Gabon’s budget deficit widened sharply in 2025, reaching 5.3% of GDP—up from 3.8% the previous year—according to the African Development Bank’s 2026 African Economic Outlook. The deterioration in public finances stems from a combination of expansionary fiscal policies and a mounting debt burden, pushing the country’s public debt to 78.9% of GDP and contributing to a sovereign credit rating downgrade in December 2025.

The economic slowdown further complicated fiscal challenges. While sectors like public works, manufacturing, and services showed resilience, GDP growth decelerated from 3.4% in 2024 to 2.7% in 2025, weighed down by declining output in oil, mining, forestry, and transportation. Increased government spending to stimulate the economy, though necessary, strained the budget balance and amplified the state’s financing needs.

Rising financial pressures strain Gabon’s public sector

The widening deficit has intensified financial vulnerabilities. The African Development Bank notes that loose monetary policies by the Central African States Bank fueled a surge in state borrowing, heightening banks’ exposure to sovereign risk. At the same time, non-performing loans continued to rise, underscoring persistent strains within the domestic financial system.

With limited fiscal flexibility, the government faces growing hurdles in addressing social challenges. Poverty levels remained nearly unchanged at 33.1% of the population, while unemployment climbed to 20.2%, disproportionately affecting youth and women. Sustainable fiscal recovery, according to the African Development Bank, will require tighter expenditure controls, more sustainable debt management, and structural reforms to bolster state revenue.