Global credit ratings agency Fitch downgraded Gabon’s long-term foreign-currency issuer default rating to “CCC-” from “CCC” on Friday, citing widening fiscal deficits and the government’s limited access to regional debt markets.
“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 ratings agency said in a statement.
The appetite for government debt has weakened substantially in the second half of the year, Fitch said, as Gabon has been under growing strain, due to declining oil output over time, ambitious public investment plans and rising debt risks weighing on outlook.
The World Bank had also warned, opens new tab that despite a recent political transition and reform momentum, Gabon’s fiscal position remains fragile.
Fitch expects that the Central African nation’s government debt will substantially increase to 80.4% of its GDP in 2025, driven by a significant fiscal expansion.
The agency also changed the nation’s long-term local-currency IDR rating to “CC” from “CCC”.
