March 15, 2017 / 12:41 PM / in 8 months

Fitch: IMF Deals for CEMAC Countries Would Ease Oil Pressures

(The following statement was released by the rating agency) LONDON, March 15 (Fitch) Potential IMF programmes for Gabon (B+/Negative), Cameroon (B/Stable) and the Republic of Congo (CCC) would ease some of the pressures created by lower oil prices, Fitch Ratings says. The extent of the benefits would depend on the authorities' implementation capacity and on developments elsewhere in the Central African Economic and Monetary Community (CEMAC). The IMF has recently initiated discussions with each country on potential programmes and will now try to reach country-by-country agreements on "policies that could form the basis of an arrangement". This follows December's emergency meeting, when the six CEMAC heads of state committed to correct fiscal imbalances and contain further declines in the zone's foreign-currency reserves. We think these discussions are likely to lead to programmes being agreed, although this is not certain. IMF funding would reduce the risks of external financing gaps emerging and help restore foreign-currency reserves, and technical assistance could strengthen institutional capacity to enact reforms. Lower oil prices have created twin deficits in the three Fitch-rated CEMAC sovereigns, increasing government debt burdens and eroding foreign-currency reserves. Starting discussions is consistent with our view that the IMF would be willing to support CEMAC members to bolster the zone's exchange-rate peg to the euro. Our country forecasts do not incorporate IMF funding or technical support due to uncertainty over the timing and content of possible programmes. Even so, our latest fiscal forecasts show Gabon's budget cash deficit averaging less than 3% of GDP in 2017 and 2018, down from an estimated 4.4% in 2016; Cameroon's deficit narrowing slightly to an average 5.1% over the same period from 5.4%; and Congo averaging 1.8%, from 9.1% last year. But these forecasts chiefly reflect recovering oil prices rather than consolidation. If programmes are agreed, implementation could still be undermined by administrative weaknesses, and social and political constraints. In Gabon, defeated candidate Jean Ping has contested the outcome of last year's presidential election, won by Ali Bongo Ondimba. We also think that it would be difficult for President Bongo to implement dramatic fiscal tightening in the face of weak growth and a possible re-emergence of social unrest. In Cameroon, the question of who will ultimately succeed 84-year-old President Paul Biya and tensions in the predominantly Anglophone parts of the country could cause political instability that affects policymaking. We therefore think programmes would focus on rebuilding foreign assets, bolstering the business environment and private investment, and on reversing fiscal deterioration through such fiscal measures as improving tax collection, controlling the public-sector wage bill and rationalising investment spending, rather than on severe expenditure cuts. How far programmes would help rebuild the external buffers would depend partly on the extent to which member countries, including Equatorial Guinea (not rated by Fitch), manage to address their macroeconomic imbalances to reverse the collective fall in reserves, which are pooled at the regional central bank. We believe IMF engagement across the zone will bolster members' commitments made at December's summit (attended by IMF managing director Christine Lagarde) to correct imbalances and that the possibility of multiple programmes would reduce the risk of a potential 'free-rider' programme. Contact: Marina Stefani Associate Director, Sovereigns +44 20 3530 1809 Fitch Ratings Limited 30 North Colonnade London E14 5GN Jan Friederich Senior Director, Sovereigns +852 2263 9910 Mark Brown Senior Analyst, Fitch Wire +44 20 3530 1588 Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email: The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article can be accessed at All opinions expressed are those of Fitch Ratings. ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2016 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below