(Business in Cameroon) - The Treasury of Cameroon successfully raised CFA176.7 billion on the Beac public securities market between June and July 2023, according to data provided by the national sinking fund CAA.
The fund explains that public securities issues were the main factor behind the 3.1% quarter-on-quarter increase in the volume of direct public debt (11,623 billion FCFA, or 40.8% of GDP) at the end of September 2023, despite the difficult market conditions since the start of the year. Indeed, before the end of the first half of 2023, it was almost impossible to expect Cameroon to mobilize more than 176 billion FCFA in the space of two months, as was the case between June and July 2023. The country's track record began in January 2023, with an issue of fungible Treasury bonds (OTAs) declared unsuccessful during the week of June 26-30, 2023: the first time since the market launched.
The Cameroonian Treasury faced temporary challenges in the public securities market due to cautious interest rates for investors and the central bank's tightened monetary policy to tackle inflation. The Beac implemented austerity measures by draining banks (primary dealers on the securities market), increasing the central bank's key rates, suspending liquidity injections in the banking system, and intensifying operations to withdraw liquidity from bank reserves. As a result, investors demanded higher interest rates on government securities.
Cameroon, known for its preference for low interest rates, had to adjust by increasing its interest rates, which, despite the rise, continue to be the lowest in the market. For instance, as per data from the Central Securities Settlement and Registry (CRCT), in September 2023, Cameroon's average interest rate on its fungible treasury bills (BTA) reached 5.67%, while the market average stood at 6.29%. Comparatively, Cameroon offered 2.24% on these securities in June 2019, rising to 3.11% in June 2020, followed by 1.98%, 2.38%, and 4.67% in June 2021, 2022, and 2023, respectively.
For its fungible Treasury bonds (OTA), Cameroon offered a rate averaging 7.2% in September 2023; the highest rate ever offered by the country for this type of securities. This marks an increase of 1% compared to the 6.2% offered between June 2019 and June 2023.