CREDIT ratings agency Fitch has taken action on Tuesday by placing Gabon on ‘rating watch negative’ (RWN) as a result of heightened political uncertainty in the Central African nation. The uncertainty stems from a military coup that occurred last month, marking the eighth coup in West and Central Africa in just three years.
On August 30, military officers seized power in Gabon shortly after announcing the annulment of President Ali Bongo’s election victory, claiming it lacked credibility. In response to this development, Fitch conducted an unscheduled review and decided to place Gabon’s ‘B-‘ Long-Term Foreign-Currency and Local-Currency Issuer Default Ratings on RWN.
Fitch’s decision is primarily due to concerns that the coup may have negatively impacted Gabon’s financial outlook. The agency suggests that the operational capacity of institutions responsible for treasury and debt management may have been compromised. Additionally, the coup may have affected Gabon’s access to regional debt markets.
Fitch stated, ‘We assume Gabon will rely more on the regional market for financing at higher interest costs as the coup heightens the market’s nervousness.’ The credit ratings agency also pointed out that the resumption of Gabon’s IMF programme is now unlikely.
In response to the coup, the Central African bloc ECCAS (Economic Community of Central African States) suspended Gabon’s membership. However, as of now, ECCAS has refrained from imposing sanctions in response to President Bongo’s ouster, further adding to the political uncertainty in the region.