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Cameroon: Government to raise XAF184 bln from the local banking sector in 2022

Cameroon: Government to raise XAF184 bln from the local banking sector in 2022
  • Comments   -   Tuesday, 30 November 2021 14:47

(Business in Cameroon) - Cameroon plans to raise XAF184 billion from the local banking sector in 2022, the 2022 draft bill currently being reviewed by the parliament reveals. According to the government, the funds raised will partially cover the 2022 budget deficit and cash-flow requirements estimated at XAF1,754.5 billion.

Apart from the funds directly raised from the local banking sector, the government will indirectly source funds from banks by issuing XAF350 billion worth of public securities. As public finance experts explain, based on the hypothesis that Cameroon will not go into the international capital market for its funding needs after its recent Eurobond refinancing operation, the government has two avenues to source that fund.

The first is the regional stock exchange BVMAC where several local banks operate as brokerage firms through their subsidiaries. Indeed, even if the country has stopped its fundraising operations in that exchange in 2019d, the Ministry of Finance and BVMAC officials have recently discussed the measures to implement to attract Cameron to the regional exchange again and dynamize the market.

The second avenue is the central bank BEAC’s capital market where some local banks are acting as primary dealers. Since the launch of that market in 2011, Cameroon has been very active there and in 2019, the country focused exclusively on it for its public security issuances, both short and long -term securities.

In addition to bank loans, both direct or indirect, in 2022, the Cameroonian government will use other financial instruments to finance its budget deficit and cash-flow requirements. These include, for instance, the estimated XAF369 billion budget support from development partners and tranches of project loans (XAF746.5 billion expected from the various funding windows). According to the 2022 draft bill, XAF105 billion are also expected to come from the IMF (through the special drawing rights) and the World Bank support funds.

 Brice R. Mbodiam

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