(Business in Cameroon) - The situation of SONARA’s bank debts (over XAF795 billion in 2019) has become uncertain since it declared a unilateral moratorium on its debt after the fire outbreak that destroyed some of its infrastructures on May 31, 2019. This was revealed by the IMF in its Country Report No. 20/48 focused on Cameroon.
“The capital and liquidity situation of key banks is now uncertain due to the uncertainty surrounding their exposures to SONARA. The mission supported the decision of banks exposed to SONARA not to pay dividends this year. SONARA represents a significant risk for the Cameroonian banking system (…) A full provisioning of exposures to SONARA per COBAC’s regulation would wipe out more than half of the banking system’s capital within two years (150 billion provisioning requirements within two years, out of total regulatory capital of 280 billion for the entire banking system),” the IMF wrote.
To avoid such a worrying situation, Cameroonian authorities intend to facilitate an agreement on the reprofiling of SONARA’s banks and suppliers' debts. This reprofiling, which will schedule repayment over five fiscal years (as suggested by SONARA), will help mitigate impacts on banks’ equity and profitability.
“So far, no banking stress has been observed but staff advised the regional banking authorities to closely monitor the situation and to be prepared to respond should stress materialize,” The Bretton Woods institution adds nevertheless.