(Bloomberg) -- Gabon is finalizing a plan to reorganize its debt as the effects of the coronavirus and last year’s crude-price slump weigh on the oil-reliant economy.
The central African government “has been working for some time with advisers handling its operations on financial markets,” Economy Minister Nicole Roboty Mbou said in an emailed response to questions. Until then, it will “continue to honor its commitments in spite of the impact of the Covid-19 crisis,” she said.
Gabon, a member of the Organization of Petroleum Exporting Countries, has $736 million outstanding on its $1.5 billion 2024 bonds. It also continues to service debt on a $1 billion issuance due in 2031 and $700 million 2025 sinkable bonds, according to Bloomberg data.
The pandemic has increased pressure on an economy weighed down by debt and reeling from last year’s low oil prices. OPEC’s second-smallest producer’s debt-to-GDP ratio has exceeded the government’s 70% cap due to a reduction in output since 2019. Roboty Mbou, the former deputy economy minister, stepped into her current role in December, after the sudden resignation of her predecessor.
Roboty Mbou said last month Gabon planned to “reprofile” its Eurobonds as part of its debt management strategy. “Reprofiling of the debt refers to several dimensions, including the search for longer maturities and better credit conditions,” she said.
Weaning Off Oil
Oil accounts for 80% of Gabon’s export revenue, leaving it vulnerable to the vagaries of global oil markets. Crude prices have recovered from last year’s lows -- with futures in London rising above $63 Monday -- but Covid-19 lockdowns in countries around the world are still depressing fuel sales and refining margins.
Gabon is looking to develop other minerals, including manganese, iron and gold, while boosting the output of its logging sector to diversify away from oil in a push that’s supported by the International Monetary Fund, Roboty Mbou said.
The country has fixed its benchmark oil price at $41 for its 2021 budget. “An amendment to the law could be made if the economic environment changes at the local or international levels,” she said. Brent crude oil traded at around $64 a barrel on Monday.
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