SerpApi.Org
By Colleen Goko
JOHANNESBURG, July 21 (Reuters) - Gabon's government is expecting a wider deficit and has budgeted for a Eurobond issuance this year, a document published on Tuesday shows, laying out financing plans that could complicate a new programme with the International Monetary Fund.
In the document detailing the revised 2026 budget, the government authorised borrowing of up to $1.5 billion (857.85 billion CFA francs) on international markets this year. The new budget slashes overall revenue projections by 22% to 3.24 trillion CFA francs. The revised 2026 budget was signed by President Brice Clotaire Oligui Nguema on July 17.
Years of political instability have saddled Gabon with an economic crunch and dwindling foreign currency reserves. The nation formally requested an IMF programme in March. Rating agencies, including Fitch, had already warned that the large fiscal deficit in the 2026 budget will make obtaining an IMF loan difficult.
The budget document shows an overall financing gap of 915.6 billion CFA francs for the year, some 13% higher than figures in December.
Kevin Daly, investment director of emerging market debt at Aberdeen Investments, said the revised deficit and the inclusion of a Eurobond would likely have consequences for negotiations with the IMF.
"If it (a new programme) does happen, it will be later in the year or drags into 2027," he said.
BOND MARKETS REACT
Government bonds across all maturities fell. Those due in February 2031 dropped 1.6 cents on the dollar to bid at 84.98 cents, Tradeweb data showed. Those due in 2029 fell 1.2 cents to 94.27 cents.
Nicholas Sauer, portfolio manager at Robeco, said the supplementary budget had not alleviated any previous concerns.
"Gabon and the broader CEMAC region would be well-served by multilateral, IMF-led, assistance given the extreme tightness of local financial markets, but this now seems to have been postponed and instead replaced by market funding," he said.
The revised budget lands as Gabon awaits the findings of an audit detailing years of public borrowing. The public debt audit is reviewing 2016-2024 records for undisclosed liabilities, unexecuted projects and funds that did not reach Treasury accounts — a review credit rating agency Moody's has said could uncover additional unreported debt.
"With debt levels already above 70% of GDP, any upside surprises have the potential to push debt into relatively hazardous territory," Sauer said.
The government also provisioned 424.9 billion CFA francs in domestic Treasury bond issuance.
($1 = 569.5000 CFA francs)
(Reporting by Colleen Goko;Editing by Alexander Winning, Alison Williams, William Maclean)
