(Business in Cameroon) - Cameroon's Treasury is planning a debt buyback operation on the public securities market of the Central African States Bank (BEAC) in May.

Sources within the Treasury's General Directorate at the Ministry of Finance reveal that the issuance size for this buyback is expected to range between CFA150 billion and CFA200 billion. The aim is to extend the repayment deadlines of certain bond securities issued in the same market years ago, as their repayment deadlines are approaching. The success of such an operation will enable the country to preserve its cash reserves to meet other priority needs, especially amidst tightening financing conditions on the sub-regional capital market due to austerity measures implemented by BEAC for months.

To combat monetary inflation (20%), Beac has continuously implemented restrictive measures to drain bank liquidity and limit access to financing. These measures include successive increases in benchmark rates to discourage commercial banks' refinancing by BEAC, suspension of weekly liquidity injection operations into the banking system, intensified liquidity absorption operations in banks, and more recently, issuing BEAC bonds to drain bank liquidity.

In such a context, it appears wiser to direct cash reserves towards priority expenditures and investments rather than debt repayment. One of the options available to economic agents adopting this strategy is debt rescheduling through operations like buybacks. This marks Cameroon's first such operation in the BEAC public securities market since its inception almost 13 years ago. "In the past, such operations weren't even possible. It's with the reform of certain regulations in 2021 that debt buybacks became feasible on the public securities market," notes a market expert.

Following the 2021 reform, Cameroon follows in the footsteps of two other states in debt buyback operations in the BEAC public securities market: Congo and Gabon. For instance, on April 16, Congo initiated buyback operations for Treasury bills (26-week maturity) and bonds (2 and 3-year maturity) totaling nearly CFA25 billion. The conclusion of these operations took place on April 18 but official results are yet to be disclosed by the central bank.