(Business in Cameroon) - On 13th August 2015, the President of Cameroon signed a decree “modifying and completing certain provisions in the Republic of Cameroon’s Finance Act for the 2015 period.” It authorises “the government to negotiate and, eventually, conclude, in the course of the 2015 period […] concessionary and non-concessionary loans respectively totalling 500 billion FCFA and 1.2 trillion FCFA.” In short, to address its financing needs, the Cameroonian government will take on 1.7 trillion FCFA in debts this year.
It is the second time since the start of the year that Cameroon’s debt ceiling has been raised. Indeed, on 6th February 2015, the Head of State had signed a decree for 900 billion FCFA (compared to 375 billion FCFA in the initial budget), the amount of financing to be raised by the government via government securities issuance on the capitals market.
An ordonnance signed the same day authorised the Minister of Finance to mandate teo banks to issue the first Eurobond (750 billion FCFA) in the history of Cameroonian public finance, for the financing of the three-year emergency plan totalling close to 1 trillion FCFA.
Cameroon’s debt ceiling will rise from 900 billion FCFA in February to 1.7 trillion FCFA in August, which is an increase of 90%. This second increase is due to the decision recently taken by the government to finance the contruction of the Mbalam-Kribi railway and the Kribi deep water port wharf within the development framework of the Mbalam-Nabeba iron mining project. This infrastructure involves from 1.5 to 2 trillion FCFA raised primarily from China.
In addition, the new raising of the debt ceiling is due to the decrease in oil revenue, which should officially lead to around 300 billion FCFA in losses for the Treasury Department this year, despite the rise in customs and tax revenue in the first quarter of 2015.
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