Republic of Gabon rated
Standard & Poor's (NYSE:MHP) Rating Services assigned its 'BB-' long-term and 'B' short-term sovereign credit ratings to the Republic of Gabon, which became the 117th sovereign government rated by S&P worldwide.
The outlook is stable.
At the same time, a transfer and convertibility assessment of 'BBB-' was assigned, in light of Gabon's membership of the Economic and Monetary Community of Central Africa (CEMAC).
Gabon's ratings are constrained by the country's narrow economic base, with oil accounting for almost half of GDP, combined with high income inequalities, S&P said.
The ratings are also constrained by the government's history of pursuing pro-cyclical fiscal policies, and its poor track record in meeting its past debt obligations. Finally, uncertainty surrounding the succession of the longstanding president weighs on the ratings, S&P added.
By contrast, the agency said the ratings are supported by Gabon's strong balance sheet position, which is boosted by high oil prices.
By year-end 2007, general government debt to GDP is expected to be 28 pct, with a fiscal surplus of 10 pct of GDP. Gabon's relative wealth and good economic prospects also support the ratings.
'The ratings are also supported by the government's commitment over the past four years to economic and financial reform, as shown by progress on privatization, fiscal consolidation, and better debt management practices,' said S&P's credit analyst Sarah N'Sonde.
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