(Business in Cameroon) - Yesterday May 26, Paul Biya, President of the Republic of Cameroon, signed an ordinance that amends and supplements some of the provisions of the 2021 finance law voted by the National Assembly in December 2020.
The ordinance amends Article 49 of the finance law by stating that “the government is authorized to negotiate and possibly conclude (…) concessional and non-concessional loans of total amounts of CFAF350 billion and CFAF750 billion respectively” under conditions “safeguarding the financial interests of the State as well as its economic and political sovereignty”.
Before that amendment, the non-concessional loans authorized for the 2021 financial year were CFAF300 billion. Meaning that the country can now raise an additional CFAF450 billion concessional loans under the new terms. According to the presidential ordinance, the additional margin is for the issuance of public securities on the international market to raise CFAF450 billion for the “partial or total redemption of the current Eurobond [ed. note: the Eurobond issued in 2015].”
The ordinance signed by the president of the republic is necessary to legalize the Eurobond refinancing operation because the operation mainly consists of incurring new debt to refund an older one. So, as the law requires it, the new debt must be included in the finance law.
Cameroon is currently scheduled to start amortizing the principal of the 2015 Eurobond (which was the first in its history) in 2023, at the rate of XAF150 billion yearly plus the interests it has been paying for years now. However, because of external liquidity pressures facing CEMAC countries, Cameroon could be unable to disburse such amounts when the time comes. Therefore, to alleviate the short and medium-term weight of this debt on the public treasury, the government has decided to refinance it this year.