(Business in Cameroon) - After the experience of the Eurobond in 2015, which enabled the Cameroonian Treasury to raise an envelope of XAF375 billion (for an expressed need of XAF750 billion), at an interest rate of nearly 10%, Cameroon will not try to mobilize financial resources on the international capital market anytime soon.
This is at least what emerged from the presentation made on 21 January 2020 in Yaounde, by Samuel Tela, Director of the Treasury at the General Directorate of the Treasury of the Ministry of Finance. He was speaking at the annual conference of heads of central and decentralized services of the Ministry of Economy.
“In view of the importance of liquidity in the money market, which since the end of 2018 has fluctuated between XAF950 and 1,100 billion, and the volume of national savings (about XAF4,000 billion), the State will be able to raise more and more resources on the local market for several years,” he said.
According to the official, “the main advantage of the local market is that the debt is denominated in local currency XAF, and therefore does not present any exchange rate risk as is the case with foreign debt denominated in foreign currency. Even if the parity is fixed (as between the CFA and the Euro, editor's note), it (the debt) could be subject to adjustment in the medium or long term,” Samuel Tela says.
At the same time, he explains, on the international capital market, “investors' perception of risk on emerging countries makes borrowings more expensive. By incorporating the other additional costs associated with this type of transaction, notably agents' commissions, the difference between exit rates for non-concessional international borrowing and domestic borrowing is small. For certain maturities, these interest rates are more favorable on domestic markets.”
Brice R. Mbodiam