Following a coup, a contentious election and four different finance ministers – all within the past three years – Gabon is turning back to the International Monetary Fund to help put its fiscal house in order.
Its push for an IMF loan – a prerequisite to unlocking investor cash and other international funding – could help stabilise the Central African OPEC-member’s finances. It will also likely have significant implications for its cash-strapped regional neighbours.
However, while investors and ratings agencies view an IMF programme as crucial, worries over Gabon’s debt transparency and the government’s will to push through tough reforms have bred skepticism.
“The programme is far from a done deal,” said Jose Mantero, sovereign analyst at Fitch Ratings.
“Significant obstacles remain, including the government’s expansionary fiscal policy and the likelihood of drastic, unpopular reforms, both of which are politically challenging in the current environment.”
The Fund on Friday wrapped up a 10-day visit to Gabon – its first since the government said it wanted an IMF loan after toying with the idea of tapping the market for over a year.
Concluding the visit, the IMF said talks would continue, adding that prudent policies were critical to safeguarding stability not only in Gabon, but in the broader region as well.
The talks were the first since several nations in the Central African Economic and Monetary Community (CEMAC) signalled they too would seek IMF help amid a regional funding crunch that has left low-rated nations with limited financing options.
GABON’S PATCHY RECORD, DATA CONCERNS COMPLICATE IMF PUSH
Years of political instability have saddled Gabon, the second-largest CEMAC economy, with an economic crunch and dwindling reserves.
Ahead of last week’s visit, the finance ministry said turning to the IMF was “part of the government’s will to strengthen transparency, budget rigidity and sustainability of public finances.”
The government has yet to make a formal request to the IMF for a new programme.
Meanwhile, its patchy track record and transparency concerns could complicate Gabon’s wooing of the Fund. Its last programme – a three-year facility approved in 2021 – “veered off-track” just a year later, according to the IMF.
And non-profit Open Data Inventory, which assesses countries based on the openness of official statistics, ranks Gabon 171st out of 198 countries.
“The challenge in Gabon is a lack of data,” said Carmen Altenkirch, emerging markets sovereign analyst at Aviva Investors.
Poor data makes it difficult to know how much fiscal adjustment – for example spending cuts, revenue increases, or a combination of both – Gabon would require.
“We still have some concerns as to the magnitude of fiscal spending in 2025, the level of public debt,” said Yvette Babb, a portfolio manager at William Blair.
That fog means the IMF may not even know yet what authorities must do to get a loan, making a deal unlikely until later this year, according to Babb.
What data is available, meanwhile, is concerning. Fitch Ratings warned late last year that the large fiscal deficit in the 2026 budget will make obtaining an IMF loan difficult.
REGION UNDER STRESS, PRESSURE ON GABON TO CLEAN UP ITS ACT
Gabon’s push to get back into the IMF’s good graces matters beyond its borders.
Civil unrest flared last year in Cameroon, the CEMAC bloc’s largest economy, after a contentious election handed 93-year-old President Paul Biya an eighth term. Security issues pervade the region, which also includes Chad, Republic of Congo, Equatorial Guinea and the Central African Republic.
Gabon had increasingly leaned on the CEMAC market for borrowing, Fitch Ratings said, but serious liquidity stress in the region means fresh funding beyond rollovers will be scarce.
“From a liquidity perspective, the regional market is extremely tight with limited ability to issue long-dated bonds locally,” said Daniel Lebetkin, Africa Debt Financing Director at Citi.
International markets are also expensive for Gabon and fellow CEMAC nations such as Republic of Congo, both of which have debt ratios that exceed the key threshold of 70% of GDP.
In November, Republic of Congo raised $670 million in a private placement priced with a reoffer yield of 13.7% – beyond what many analysts deem sustainable.
Cameroon and Republic of Congo routinely ask investors for financing via private placements, said Thys Louw, a portfolio manager with the emerging markets fixed income team at Ninety One.
“The only way out, really, for the region is to all be on IMF programmes,” he said.
Recent oil price spikes, driven by war in the Middle East, help oil producers. But a lack of financing options with debt repayments looming is nonetheless piling pressure on Gabon to do what is required to satisfy the IMF, investors said.
“It’s a game changer in the sense that there is regional pressure on (Gabon’s) government to fall in line and make good on this,” said William Blair’s Babb.
