Cameroon to Reduce its Rate of Indebtedness

Published on 20.07.2022 at 11h57 by Nana Kamsu kom

Cameroon Debt

The medium-term economic and budgetary programming document of Cameroon, which is the basis for the 2022 budgetary orientation debate states that the government aims to contain the country’s debt to 50% of GDP in 2025, against 45.1% at the end of May 2022.

Over the period of just 3 years from June 2022 to 2025,Cameroon intends to increase its debt by only 4.3% of GDP. Cameroon projects its nominal GDP at CFAF 33,026 billion in 2025. To contain its debt to 50% of GDP at that date, the country should therefore increase its debt, estimated at CFAF 11,672 billion at the end of May 2022, by a maximum of CFAF 1,420 billion, or less than CFAF 400 billion per year.

This is a real challenge. To realise this, it is necessary to know that the public sector debt in the country grew by more than CFAF 4,000 billion between 2016 and 2020, rising from CFAF 6,000 to 10,000 billion over a period of 4 years. Over the past two years, public debt has increased by CFAF 1026 billion in 2021 and 512 billion in 2020.

To achieve its objective, Cameroon plans to focus on the settlement of debt on time and the clearance of all domestic arrears (outstanding debts, floating debts, unstructured debts..)The country is also banking on the efficient mobilisation of resources through the optimal programming of external drawings and public securities issues.

All of which will be ensured by administrative measures such as the respect of debt ceilings defined in the debt strategy or the obligation to refer to the National Public Debt Committee. To date, Cameroon’s public debt is considered “sustainable, with a high risk of debt distress”.

The government’s ultimate objective is to reduce the risk of over-indebtedness to a moderate or even low level in a few years to improve the country’s debt conditions (reduction of interest rates, increase in maturities, etc.).

To achieve this, in addition to reducing the rate of indebtedness, the country also plans to gradually broaden the tax base and strengthen the capacity to mobilise export earnings through its import-substitution policy.