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Moody's Warns: Gabon Faces Default Risk Over Debt
25 Jun
Summary
- Moody's downgraded Gabon's outlook to negative due to debt concerns.
- Gabon plans audit of borrowing and seeks new infrastructure funding.
- World Bank provided $150 million to tighten public finances.
Moody's has revised Gabon's financial outlook to "negative" from "stable," citing substantial funding requirements and restricted access to finance. The credit rating agency expressed concern that ongoing debt exchanges could be deemed distressed, potentially signaling a default.
Gabon's government is initiating a thorough audit of its historical borrowing practices. This move is part of an effort to secure new funding for essential infrastructure projects, addressing long-standing fiscal management issues.
Moody's cautioned that the audit might reveal previously undisclosed liabilities, further jeopardizing debt sustainability. A recent $150 million agreement with the World Bank aims to bolster public finances, adding to the institution's total commitment.
While an IMF program could improve borrowing capabilities over time, near-term funding challenges persist. Current market conditions indicate that any new international debt issuance would likely incur higher costs for Gabon.
