Large Deficit in Gabon Budget to Make IMF Funding Support Difficult
The very large fiscal deficit presented in Gabon’s budget for 2026 will make it difficult for the country to secure funding support through a new IMF programme, Fitch Ratings believes.
In its commentary note, Fitch said the authorities’ plans for a steep increase in capital spending are unrealistic and will be prevented by financing constraints, meaning that the deficit will be much smaller than the 15% of gross domestic product (GDP) budgeted.
The council of ministers in early September approved the 2026 draft budget that plans a near-doubling in spending (up by 97%) compared to the 2025 budget law, to 44% of GDP – excluding debt amortisation and changes in arrears.
This includes a 570% rise in capex. Revenue is targeted to increase by 22%, resulting in a budget deficit of about 15% of forecast GDP.
The spending targets, including for capital expenditure, are far above what Fitch analysts had expected when the rating agency affirmed Gabon’s Long-Term Foreign-Currency Issuer Default Rating at ‘CCC’ in June 2025.
Fitch has predicted fiscal deficits of 2.4% of GDP in 2025 and 2.1% in 2026. The authorities aim to fund about 60% of the 2026 deficit domestically and 40% from external sources, which would bring government debt close to 90% of GDP, from 73% at end-2024.
The budget signals a high priority placed on infrastructure improvements, but the planned deficit and spending levels highlight low policy credibility.
The budget forecasts Gabon’s economy to grow by 7.9% in 2026, spurred by public spending, while Fitch projects real GDP to increase by 2.6%, implying lower non-oil revenue growth than budgeted.
The authorities expect oil output to fall by about 3% year on year in 2026. The budgeted 36% rise in oil revenue in 2026 compared with 2025 thus implies a significantly larger share of oil revenue will be remitted to the government.
The acquisition of Assala Energy by the state-owned Gabon Oil Company in 2024 could facilitate the increase in government receipts. However, the transaction was financed with borrowing that will encumber a portion of future oil production, and under undisclosed terms.
The government expected oil price of about USD65.1/barrel next year is in line with Fitch’s projection for Brent.
Analysts noted that Gabon relies heavily on the CEMAC regional sovereign bond market for borrowing, and this reliance is increasing. However, liquidity in the market remains strained, despite a March 2025 rate cut and the highest level of liquidity injections since 2021.
Fitch therefore believes the regional market will be unable to provide significant net new funding in 2025-2027, although rollovers should be accommodated. In this context, securing new programmes with official lenders appears to be key to anchor policy and catalyse external financing.
The authorities plan to secure a new IMF programme in 2026. Arrears to multilateral lenders have been cleared, but it is unclear at this stage what conditions the IMF would set as part of any new programme. We believe the IMF is unlikely to allow for substantial non-concessional borrowing to finance a budget deficit of anything near 15% of GDP.
Fitch in June said that Gabon’s rating could come under downward pressure if the government were unable to secure a support programme from multilateral institutions, resulting in an increase in external financing pressures.
Recent press reports state that Gabon is starting to audit external debt. Fitch believes this relates to ongoing efforts, by a task force that reviews both domestic and external supplier claims before recognising them as debt, to ensure project milestones for disbursement have been met.
“We do not expect a significant adjustment to the debt metrics; our government debt numbers already include an amount for debt contracted but not yet recognised”. Nigerian Bonds Return Reduces Ahead of Reopen Offers
