Moody’s affirms Gabon’s Ba3 ratings; outlook stable

Libreville, Gabon, Capital Markets in Africa —- Moody’s Investors Service has today affirmed the Republic of Gabon’s Ba3 issuer and government bond ratings. The outlook is stable.

The key drivers behind Moody’s decision to affirm the Ba3 ratings are:

(1) Moody’s expectation that the oil shock-induced deterioration in the government’s debt profile will reverse from 2017 onwards and will remain in line with similar rated peers; 

(2) the country’s membership of the Economic and Monetary Union of Central Africa (CEMAC in French) and the franc Zone, which limits Gabon’s susceptibility to external shocks during the period of adjustment to lower global oil prices.

Gabon’s country and deposit ceilings remain unchanged at Baa3.

The stable outlook reflects Moody’s expectation that the deterioration in government debt and fiscal positions will be contained and ultimately reverse from 2017 onward. The growth outlook is expected to remain healthy and external risks induced by the terms of trade shock limited.

What could move the Rating up/down 
Better-than-expected containment of the government’s fiscal deficits and debt, progress in the diversification of the economy, and decreased reliance on oil revenues for government finances could lead to upward pressure on the ratings.

Conversely, downward rating pressure will increase if the government’s finances deteriorate faster than expected in Moody’s baseline scenario and fail to reverse over the considered horizon.

Key Economic Indicators: 
— GDP per capita (PPP basis, US$): 20,756 (2014 Actual) (also known as Per Capita Income) 
— Real GDP growth (% change): 4.1% (2014 Actual) (also known as GDP Growth) 
— Inflation Rate (CPI, % change Dec/Dec): 1.7% (2014 Actual) 
— Gen. Gov. Financial Balance/GDP: 2.6% (2014 Actual) (also known as Fiscal Balance) 
— Current Account Balance/GDP: 7.5% (2014 Actual) (also known as External Balance) 
— Level of economic development: Low level of economic resilience 
— Default history: At least one default event (on bonds and/or loans) has been recorded since 1983.

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