Yaoundé - 25 October 2020 -

Cemac: Credit costs rise by 1% within 12 months on the money market due to increased demand

Cemac: Credit costs rise by 1% within 12 months on the money market due to increased demand
  • Comments   -   Tuesday, 06 October 2020 09:37

(Business in Cameroon) - The activities of CEMAC countries’ public treasuries on the BEAC public securities market rose by 40.2% between June 2019 and June 2020.

According to a press release issued by the BEAC Supervisory Board of the Securities Settlement and Custody Unit (CRCT), the said countries issued a total of XAF2,870 billion of public securities during the reference period.

This increase in the volume of funds sought on the public securities market led to an increase in costs. According to the CRCT, between July 2019 and July 2020, the costs of these fund-raising operations (for which the Cameroonian Treasury is the sub-regional market leader) rose from an average of 4.8% to 5.7% of the amounts requested by countries.

Apart from the strong demand, this increase in transaction costs is also due to the maturity period of the securities issued by CEMAC countries. The BEAC notes that since the advent of the coronavirus around the end of Q1-2020, the volume of long-term public securities (treasury bonds) issued started exceeding that of short-term securities.

Since the end of 2015, CEMAC countries’ recourse to the money market has risen with the drop in the prices of commodities exported by the community (oil notably). This drop, in commodity prices, forced the countries to seek alternative methods to fund their budget since their revenues have nosedived.

Also, with the advent of the coronavirus pandemic, health expenses surged despite the drop in public revenues. Indeed, in the framework of the coronavirus response strategy, countries sought more funds in the international and sub-regional markets to boost healthcare (creation of field hospitals, strengthening technical platforms, purchase of test kits, etc.) and prevention.

 Brice R. Mbodiam

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