Gabon’s Finance Chief Asks Creditors for Relief After Oil Rout
Gabon’s Finance Chief Asks Creditors for Relief After Oil Rout
Gabon is seeking debt relief from its creditors as the weight of the oil rout and the global coronavirus pandemic batters its economy.
The oil-dependent central African nation needs a debt moratorium or the cancellation of certain obligations, especially old debt that the government has “been paying for several years,” according to Finance Minister Jean-Marie Ogandaga. He’s in talks with all the country’s multilateral creditors for relief and has written to the government’s Chinese partners and Afreximbank, Ogandaga said by phone from the capital, Libreville.
The country started 2020 with Africa’s first Eurobond sale of the year, going to the market in January asking for $1 billion and getting $3.5 billion in offers. The debt was issued at a yield of 6.625% and that has since surged to 10.233%. The country’s average dollar spreads stand at 1,100 basis points over U.S. Treasuries, according to Bloomberg Barclays indexes, which is considered to be distressed territory by some investors.
By the middle of February, Ogandaga even said the country may issue another Eurobond before the end of this year, and put economic growth for 2020 as high as 5%. Expansion is now forecast at between 0.3% and 0.5%, he said. Whereas the government had a budget forecast of oil being $57 dollars a barrel, it’s reduced the price estimate to $26.
“If you suddenly started earning half your salary, how can you continue paying your debt as per normal,” Ogandaga said. “The state doesn’t function differently to us at home”.
OPEC’s second-smallest member last month announced a 250 billion CFA franc ($412 million) economic package to manage the impact of the coronavirus. President Ali Bongo said 225 billion CFA francs will be used to support companies severely affected by the virus, while 6 billion CFA francs will be allocated monthly for electricity and water bills. The International Monetary Fund approved a $147 million payment to Gabon under its Rapid Financing Instrument to address the impact of the pandemic.
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