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Cameroon: CFA F Depreciates Against Dollars, Increasing Cameroon’s Debt by 420B

CAA
CAA

The various upward variations in the exchange rate of the F CFA against the US dollar caused an increase of C FAF 420 billion  in the outstanding Cameroonian public debt  between June 2021 and June 2022.

 

Based on this information revealed in the latest conjuncture note of the Autonomous Amortization Fund (AAA), the manager of the public debt in the country, the fluctuation of the F CFA against the dollar has increased the outstanding public debt of Cameroon by an average of F CFA 35 billion each month during the period under review.

But according to  AAA (CAA) data, this situation has continued to worsen since the first quarter of 2022. For example, between the first and second quarters of 2022, this variation in the exchange rate between the dollar and the F CFA boosted Cameroon’s public debt envelope by F CFA 172 billion, or just over CFA F 57 billion per month. For the month of May 2022 alone, this increase reached F CFA 78 billion, reports the CAA.

This phenomenon, which aggravates the exposure of Cameroon’s sovereign debt to foreign exchange risk, is mainly due to the acceleration in recent months of the fall of the euro against the dollar (which began in January 2021), because of the war in Ukraine and the surge in world oil prices on the international market. As a result of this gloomy international situation, on 5 July 2022, for example, the euro fell by 1.5% against the US dollar, reaching its lowest level in almost 20 years.

This reality, which has been observed for several weeks with varying degrees of vigor, has had a knock-on effect in terms of a sharp depreciation of the F CFA, which is a currency pegged to the euro at a fixed parity. As a result of this fluctuation of the euro against the dollar, on Wednesday 6 July 2022, the F CFA was trading on the foreign exchange market at 640.1 F CFA for one dollar, according to the Xe.com platform. This corresponds not only to a 10% drop since the beginning of the current year, but also and above all to its lowest level in more than 20 years, according to the analyses of the Ecofin platform.

 

 

source; Investiraucameroun



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