(Business in Cameroon) - The value of the USD 750 million Eurobond (FCfa 375 billion), launched in November 2015 by the State of Cameroon and maturing in 2025, went up 1.7 cents on this past 8 March. This price increase, highlighted the Reuters agency, came after the Cameroonian government officialised ongoing negotiations with the International Monetary Fund (IMF), to implement a three-year structural adjustment programme (2017-2019) to stabilise public finances and boost profitable investments.

In other words, while internally the population is fearing the austerity which may be induced by this programme with the IMF (in spite of assurances from the government), at the international level, the decision taken by the Cameroonian government to go back to this Bretton Woods institution in a context of economic stagnation in the CEMAC zone, rather provides comfort to the investors, who put more stock in the country’s signature.

Indeed, based on the first bits of information coming out the discussions between the IMF and the Cameroonian government, the programme under negotiation should in practical terms enable the State to stabilise its financial situation, in particular through a more important widening of the non-oil tax base and the increase in efficiency of the public spending. Concurrently, we learned, reducing the rate of indebtedness of the country, which greatly increased these past months according to the IMF, and promoting concessional rate indebtedness was considered.

All these actions are meant to enable the government to have access to the necessary funding, despite commodities’ prices falling, to boost investments in social sectors (education, health, rural and urban development, etc.) and projects with significant leverage on the economic growth, the International Monetary Fund insists.

These main directions already seem to satisfy investors, who immediately showed a strong interest for the Cameroonian Eurobond listed on the Dublin stock exchange (in Ireland), where the 3,750 sovereign bonds of Cameroon, with a nominal value of USD 200,000 (approximately FCfa 123 million) each, were already sought at USD 222,040 (about FCfa 123 million) on 23 January 2017, representing a gain of USD 22,040 (about FCfa 13 million).

As a reminder, Cameroon had to raise FCfa 375 billion through this first Eurobond in the history of its public finances, with a record annual interest rate of 9.75%. However, only one year after this fundraising operation done in rather unfavourable conditions, the Cameroonian Eurobond, listed on the Irish stock market, already reached interesting rates of return. For example, this rate reached 8.5% at the end of the year 2016, and consequently raised the interest of specialised investors such as Exotix Partners, who then decided to include Cameroonian sovereign bonds in the top 5 of their bond portfolio.

Brice R. Mbodiam

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