China Eximbank provides $100.8 million preferential buyer’s credit for Construction and Equipping of Vocational Training and Development Centers Project

China Eximbank provides $100.8 million preferential buyer’s credit for Construction and Equipping of Vocational Training and Development Centers Project On November 11, 2015, China Eximbank and the Government of Gabon signed a $100,877,016.45 preferential buyer’s credit (PBC) agreement for the Construction and Equipping of Vocational Training and Development Centers Project.

The proceeds from this loan will be used to finance a commercial contract between Avic International Holding Corporation (AVIC) and Gabon’s Ministry of Vocational Training, which was signed on June 15, 2013.

The purpose of this project is to build and equip three vocational training and development centers in the cities of Owendo, Port-Gentil and M'Vengué (Franceville). Each center will be equipped with materials, technology, appliances, and furniture.

Each center will provide training in up to 10 different industries and accommodate up to 600 students who will live onsite. These centers are being created to improve the country’s employment situation, especially among young people. AVIC was the contractor responsible for project implementation. A formal groundbreaking ceremony took place on August 11, 2017.

However, the first China Eximbank loan disbursement did not take place until June 2018.

An inauguration ceremony for the three vocational centers (including the Multisectoral International Center for Vocational Training and Education in the special economic zone of N’kok) took place on April 9, 2021.

There are some indications that the China Eximbank loan for the Construction and Equipping of Vocational Training and Development Centers Project may have financially underperformed vis-a-vis the original expectations of the lender.

In mid-2014, a decline in international oil prices generated sharp reductions in Gabon’s oil exports and fiscal revenues. The country’s rising fiscal deficit led to the accumulation of arrears to external creditors.

By 2017, the stock of the Government of Gabon’s external arrears stood at $115 million, including arrears to China, Canada, Germany, Spain, France, Israel, and South Korea. All of these arrears were successfully cleared by 2020. However, the Government of Gabon accumulated $3 million of additional arrears to Chinese creditors in 2020.

By the end of May 2021, ‘the stock of [the Government of] Gabon’s external arrears stood at CFAF 98.03 billion (US$182.1 million), including CFAF 23.8 billion (US$44.2 million) vis-à-vis multilaterals and CFAF 21.05 billion (US$39.1 million) vis-à-vis government agencies and private creditors insured with companies from Paris Club member countries and from China [ICBC and China Construction Bank] CFAF 1.3 billion (US$2.42 million).

The Government's strategy for the clearance of existing external arrears consists of focusing primarily on multilateral debt, bilateral debt, insured commercial commitments and seeking agreements with other creditors prior to the IMF Board meeting. Accordingly, we will clear the arrears vis-à-vis the multilaterals.

We will also clear bilateral and commercial-insured arrears as follows: (i) Austria CFAF 6.83 billion (US$12.69 million); (ii) France CFAF 11.9 billion (US$22.11 million); (iii) Israel CFAF 2.23 billion (US$4.13 million); and Spain CFAF 0.09 billion (US$0.17 million).

Regarding the other commercial arrears vis-à-cis AFREXIMBANK (CFAF 7.52 billion or US$13.97 million, and commercial non-insured vis-à-vis France CFAF 0.7 billion (US$1.24 million), Austria CFAF 8.71 billion (US$16.18 million), and Morocco CFAF 1.01 billion (US$1.87 million), we contacted these creditors individually to obtain from them the non-objection agreement.

The same communication was made with China to which our bilateral payment arrears are about CFAF 34.01 billion (US$63.17 million).’ Then, in 2022, the IMF reported that the Government of Gabon’s external arrears to Chinese creditors stood at $23.9 million as of December 2021 and $1 million in June 2022.

On April 3, 2024, Gabon’s Ambassador to China transmitted a letter (reference number: 000115/AMBAGAB-RPC/24) to the transitional authorities in Gabon, urging them to consider a debt settlement mechanism whereby the Government of Gabon would repay its outstanding debts to China Eximbank by depositing the cash proceeds from the sale of 1 or 2 oil cargoes (worth $150 million per cargo) each year to UNIPEC in a China Eximbank-controlled escrow account.

Gabon's General Directorate of Debt indicates that repayments are ongoing for the project. However, no dates were indicated when repayments began (https://www.dette.ga/accords/accords-prets/2015).