Moody’s, the credit rating agency, has downgraded Gabon’s credit rating, shifting its economic outlook from “stable” to “negative” following the coup d’état on August 30, 2023. The primary role of rating agencies like Moody’s is to assess the risk of default on a borrower’s debt. Moody’s justifies its decision by citing the “political uncertainty” in Gabon, even as the country’s new Prime Minister seeks to reassure stakeholders.
In Gabon, a few weeks after the coup d’état, Moody’s downgraded the country’s credit rating overnight on September 12th and 13th, 2023. The agency revised its economic outlook for Gabon to “negative,” particularly concerning the country’s ability to meet its debt obligations.
In a statement, Moody cites “political uncertainty” in the country following the August 30, 2023 coup that ousted Ali Bongo Ondimba. Moody’s also expresses concern about Gabon’s suspension from the Central African Economic and Monetary Community (CEMAC), which, according to the agency, “increases the risk of liquidity shortage in the country” and could hinder its ability to service its debt.
A “Prudent Measure”
According to a source familiar with financial circles, Moody’s decision is not considered a severe setback but rather a “prudent measure.” The source notes, “Investors understand that it’s business as usual with the new authorities.”
On September 13th, the Committee for Transition and Institutional Restoration (CTRI), the body behind the coup, reactivated a “task force for monitoring domestic and foreign debt.” This move, according to our source, is a response to the rating agencies’ decisions and serves as a signal that there is no disruption in the country’s responsibilities.
On the same day, Gabon’s new Prime Minister, Raymond Ndong Sima, assured Bloomberg that “Gabon will undoubtedly honor its debt obligations.” This statement aims to provide reassurance to international stakeholders amid the evolving political landscape in Gabon.