Gabon reportedly pursuing an IMF loan, but what will the lender's tough conditions be?

Gabon is reportedly turning back to the International Monetary Fund (IMF) to stabilise its finances.

However, concerns abound that an IMF loan would come with tough conditions that the government may be reluctant to push through.

"Significant obstacles remain, including the government's expansionary fiscal policy and the likelihood of drastic, unpopular reforms, both of which are politically challenging in the current environment," Jose Mantero, sovereign analyst at Fitch Ratings, told Reuters.

The Fund on Friday wrapped up a 10-day visit to Gabon – its first since the government said it wanted an IMF loan nearly a year ago.

Gabon has traditionally relied on CEMAC for financing

Concluding the visit, the IMF said talks would continue, adding that prudent policies were critical to safeguarding stability not only in Gabon, but in the broader region as well.

Ahead of last week's visit, the finance ministry said turning to the IMF was "part of the government's will to strengthen transparency, budget rigidity and sustainability of public finances."

The government has yet to make a formal request to the IMF for a new programme.

Traditionally, Gabon increasingly leaned on the Central African Economic and Monetary Community (CEMAC) market for borrowing, Fitch Ratings said, but liquidity challenges in the region means fresh funding beyond rollovers will be scarce.

Spike in oil prices

Recent oil price spikes, driven by war in the Middle East, help oil producers.

However, a lack of financing options with debt repayments looming is piling pressure on Gabon to do what is required to satisfy the IMF, investors said.