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Cameroon: Rise in US Dollar inflates external debt service for July by CFA3bn

Cameroon: Rise in US Dollar inflates external debt service for July by CFA3bn
  • Comments   -   Thursday, 21 July 2022 12:29

(Business in Cameroon) - The rise in the US dollar will make Cameroon pay an extra CFA3 billion in external debt service for July 2022. The Minister of Finance’s Treasury Committee explained that while the 2022 budget was prepared based on $1 for CFA588.5, the greenback is now worth more than CFA640, up 9% compared to forecasts.

For July 2022, the country planned to repay CFA146.8 billion in foreign currency, according to the cash flow plan attached to the budget law. However, the new exchange rate makes it nearly CFA150 billion.

Assuming that the cash flow plan has been met and that the dollar remains at its current level, additional payments could reach CFA8 billion by the end of the year. To cover the exchange rate risk and handle expenses related to the new borrowings, the government has budgeted CFA11.8 billion.

As of May 31, 2022, Cameroon's external debt amounted to CFA7,735 billion, according to the State of Cameroon's medium-term economic and budgetary programming document (2023-2025). It represents 72.4% of the overall portfolio. Based on the fixed parity between the CFA and the euro, exposure to forex risk is 45.4%. At the end of 2021, the risk was 34.9%.

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