junk status.
Background on Fitch rating on Gabon
Gabon’s downgrade highlights long-running structural weaknesses in an economy heavily dependent on oil revenues and vulnerable to swings in global commodity prices. Despite relatively high income per capita compared with many African peers, fiscal management has been uneven, with periods of strong oil receipts often followed by rising public spending and weak budget discipline.
The country has struggled for years with arrears to suppliers, pension funds and regional institutions, undermining confidence in public finances. While oil accounts for the bulk of export earnings and a significant share of government revenue, production has stagnated and diversification efforts have yielded limited results.
Public debt rose sharply after the Covid-19 pandemic, when Gabon increased borrowing to cushion the economic shock. Since then, higher global interest rates and tighter financial conditions have made refinancing more difficult, particularly within the Central African regional market, where investor appetite has cooled.
Gabon is a member of the Central African Economic and Monetary Community (CEMAC), which uses the CFA franc and pools foreign exchange reserves. While the arrangement provides currency stability, it also limits monetary flexibility, leaving fiscal policy as the main adjustment tool. Regional authorities have repeatedly urged member states, including Gabon, to rein in deficits and clear arrears to preserve macroeconomic stability.
Fitch Ratings said Gabon’s limited access to both regional and external financing has heightened liquidity risks, with heavy debt repayments falling due in the near term. The agency noted that reliance on short-term domestic borrowing has increased rollover risks at a time when investor participation in bond auctions has weakened sharply.
Political uncertainty has added to investor caution. Gabon has been governed by a transitional administration since the August 2023 military takeover that ended more than five decades of rule by the Bongo family. While the new authorities have pledged to improve governance, audit public contracts and strengthen transparency, credit rating agencies say implementation has been slower than markets had hoped.
Gabon previously entered an International Monetary Fund-supported programme in 2021 to stabilise public finances, but progress was disrupted by the pandemic and later political developments. Talks with external partners have continued, though no new IMF programme has yet been finalised, limiting access to concessional financing.
Ratings in the CCC range signal that default is a real possibility unless financing conditions improve or policy adjustments are accelerated. Analysts say restoring confidence will require tighter fiscal control, clearer debt management strategies and sustained reforms to broaden the revenue base beyond oil.
For now, Gabon’s deepening junk status underscores the challenges facing even resource-rich African economies as they confront higher borrowing costs, fragile investor sentiment and shrinking fiscal space.
