Gabon's government is expecting a wider deficit and has budgeted for a Eurobond issuance this year, a document published on Tuesday shows, laying out financing plans that could complicate a new programme with the International Monetary Fund (IMF).

In the document detailing the revised 2026 budget, the government authorised borrowing of up to $1.5-billion (855-billion CFA francs) on international markets this year. The new budget cuts overall revenue projections by 22% to 3.24 trillion CFA francs. President Brice Clotaire Oligui Nguema signed the revised 2026 budget on July 17.

Years of political instability have saddled Gabon with an economic crunch and dwindling foreign currency reserves. The nation formally requested an IMF programme in March. Rating agencies, including Fitch, had already warned that the large fiscal deficit in the 2026 budget will make obtaining an IMF loan difficult.

The IMF did not immediately respond to a request for comment on whether the new budget risks negatively affecting an eventual new programme.

The budget document shows an overall financing gap of 915.6-billion CFA francs for the year, some 13% higher than figures in December.

Kevin Daly, investment director of emerging market debt at Aberdeen Investments, said the revised deficit and the inclusion of a Eurobond would likely have consequences for negotiations with the IMF.

"If it (a new programme) does happen, it will be later in the year or drags into 2027," he said.

BOND MARKETS REACT

Government bonds across all maturities fell. Those due in February 2031 dropped 1.575 cents on the dollar to bid at 84.97 cents, while those due in 2029 fell 1.2 cents to 94.27 cents.

Nicholas Sauer, portfolio manager at Robeco, said the supplementary budget had not alleviated any previous concerns.

"Gabon and the broader CEMAC (Central African Economic and Monetary Community) region would be well-served by multilateral, IMF-led, assistance given the extreme tightness of local financial markets, but this now seems to have been postponed and instead replaced by market funding," he said.

The revised budget lands as Gabon awaits the findings of an audit detailing years of public borrowing. The public debt audit is reviewing 2016-2024 records for undisclosed liabilities, unexecuted projects and funds that did not reach Treasury accounts — a review credit rating agency Moody's has said could uncover additional unreported debt.

"With debt levels already above 70% of GDP, any upside surprises have the potential to push debt into relatively hazardous territory," Sauer said. 

The government also allocated 424.9-billion CFA francs in domestic Treasury bond issuance.