Gabon Tackles Record Debt of $15 Billion by 2025

The Gabonese government is facing a daunting task in managing its public debt, which has reached an unprecedented $15 billion by 2025. The economy of the Central African Monetary Community (CEMAC) is under intense pressure to balance its books, with tensions over trésorerie and increased reliance on regional markets exacerbating the issue.

A Rising Debt Trajectory

The rising debt burden poses a significant question mark over the country’s fiscal sustainability. Historically, Gabon has been praised for prudent macroeconomic management in the early 2000s, but recent events have undermined this reputation.

The combination of falling oil prices, the COVID-19 pandemic and increased borrowing on regional markets have all contributed to the current crisis. The current debt stock is largely external, with a significant proportion attributed to eurobonds issued between 2013 and 2020, while domestic debt continues to grow in weight.

The Transition of Oligui Nguema

Since taking office in August 2023, General Brice Clotaire Oligui Nguema has made restoring fiscal balance a key plank of his economic agenda. The Committee for Transition and Restoration of Institutions (CTRI) has announced several audits aimed at identifying litigious claims and authenticating legitimate claims to free up funds for public investment.

However, the transition remains constrained by an ambitious remittance schedule, with several eurobond repayments due in the coming years. Libreville’s test run on international markets in 2024 failed to resolve the underlying issue, leaving investors hoping for improved visibility and dialogue with the International Monetary Fund (IMF).

Petroleum, Manganese and Timber: Drivers of Revenue

Gabon’s ability to absorb this debt burden depends largely on the performance of its export-oriented sectors. Oil remains the mainstay of government revenue, despite production levels declining slightly from 200,000 barrels per day.

The country’s manganese production, courtesy of Comilog, a subsidiary of Eramet, is also a significant contributor to export earnings. Additionally, timber exports, backed by the Nkok economic zone, round out the tripartite mix.

Accelerating Infrastructure Development

Authorities aim to accelerate infrastructure projects to bolster non-oil driven growth. The Transgabonaise and several energy-related partnerships are expected to drive activity beyond 3% annually, a necessary condition for stabilizing debt-to-GDP ratios.

If this target is not met, Gabon’s creditworthiness may further deteriorate, following successive downgrades from international rating agencies in recent years.