(Business in Cameroon) - As of December 31, 2019, the outstanding public and publicly guaranteed debt (all debts contracted by the State, companies and other public institutions) reached a volume of XAF8,384 billion. This was revealed by Charles Assamba Ongodo, the Director-General of Cooperation and Integration at the Ministry of Economy, during the annual conference of central and decentralized services of the Ministry of Economy on January 21, 2020, in Yaoundé.  

This debt, which has increased by XAF827 billion within 8 months (it was XAF7,557 billion at the end of April 2019), now represents 37.4% of the country's GDP, Mr. Assamba stressed.

This increase can be explained by the acceleration of disbursement on external debts during H2, 2019, as announced by the Ministry of Finance in an explanatory note of the budgetary adjustment decided by the Head of State on May 29, 2019.

The increase can also be explained by the upward revision of the financing raised on the money market (BEAC) from June 2019. The latter in fact increased from XAF260 to 350 billion, thanks to the above-mentioned budgetary adjustment.

High risk of over-indebtedness

Despite its strong growth over a relatively short period of time, Cameroon's public debt, which only represents a little more than 37% of GDP, remains sustainable at first sight since the convergence criteria in force in the CEMAC zone set the ceiling for the public debt at 70% of GDP.

However, despite this, Cameroon is classified by the Bretton Woods institutions, basing themselves on the speed with which the country has indebted itself in recent years, as a country with “high risk of debt distress.”

“The risk of high debt distress is justified by the fact that since 2018, the two liquidity ratios of debt service to export earnings and debt service to government revenue have been exceeded. This indicates that from 2018, and until 2026, the Treasury will face enormous difficulties in honouring its commitments, especially the timely settlement of debt service,” the Cameroonian Minister of Finance explains.  

Louis Paul Motaze said this before parliamentarians on July 8, 2019, during the presentation of the initial 2020 draft budget of the State, as a prelude to the very first budgetary orientation debate in the history of public finance in Cameroon.

Brice R. Mbodiam