GABON

RISK RATING
High
Default High Risk Score 6.00
Normal Average 4.65
Weighted Average 4.38
RISK RATING HISTORY
RISK RATING SCALE

Risk Rating Scale

Severe: 8.0 to 10
High: 6.0 to 7.9
Elevated: 4.0 to 5.9
Moderate: 2.0 to 3.9
Low: 0.0 to 1.9
EXCHANGE RATE
Country Outlook

Despite a ballooning twin budget and current account deficit, IMF financial support should mitigate debt servicing risks and the economy is well-placed to recover quickly once oil prices bounce back. The IMF’s intervention has been the main driver of economic stabilisation after years of stagnant growth and divestment. However, plans for a dynastic succession and emerging corruption scandals undermine the stability of the Gabonese political system. The continuation of the Bongo family dynasty may augur lower contract risks for foreign investors in key sectors such as oil and gas, forestry, and banking. Any sudden change in government or a pivot to the opposition would expose businesses to contract reviews, politically motivated corruption probes, and demands for kickbacks. A smooth succession would allow the de facto business-friendly and experienced administration to remain in place, thus mitigating commercial risks.

  • President Ali Bongo Ondimba has been trying to reassert his authority after months of recuperation following a stroke in November 2018. Bongo has been eliminating potential political rivals who might challenge him for the succession. The appointment of Bongo family loyalist Rose Raponda as new prime minister is also meant to shore up the president‚Äôs authority. Only the president‚Äôs family and closest advisors are aware of his actual medical state. There has also been growing speculation that Bongo intends to step down at the 2023 elections in favour of a family member, just like he inherited the presidency from his father. The Bongo family member being positioned most evidently onto a succession path is the president‚Äôs son Noureddin Bongo-Valentin.
  • Civil and military unrest remain likely due to ongoing political instability and weak economic performance. There will remain a heightened risk of military and civil unrest as long as there is no clarity on the condition of President Bongo and the government does not initiate constitutional provisions for the presidential succession. The risk of public and private sector strike action is also growing in reaction to spending cuts and plans to reform the oil sector. There is a high threat of opposition leaders inciting widespread violence among their supporters, particularly in major cities such as the capital, Libreville, and the city of Port-Gentil.
  • Debt sustainability is becoming a real concern. Gabon‚Äôs Eurobonds have traded at spreads of more than 1,000 basis points over US treasuries, the point above which the securities are considered to be distressed debt. Before the pandemic, the government had been stabilising its debt levels, with government debt falling to 54 percent of GDP compared to 63 percent just three years ago. As the budget deficit and current account deficit balloon, Gabon is likely to seek more debt to balance its fiscal status and buffer the currency. However, the country‚Äôs solid economic performance and the fiscal consolidation over past years should contribute to a rapid economic recovery from next year. The BCEAO acts as a safety net protecting the country with solid reserves and the possibility to use part of the cash liquidity to plug the budgetary deficit.
CUMULATIVE AND DAILY COVID-19 INFECTIONS AND DEATH RATE
INTERNATIONAL MONETARY FUND | DATAMAPPER
Risk Perils
Political Instability
4.5
Expropriation, Nationalisation, Confiscation & Deprivation
3.5
Contract Frustration & Breach
3.5
Taxation
4.5
Bribery & Corruption
6.0
Regulatory Burden
5.0
Strikes, Riots & Civil Commotion
5.0
Security
3.5
Sovereign Default
5.0
Economic Volatiliy
6.0

Risk Rating Scale (small)

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