China Construction Bank provides $39.5 million loan for Libreville Sports Palace Construction Project

China Construction Bank provides $39.5 million loan for Libreville Sports Palace Construction Project In 2018, the Government of Gabon and China Construction Bank signed a $39,588,698 (CFA 19,794,349,018) loan agreement for the Libreville Sports Palace Construction Project. The loan carries a 5.8% interest rate.

However, it is known that the borrower was expected to use the loan proceeds to finance a commercial (EPC) contract between China State Construction Engineering Corporation (CSCEC) and the Gabonese Ministry of Youth and Sports, which was signed on April 27, 2017.

The purpose of the project was to design and construct a sports palace (handball stadium) with 5,493 seats in the city of Libreville. The exact locational coordinates of the stadium are 0.3947, 9.4529. The project site had a total construction area of ​​12,800 square meters. CSCEC was the EPC contractor responsible for implementation.

Construction began on May 16, 2017, and reached completion on December 25, 2017.

The project officially achieved 'completion acceptance' on January 15, 2018, and it was officially handed over to the local authorities on January 16, 2018.

The construction of the facility was undertaken on an expedited basis to ensure that it could be used for the 2018 African Men's Handball Championship (which took place from 17 to 27 January 2018 in Gabon).

On December 26, 2018, Gabon’s Minister of the Economy, Prospective and Development Programming reported to the Gabonese Senate that CSCEC had 'pre-financed the [construction of the stadium] while awaiting the availability of the financing requested from the China Construction Bank Corporation (CCB)'.

In the third quarter of 2020, CCB made a loan disbursement worth CFA 1.109 billion.

There are some indications that the China Construction Bank loan for the Libreville Sports Palace Construction 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.