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
Gabon launches a fresh CFA50 bln bond issue after June’s oversubscribed sale Offer structured in two tranches with 2- and 3-year maturities at 5.6%...
• Flutterwave partners Clear Junction to strengthen remittance reach, with opportunities including its Ghana's market• Bank of Ghana suspended...
• Gabon plans reforms to curb rising non-performing bank loans• NPLs hit 10.2% of total loans in 2024, AfDB says• Credit tightens despite liquidity...
• Afreximbank, Shelter Afrique to mobilize $1B for housing projects• Deal includes training to boost project preparation capacity• Africa faces...
Most Read
01

Niger’s economy grew 10.3% in 2024 and is projected to expand 6.6% in 2025. Yet non-performin...

Niger’s rapid growth shadowed by fragile banking sector
02

Zenith Bank picks Côte d’Ivoire for $90M debut into Francophone Africa, confirming ambition t...

Zenith Bank Moves to the WAEMU/CEMAC  $92.4 Billion Loan Book Appeal, When Half Seats Are Taken
03

• Benin’s FeexPay and Côte d’Ivoire’s Cinetpay receive BCEAO payment service licenses• Both firms ex...

WAEMU fintech industry strengthens with two new BCEAO regulatory approvals
04

Nigeria’s fintech landscape has undergone a seismic shift in recent years, driven largely by persist...

In Nigerian, Bank Technology Failures Pushed OPay and PalmPay to Leadership in Daily Payments
05

Ghana is merging loss-making AT Ghana with Telecel to create a stronger rival to dominant MTN. ...

Ghana Government Pushes Telecel–AT Merger to Revive AirtelTigo Investment, as MTN Maintains Market Dominance
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

regie@agenceecofin.com 
Tél: +41 22 301 96 11 
Mob: +41 78 699 13 72


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.