(Business in Cameroon) - On May 19, 2020, Cameroon paid interest charges on the XAF450.4 bln (swap charges excluded) Eurobond it issued in 2015. This payment has become a routine since the issuance of this Eurobond. For instance, on November 19, 2020, the country is expected to make another interest payment in the framework of the security issued in the European markets. As the country pays interests twice a year and XAF21 billion per payment, this means that it spends over XAF42 billion on interest charges for this operation every year. These interest charges should drop by one-third in 2023 once it refunds one-third of the principal.

The May 19, 2020, interest payment was welcomed by rating agency Moody’s, which revised the country’s repayment ability from “negative” to “stable.” The reason for this revision is that Cameroon paid the interest rates when the agency was wondering whether the country would extend the moratorium on debt service granted by the G20 to private investors since the country is facing tough economic challenges. For instance, apart from social pressures and the security crisis in the Far North, the North, the East, the Northwest, and Southwest, the country still has to face the economic consequences of the coronavirus pandemic. Also, hundreds of thousands of residents in Douala and some other towns, have recently been affected by flooding caused by torrential rain.

At the same time, the support provided by G20 countries appeared to be below the volume expected by the World Bank. While the Bretton Woods institution was expecting about XAF155 billion, the amended finance law of June 3, 2020, revealed that the amount was XAF118 billion.

It is worth reminding that according to sources close to international investors, Cameroonian authorities are negotiating with the International Monetary Fund (IMF) to refinance the Eurobond. The aim is to postpone the repayment of the principal. Indeed, according to the current schedule, on November 23, 2023, Cameroon will pay part (XAF150 billion) of the principal. However, with its ailing exports, it is not sure whether Cameroon will have enough Euro-denominated currencies by the refund date. Apart from that, the country still has to refund other international loans contracted to fund the organization of the yet-to-be held African Cup of Nations 2021 notably.

Idriss Linge