Fitch Ratings raised its outlook on Gabon to stable from negative and affirmed the long-term foreign-currency issuer default rating at B.
The rating agency said the revision reflects an improvement in the African country's reform efforts, which enabled the government to access official external financing, and the completion of required actions to conclude the second review of the International Monetary Fund's extended fund facility in August 2018.
"Constrained financing options due to reduced access to external private funding and the interruption of central bank lending have ... given the Gabonese government a strong incentive to demonstrate its commitment to the IMF [program] in order to preserve access to official financing and rebuild fiscal buffers," Fitch said.
Fitch expects Gabon's gross financing needs to decrease to 8% of GDP this year and in 2019 from 10.7% in 2017, supported by gradual fiscal adjustment. The debt watcher also expects the fiscal cash deficit to shrink to 2.2% of GDP this year from 3.4% last year, driven by higher oil prices and economic recovery. Gross general government debt is expected to decline to 59.8% of GDP from 62.7% in 2017.
The rating agency expects Gabon's GDP to grow 1.5% this year and 3% in 2019 from 0.5% in 2017, and the current account deficit to narrow to 2.2% of GDP in 2018 and 1.4% in 2019.