Yaounde — Cameroon’s finance minister has been authorised to raise as much as 200-billion CFA francs ($348m) from international financial markets to shore up government cash flows for fiscal year 2025, according to a presidential decree.
Kelly Mua Kingsly, head of finance operations of the state at Cameroon’s ministry of finance, said the government would consider using several market instruments, but syndicated loans were the most likely.
“This is most likely given the urgency and nature of liquidity needs. It is also attractive due to shorter structuring time and flexible drawdown options,” Kingsly said.
Concessional or semi-concessional loans suitable for budget support components and assimilable treasury bonds or treasury bills on the Bank of Central African States (BEAC) market could also be considered, he said.
Eurobonds were less likely, he said, due to high global interest rates, low sovereign credit ratings and lower appetite from international capital markets for frontier markets in the wake of the Covid-19 pandemic and during a period of geopolitical risk.
The borrowing plan comes as Cameroon faces slow disbursement of external financing and delays in revenue mobilisation, notably non-oil tax collection deficits.
Tight monetary policy by the regional central bank to curb inflation and stabilise the CFA franc has provoked a liquidity squeeze across Central Africa, while the BEAC’s reserve requirement has affected treasury liquidity.
Officials also say the government is keen to diversify its sources to avoid excessive domestic borrowing that could crowd out private sector investment.
Cameroon has recently relied on domestic and external borrowing to bridge budget deficits.
Reuters
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