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By Duncan Miriri
NAIROBI (Reuters) - Voters in Gabon will go to the polls on Saturday in a presidential election as the country's junta leader seeks democratic legitimacy after taking power in a 2023 coup.
WHO IS RUNNING IN THE ELECTION?
Brice Oligui Nguema faces seven other candidates, including Alain Claude Bilie By Nze, former prime minister in the ousted government, who is his main challenger.
Nguema, a 50-year-old general, had initially promised to hand back power to civilians after a transition period, but later secured constitutional amendments in a November referendum allowing him to run.
He is tipped to win due to the advantages of incumbency and his popularity as the mastermind of the end to Ali Bongo's unpopular rule. While the military ended more than half a century of rule by the Bongo family, the move was condemned by the African Union, France and the United States.
WHAT IS THE MAIN CONCERN FOR INVESTORS?
Investors are watching to see if the central African oil producer, which has $3 billion outstanding on international bonds, will re-establish its democratic credentials by holding a credible election.
Political uncertainty and concerns about governance partially curtailed economic growth to 2.4% in 2023, from 3% in the previous year, the International Monetary Fund said.
It also worsened fiscal imbalances, leading to debt arrears and an increase in the ratio of debt to economic output.
Gabon does not currently have a lending programme with the IMF and investors have said securing a programme would help the government to anchor its economic recovery strategy.
Gabon was also suspended from a preferential trade agreement with the United States (AGOA) after the coup - though the pact's future is in question more widely following U.S. President Donald Trump's tariff announcements.
WHAT ECONOMIC CHALLENGES WILL THE WINNER FACE?
The main risk facing Gabon's economy is an acute squeeze in liquidity. The World Bank suspended disbursements in January due to arrears of $27 million.
Gabon has relied increasingly on regional capital markets to meet its financing needs.
The government offered to buy back a $605 million dollar bond maturing this June, financing the transaction through a combination of local currency debt sold on the regional market and the private placement of a $570 million dollar bond.
The manoeuvre was meant to assure markets of Gabon's ability to manage its liabilities, but was not enough to spare the central African nation from a ratings downgrade.
Fitch cut Gabon's foreign debt rating deeper into the lowest junk ratings, to "CCC" from "CCC+", citing a shortage of liquidity to tap in the regional debt market, a slowdown in credit flows from bilateral lenders and growing external debt maturities.
Like other frontier issuers, Gabon's bonds have been pounded as investors ditched risky assets in response to trade turmoil. With some trading at double-digit yields, this signals Gabon would struggle to access international capital markets.
The government has turned its eye to new sources of cash. It said in January it would seek a $157 million loan from Cargill Financial Services, and it is also in talks with the Cairo-based Afreximbank for another loan of $210 million.
WHAT OTHER FACTORS ARE IN PLAY?
Gabon became the first country in Africa to complete a debt-for-nature swap in 2023, when it bought back some of its dollar debt through the issuance of a $500 million blue bond.
Gabon's abundant rainforests, beaches and coastal waters that host endangered turtle species enabled it to complete the debt-for-nature swap, where the savings usually go to fund conservation.
But the winner of the April 12 election will be confronted by a changed world, with a new U.S. administration that does not consider climate change a priority, cutting the appetite for such deals.
Like other developing countries, Gabon also faces other challenges arising from the wider geopolitical shifts, including President Donald Trump's sweeping tariffs on trade.
Prices of crude oil have dipped after the new tariffs were announced, which could curb Gabon's revenue from oil exports.
(Reporting by Duncan Miriri; Editing by Karin Strohecker and Alex Richardson)
