Public Management

Moody's maintains tough stance on Cameroon despite debt stability predictions

Moody's maintains tough stance on Cameroon despite debt stability predictions
Friday, 01 March 2024 05:08

U.S. rating agency Moody's has maintained a strict (Caa) rating for Cameroon, even though the country's debt is projected to remain stable until 2027. The agency cites insufficient budgetary performance and emphasizes the need for political stability, especially in a global context where democracies are under significant strain.

In its recent analysis, Moody's decision to keep Cameroon's rating unchanged stems from political risks, particularly regarding the transition of power. The agency noted that apart from weak public financial management, the rating reflects the risks of political destabilization following the lack of a credible plan for presidential succession. The agency also highlighted two incidents of delayed payments to the European Investment Bank (EIB) in 2023, occurring one and five days late in August and September, respectively. Although these delays were minor (less than 0.003% of GDP), Moody's analysts believe they indicate vulnerabilities in the country's budget management.

Despite signs of fiscal responsibility, Cameroon's debt-to-GDP ratio is expected not to exceed 44% by 2027. The average maturity of its foreign debt stands at seven years, and debt service is anticipated to account for only 4.8% of revenues on average during the period. Noteworthy efforts include a 15% increase in fuel prices, which has contributed to inflation.

The government's decision to grant a 5% salary increase to civil servants and other public sector workers, while cutting some taxes to support the economy, further strains a public budget already considered modest compared to that of Côte d'Ivoire, which has a similar population profile.

Despite these measures and careful debt management, Moody's continues to rate the country in the Caa category, raising questions as more risky countries receive better ratings. For now, Cameroonian authorities do not plan to return to international markets after borrowing €200 million from Afreximbank.

This pessimistic stance has affected Cameroon's current Eurobonds. Investor yield expectations have slightly increased, indicating that the agency's concerns have been noted. This is particularly evident with the Eurobond issued in November 2015, which has $102 million remaining to be repaid by November 2025, according to data reviewed by Ecofin Agency.

Additional Info

  • communiques: Non
  • couleur: N/A
On the same topic
• Inflation within the West African Economic and Monetary Union (UEMOA) fell to a two-year low of 0.6% in May, bolstered by a decline in food costs. •...
• Interbank volumes rose 18.7% in May, while rates declined across the market• The BCEAO cut its main policy rate to 3.25% following a sharp drop in...
• EY is preparing to leave Francophone Sub-Saharan Africa by 2026• The exit could unlock $500 million to $1 billion in annual market...
Sixty-five percent of banks in sub-Saharan Africa view cyber risks as a major hurdle to digitalization, according to the European Investment Bank. In...
Most Read
01

• Global coffee consumption projected to hit a record 169.4 million 60-kg bags in 2025/2026, up from...

Coffee: Global Consumption Expected to Reach Record Level in 2025/2026
02

• Algeria grants commercial 5G licenses to top three telecom operators: Mobilis, Djezzy, and Ooredoo...

Algeria Awards Commercial 5G Licenses
03

• Investors seem to keep focusing on yields, which are high for the moment• New Leadership might see...

Afreximbank Bonds Retain Market Confidence Despite Moody’s Downgrade
04

• Kenyan President William Ruto signs strategic partnership with UK Prime Minister Keir Starmer to b...

William Ruto in London: New Agreement Aims to Double Kenya-UK Trade by 2030
05

• IFC teams up with AfDB and Nigeria’s EbonyLife to assess a new fund for African cinema• Sector cou...

IFC Plans Investment Fund to Help Grow African Film Industry
Enter your email to receive our newsletter

Ecofin Agency provides daily coverage of nine key African economic sectors: public management, finance, telecoms, agribusiness, mining, energy, transport, communication, and education.
It also designs and manages specialized media, both online and print, for African institutions and publishers.

SALES & ADVERTISING

Benjamin FLAUX
bf@agenceecofin.com 
Téls: +41 22 301 96 11 
Mob: +41 78 699 13 72
Média kit : Download

EDITORIAL
redaction@agenceecofin.com

More information
Team
Publisher

ECOFIN AGENCY

Mediamania Sarl
Rue du Léman, 6
1201 Geneva
Switzerland

 

Ecofin Agency is a sector-focused economic news agency, founded in December 2010. Its web platform was launched in June 2011. ©Mediamania.

 
 

Please publish modules in offcanvas position.