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Moody's downgrades Congo and Gabon credit ratings in latest review

Moody's downgrades Congo and Gabon credit ratings in latest review

Credit rating agency

Credit rating agency Moody’s has lowered by one notch the sovereign ratings of both Congo and Gabon following the conclusion of its latest reviews in the two central African states.

The agency downgraded Congo’s rating – the country’s second downgrade in just two months – to B2 while Gabon’s rating fell to B1.

Both countries outlook was also assessed as negative by Moody’s who blamed the downgrades on the liquidity pressure placed on the two countries due to the slump in the global crude oil prices.

According to Moody’s Gabon’s government finances will continue to deteriorate with government debt projected to reach 51% of GDP in 2016 before it stabilizes.

The rating firm warned that higher and more costly debt as well as a continued decrease in government revenue and nominal GDP are causing a deterioration across all Gabon’s debt burden indicators.

Moody’s expressed concern on Congo’s government finances which it noted were sensitive to oil prices and had dipped by 48% in 2015.

The agency noted that Congo’s finances were strong prior to the downward adjustment in oil prices, but will be substantially weaker by the end of 2017, despite likely further fiscal consolidation measures.

Congo’s capacity to countervail the negative impact on its finances — by lowering expenditure as well as boosting revenues and stimulating the non-oil economy — remains limited relative to the scale of the task, the agency noted in a statement.