Gabon’s sovereign risk rating has been adversely affected by declining oil production and lower global oil prices, which will lead to a weakening in the fiscal and current-account positions. A plunge in the exchange rate against the dollar is also magnifying the external debt burden.
Banking sector risk
The banking sector risk score will remain vulnerable to the widening fiscal deficit, given banks’ exposure to public entities and government suppliers. However, ample liquidity and access to central bank refinancing should limit the downside risks.
Anti-government protests will continue to pose recurring challenges to political stability as the government struggles to address public grievances in the context of falling oil revenue. However, the risk of regime overthrow is limited by good relations between the army and the president, Ali Bongo Ondimba, as well as by some limited efforts to open up the political spherefor instance by lifting unpopular bans on opposition parties.
Economic structure risk
Despite some progress with economic diversification and relatively low levels of public debt, Gabon’s overdependence on oil remains the primary structural risk. With the current account expected to slip into deficit in 2015 and the fiscal position also deteriorating, the BB rating is increasingly at risk.